Vintage year, but exporters see red

Sauvignon blanc is New Zealand's top seller but growers want to boost exports of pinot noir. Picture / Jeff Brass

Annual wine exports cracked the $500 million mark for the first time in the year to June but the industry is keen to reduce dependence on sauvignon blanc.

Figures show the variety's share of export volumes continued to grow in 2005-06, now accounting for 72 out of every 100 bottles of wine sold overseas.

"The success of sauvignon blanc is opening a lot of doors for us internationally," said Philip Gregan, chief executive of industry body NZ Winegrowers.

"But we can't have all our eggs in one basket. In terms of the long-term health of the industry, we must diversify."

The industry will keep leveraging off sauvignon blanc's success overseas to promote other varieties.

Gregan said the need to spread risk showed why growth in pinot noir exports was important - exports in that variety grew 55 per cent last year, taking the number-two spot off chardonnay.

NZ Winegrowers said overall annual sales last year exceeded 100 million litres for the first time, hitting 108 million litres. Exports of just under 58 million litres, worth $512 million, were 12 per cent up by volume and 18 per cent by value. The fall in the dollar helped, with the average value a litre of exports rising 41c to $8.87.

Local sales volumes hit 50 million litres - up 5 million litres or 10 per cent on the previous year and the highest level in two decades. The industry does not collect domestic sales value figures but Gregan said his "guesstimate" was that domestic sales also rose in value by about 10 per cent to around $450 million.

The 2006 grape harvest rebounded to a record level. About 166,000 tonnes of grapes were harvested in 2004 - that figure dipped to 142,000 last year because of cold weather but recovered to 185,000 tonnes this year.

NZ Winegrowers chairman Brian Vieceli said the record harvest would provide volume to consolidate the country's presence in new overseas markets, as well as continuing supply to the top three export destinations of Britain, US and Australia.

"Forecasts indicate we will grow exports ... to more than 70 million litres in 2007 but still face unfulfilled market demand."

Exports at that level would be worth nearly $700 million. The industry is targeting total sales of $1.5 billion by 2010, with about $1 billion in exports.

Vineyard plantings are expected to reach 30,000ha by then compared with about 22,000ha now.

Vieceli said surveys showed confidence that sales would continue to rise, driven by sauvignon blanc, but there was no room for complacency.

"To fulfil forecasts, the industry will need to accelerate efforts in marketing and innovation, without losing sight of the integrity and quality that sustain the New Zealand wine proposition."

He also warned that a sharp surge in vineyard planting based on speculation, rather than a "sound understanding of industry dynamics", was a potential risk.

Future prosperity depended on maintaining the balance between supply and demand.

"This ... requires that investments are focused on the medium to long term and reflect the realities of market demand and resource sustainability."

Neil Burgess, a wine analyst at rural lender Rabobank, said maintaining quality was essential, particularly with New Zealand's reputation largely driven by sauvignon blanc.