Grape expectations

By SIMON HENDERY and NZPA


The wine industry is expecting a grape harvest next autumn twice the size of this year's crush.

The question is: can it sell the lake of wine this leap in production will create.

Despite an increase in vine area as investors continue to rush into the wine business, this year's 76,400-tonne grape crush was well down on last year's 118,700 tonnes.

This year's slump was caused by spring frosts in several growing areas in September and October last year.

But with no repeat of those widespread frosts this spring, and with more new vines producing, the grape crush looks likely to be well up when harvesting takes place from late summer.

"We're looking at a far more normal year than last year, and the implication of that is 150,000 tonnes plus or minus, depending on how flowering and the later weather goes," said Philip Gregan, chief executive of the Winegrowers industry group.

The domestic wine market, accounting for two-thirds of production, is considered near saturation so producers are looking to export markets.

Gregan said the big question was whether the industry could sell the large 2004 vintage. More uncertain was how it would sell an even larger 2005 vintage.





"If we have two big years in a row, that really heightens the marketing challenge for the industry.

"The chances are we will, given all the new plantings, so we just have to do a lot of work on marketing."

Producers are working hard to secure new and bigger markets.

The latest success story comes from Marlborough's Whitehaven Wine Company, which has struck a deal with US wine giant E & J Gallo, enabling it to treble production in the next three to five years.

But a grape grower and former Winegrowers deputy chairman, Willie Crosse, warned that the industry would have to treble sales to handle the increased production.

"People really need to understand what we are facing," he said.

"In the next three years New Zealand has to increase its sales threefold, from three million to 10 million cases."

Deals such as Whitehaven's would have to be the rule, rather than the exception.

Whitehaven managing director Greg White said people should not rush out to plant more grapes as there was still a risk of oversupply.

But there was still room for optimism in the industry.

"There are still some big markets that need to be filled," he said.

One of the best ways to get long-term sales growth was by getting into those markets through relationships with foreign companies.