Wine exports pass $250m for first time

Wine exports reached record levels in the past year, but industry bosses are cautious about short-term growth prospects because of a low harvest.

New Zealand Winegrowers' annual report shows that export volumes rose 18 per cent to 27.1 million litres in the year ended June 30.

The annual value of exports passed the quarter-billion-dollar mark for the first time, hitting $281.9 million, up 14 per cent.

Chairman Peter Hubscher said the increases followed the trend of recent years and were expected to continue in the medium to long term.

But the smaller-than-expected 2003 vintage of 76,400 tonnes - down 35 per cent on 2002 - was frustrating and would curtail short-term growth.

Mr Hubscher said there would be greater availability of some varieties from last year's vintage, notably chardonnay, pinot noir, merlot and cabernet sauvignon.

But the reduced production of sauvignon blanc from the current crop meant many wineries would struggle to meet export demand in the year ahead.

He said the short-term view was also influenced by economic issues, such as the rise of the New Zealand dollar, leading to lower returns per litre.

This was compounded by higher grape prices, low growth rates in major economies and intense competition in international markets.

Over the longer term, Mr Hubscher said, the main challenge facing the New Zealand industry was the rapidly expanding amount of land being turned into vineyards.

He said vintages of 200,000 tonnes or more were a real possibility within five years.

An improved marketing effort would be needed to sell greatly increased supplies of premium wine to overseas markets.

The annual report showed that total sales of New Zealand wine jumped to a record 61.5 million litres, up 10 per cent on the previous 12 months.

Domestic wine sales rose 1.8 million litres to an estimated 34.4 million litres, although New Zealand wine's share of the local market fell to 46.2 per cent from 47.7 per cent.

The number of growers and wineries in the country had topped 1000. Wineries were up to 421 from 398.

The report noted the industry's "outrage" at the Government's move to increase the excise on fortified wines like sherry and port.

The change, which also affected spirits, was introduced in May to try to curb binge-drinking by young people.

But it led to fortified wine sales plummeting 53 per cent in the month of June, compared with June 2002.

- NZPA