KEY POINTS:
Wine exports are likely to outstrip the value of wool exports for the first time this year because of winemarkers' focus on premium product and strong marketing.
After another year of strong growth, overseas wine sales in the year to June 30 topped $700 million, up 36 per
cent, despite the effect of the high dollar, New Zealand Winegrowers chairman Stuart Smith said.
He said wine exports were likely to surpass the export value of wool within a year.
"Think about that. Overtaking wool - one of the products on which this country's prosperity was built," said Smith yesterday at the wine industry's annual Romeo Bragato conference in Auckland.
Wool exports for the year were worth $900 million-$1 billion, according to wool industry estimates. But Meat and Wool New Zealand figures showed that raw wool exports were down 5 per cent to $655 million in the same period.
Smith said the key to wine's success was a high degree of vertical integration and that an increasing focus on high-value premium markets was behind the boost in export receipts.
The wine industry has conducted all of its international marketing activities through New Zealand Winegrowers, established in March 2002 as the joint initiative of the New Zealand Grape Growers Council, and the Wine Institute of New Zealand.
But despite the growth in export value, the high currency has savaged wine industry profits.
"The current value of the New Zealand dollar - even reduced from its highs against the US dollar - makes export a very difficult business," Smith said.
Smith said there was no magic bullet, and barriers to profitability differed regionally. Gisborne growers, for example, faced steeper prices for grapes than those in Marlborough and higher production costs were a problem for red wine producers due to their product mix.
The more intensive production systems employed by red and sparkling wine specialists meant it could take 10 years to reach profitability, he said.
While those issues could be managed, some could not, he said, such as compliance costs that kept growing "despite the best endeavours of successive governments".
Meat and Wool chairman Mike Petersen said the wool industry could learn a lot about marketing from the wine industry.
"There's no doubt that the growth in the wine industry has been phenomenal - particularly in the last 12 months with the currency," he said.
"They've done a phenomenal job, and certainly we've been looking at the Winegrowers model as one that we could apply to parts of the wool industry."
Woolgrowers abandoned their statutory marking body, the Wool Board, years ago, Petersen said.
Wool industry profitability had been declining since then, as synthetic fibres took over in its markets.
The Wool Industry Network, which has been seeking a better direction for wool growers, would announce ways in which the sector could be rejuvenated in about six weeks, he said.
"We'll be announcing developments around the need for marketing the strong wool clip," he said.
Cheers
* Wool exports were a major factor in boosting New Zealand's economy in the 1950s and 1960s.
* But the industry has been in decline since the rise of alternative and synthetic fibres and the disestablishment of its statutory marketing body, the Wool Board.
* Wine exports exceeded $700 million last year, and the chairman of New Zealand Winegrowers says the industry could outsell wool this year.
* The wool industry has been eyeing wine's marketing structure in a review of its own marketing needs, the results of which are to be released in six weeks.
