Baking summer sparks warning of wine glut

Paul Munro, a Deloitte partner who specialises in the wine industry, said this summer's hot, dry weather meant there would be a "pretty strong harvest". Photo / APN

The wine industry risks slipping back into overproduction as one of the driest summers in living memory provides outstanding grape-growing conditions across the country, says an analyst.

This year's vintage is expected to be bigger than the 269,000-tonne harvest in 2012, which was 18 per cent smaller than the 2011 crop and helped to rebalance supply and demand in the sector.

A bumper vintage in 2008, when the country was also being hit by drought, resulted in a 27-million-litre glut that eroded wine, land and grape prices and led to an increase in exports of cheaper bulk wine - product shipped in giant plastic bladders.

Paul Munro, a Deloitte partner who specialises in the wine industry, said this summer's hot, dry weather meant there would be a "pretty strong harvest" and there was a risk of a return to oversupply.

"I think the industry's got to be careful that it doesn't flip-flop back into that sort of supply imbalance and produce too much for the market," Munro said. "It's a fine balance that the industry needs to manage carefully and I think New Zealand Winegrowers are doing a pretty good job in terms of keeping that message top of mind so producers don't attempt to harvest large volumes of product."

New Zealand Winegrowers chief executive Philip Gregan said the industry group was expecting the current vintage - the harvesting of which will continue until early May - to be larger than last year's but variable crops in many areas were making it difficult to forecast.

Stuart Smith, owner of Marlborough's Fairhall Downs Estate winery, said there was always a risk of overproduction but a larger harvest would be welcomed. He did not expect any impact on prices unless the vintage was "massive".