George Fistonich praises rival winemakers for co-operating to limit the size of this year's harvest. Photo / Paul Estcourt
We have travelled the country to learn how people are coping with the recession. Watch the video interviews, or send us your own videos and tips, at nzherald.co.nz/go/surviving09
The wine industry has produced another bumper grape harvest but global recession and increased supply are putting pressure on prices.
The 2009 grape harvest of 285,000 tonnes is the same size as last season - when wineries underestimated a crop that soared 39 per cent and created an oversupply after
years of shortages.
Growers and winemakers co-operated this year to limit the harvest, which included a 2000ha increase in productive land.
Villa Maria Estate founder George Fistonich said the industry co-operation had been amazing and the harvest could have been about 350,000 to 400,000 tonnes.
There was still a carryover from last year's harvest and it would take two or three years to get back into balance.
Price pressure would be felt domestically and internationally, he said.
"It's going to be more a question of profitability. When you get a surplus you do tend to get a lot of price pressure. Word gets around so everybody tries to negotiate a lot harder."
However, most of the bulk wine was being sold under secondary brands, with major brands maintaining the retail price position overseas.
"I think the danger will be if the main brands start to drop their price internationally," Fistonich said.
"Then you could get the situation you had in Australia where the public gets a perception that you're capable of doing stuff at a lower price."
Last year's record vintage had driven export growth of 28 per cent for the year to date, meaning the industry would hit a target for $1 billion of exports during this year, which was a year earlier than forecast.
Delegat's Group managing director Jim Delegat said volume sales at the NZX-listed company were running generally about 20 per cent up on last year and inventory was in line with demand.
"It will pose an issue, a continued problem, for small to medium-sized companies because I understand that they have produced a larger harvest where the large companies have in fact produced less than last year.
"For those producers who are able to succeed in establishing global distribution the future continues to look positive."
The average price a litre for exports for the year ending March was $9.13, compared with $8.98 the previous year.
New Zealand Winegrowers chief executive Philip Gregan said the price per litre for the year to May had dropped but was still higher than the previous year.
"There's a lot of downward price pressure and it's got as much to do with the global recession as anything else.
"We've seen new opportunistic brands appear in the market but at this stage it does not seem to have affected the pricing of our core brands very much."
There were more than 600 wineries nationally with about 200 supplying the domestic market only.
"I wouldn't know that anybody's making too much money selling in the domestic market," Gregan said.
"It's just a very, very tough market out there.
"As we expected, with the global recession and increased supply there was always going to be an impact on winery and grower profitability."
He said that humidity and weather pressure in February was replaced by a superb March and April, meaning grapes could be picked at optimal ripeness.
2009 HARVEST
* 285,000 tonnes of grapes, same as last year.
* Quality expected to be good thanks to the weather.
* Export target of $1 billion will be reached this year.
