A record grape harvest is expected this year as wineries look to replace stock after high sales figures.
New Zealand Winegrowers chief executive Philip Gregan said the harvest would be about 310,000 tonnes, up from 266,000 last year.
Gregan had previously said a harvest of more than 300,000 tonnes would take the industry back to 2008, when a substantial rise created an oversupply that helped erode wine, grape and land prices.
However, sales this year were stronger than expected, and the harvest would not create the oversupply of 2008.
"We don't see that now," Gregan said. "Not given the sales performance we've seen in recent months."
Bottled wine exports were growing at 10 per cent annually and the performance in key markets was encouraging, he said.
"We now estimate total sales for June year end 2011 will be 220 million litres compared to earlier forecasts of 205 million litres."
The higher sales forecast would exceed 2010 vintage production by 30 million litres, which meant lower stock levels for many wineries heading into this harvest, Gregan said.
Export sales for the year would be around $1.1 billion, plus $500 million from the domestic market.
"We've seen no vineyards planted last year, we're getting close to production capacity and we're seeing strong sales growth so we remain pretty confident. "
But the industry still faced challenges.
"As an industry we need to remain focused on recovery of winery and grower profitability as a prerequisite to sustainable growth."