Cheap NZ wine starts to run dry

Henry Jacobs says large volumes of mediocre wine in 2008 started the downward price spiral. Photo / Christine Cornege.

The days of quality cheap New Zealand wine are numbered as a nationwide fall in production has put an end to a surplus that has been the delight of price-conscious consumers.

The $10 and $12 specials of Marlborough sauvignon blancs on offer since a record-breaking harvest in 2008 will disappear this year, say wine industry experts.

Viva wine editor Jo Burzynska said a 17 per cent drop in production in the wine industry last year, the result of one of the coolest seasons on record, would result in the bumper 2008 surplus drying up.

In Marlborough there was a 23 per cent drop.

"They will go back to the prices they were pre-2008. I think there will be a lot more Marlborough sauvignon blancs around the $20 mark or over $15."

Ms Burzynska said the low prices were never sustainable for the industry. "A lot of people weren't making money ... and that couldn't have gone on. Since 2008 there's been quite a lot of receiverships and wineries going out of business.

Villa Maria Estate founder and owner Sir George Fistonich said wine prices were cheaper now than they were 15 years ago. "The price of wine in New Zealand is well below where it should be. The amount of pressure in discounting has been quite high because of the surplus."

He said prices could also rise because the cost of grapes had increased $200 a tonne to about $1500. Gisborne Wine Growers chairman Doug Bell said price increases would follow four "very tough years" for the industry where the 40 per cent higher surplus made it difficult for wineries to move their product.

"This sees us return to what could be a sustainable level of prices both in terms of grapes and wine."

He said cheap wines would still be available, but they would be imported.

"New Zealand wines will find their way into more profitable export markets and discount wines will probably be now made from overseas wine."

The owner of Primo Vino wine store in Hamilton, Henry Jacobs, said historically imported wine was sold at discounted prices and New Zealand wine fetched a higher price.

"When supply and demand were fairly well in equilibrium ... that was not uncommon. 2008 was really bad in that not only was there huge volume but the wines weren't very good and that caused the start of the downward spiral."

Ken Sheldrick, cellarmaster for the Wine and Food Society of Auckland, said it was too early to predict price increases because many wine growers were experiencing such a good season so far.

"With this wonderful weather we're having this year, 2013 could be an absolutely cracker year for wine production so we could well have another surplus," Mr Sheldrick said.

"There's still a worldwide surplus of wine and quite a bit of our wine is not getting exported ... I don't think prices will go up all that much."