The New Zealand Wine Company said its 2011 grape harvest is 586 tonnes, or 26 per cent, higher than last year at 2808 tonnes from both its company-owned vineyards, leased vineyards and contract growers.
"Our staff and contract growers managed the 2011 harvest very well and we are particularly pleased with the overall quality of our Sauvignon Blanc and Riesling fruit and are confident that our winemakers will produce quality 2011 wines to drive our export-lead growth opportunities," said chief executive Rob White.
New Zealand Winegrowers has previously reported the national harvest rose 23 per cent to 328,000 tonnes with Marlborough production up 34 per cent to 245,000 tonnes, the Marlborough-based NZAX-listed company said.
The bumper harvest exceeds the previous record 285,000 tonnes from the 2008 harvest and is likely to contribute to the existing wine glut and drive more wineries out of business.
According to Bloomberg News, the average grape price fell from $2161 a tonne in 2008 to $1293 last year.
NZ Winegrowers had recommended the industry limit the 2011 vintage to 265,000 tonnes, the second year it has attempted to limit output.
NZ Wine Company is obviously suffering. Late yesterday, it said it would breach one of its three banking covenants "by a significant margin" at June 30.
The covenant requires its operating earnings must not be less than 1.3 times interest costs for the year ending June 30.
The company said its bankers agreed to waive the breach pending an independent review of its financial forecasts and business model.
"If the bank is not satisfied with the results of that process, it may trigger an event of review" which may lead to the bank demanding immediate repayment, it said.
The company said the oversupply of New Zealand wine "has resulted in high levels of New Zealand bulk wine sales, currently around 30 per cent of total export sales volume, and, when coupled with a very strong New Zealand dollar against the British pound and the US dollar, plus aggressive competition," have cut its sales and margins and will mean it reporting an underlying operating loss.
New Zealand Wine Company shares last traded at $1.32 on Wednesday last week.
The shares have been trending lower from $2.50 in September 2009.