Wine export surge allays fears of glut

New Zealand wine exports hit a record in the 12 months to the end of February. More than 44 million litres went overseas in that period, a 55 per cent increase on the previous year.

But the biggest markets - Britain, the US and Australia - will get less New Zealand wine this year, because of the smaller vintage now under way.

These markets take 84 per cent of New Zealand wine exports and all are growing, something that New Zealand Winegrowers chief executive officer Philip Gregan attributes to increased volumes of wine following the 2004 vintage and international promotion.

Mr Gregan said he did not foresee a glut of New Zealand wine in the international market because of the steady rise in exports over the last nine months.

"The surge in the amount of wine we send overseas has removed a huge amount of uncertainty about our ability to sell wine in the international market place and given that some major wineries are starting to run out of wine I don't think there's any glut of New Zealand wine overall."

However, there were many wine companies, mostly smaller operations, which had too much stock, Mr Gregan said.

"The biggest challenge for small companies that are overstocked is that they have got to get their policy right, figure out what they are offering to the market place and have a strategy on how and where to sell that wine."

Chris Seifried from Nelson's biggest winery, Seifried Estate, said the company had experienced strong export growth in recent years, but would put export expansion plans on hold this year.

The demand for Seifried wines in Germany, Britain and Australia was strong but he expected international sales to be curtailed by a 20 per cent drop in production this year, due to the smaller than expected vintage.

"We really want to concentrate on five or six key markets and visit them a couple of times a year to establish a relationship rather than getting our wines into other countries and then not being able to visit them," Mr Seifried said.

The importance of establishing face-to-face relationships with buyers could not be underestimated, he said.

"It is especially important if you are a small winery and in regions other than Marlborough.

"Everyone knows Marlborough and knows sauvignon blanc and thinks that is New Zealand wine.

"We need to be out there telling our story and for us it's important to talk about Nelson's identity, our family-owned winery identity, sustainable viticulture and screwcaps, which all help to define who we are."

In the recent export surge, sauvignon blanc remained New Zealand's strongest selling varietal wine, with 31 million litres exported in the year to February 2005.

Pinot noir exports rose to 2.2 million litres for the 12 months to February 2005, a rise of 57 per cent on the previous period.

Cabernet sauvignon, merlot and other blends rose 43 per cent to 1.4 million litres.

The downturn in expected national grape tonnage this year was expected to stem the rapid growth, but Mr Gregan said it would enable many smaller wineries to get stocks back in balance.

"With nearly 500 wineries now it is no secret that some of the small ones are a little oversupplied," he said.

"This smaller vintage and the big export demand will help them to achieve a better balance of stocks they are holding."

Mr Seifried said finding markets first and making wine later remained integral to the success of new wineries.

DRINKING OUR WINE

New Zealand's biggest wine export markets in 2004 (in litres)
* Britain 17.06m
* US 9.37m
* Australia 8.33m
* Netherlands 1.23m
* Canada 940,000

Source: NZ Winegrowers