KEY POINTS:
Wine buyers will enjoy big bargains next year as the price of middle to low-end bottles plummets.
Consumers can thank a record vintage of grapes combining with a surplus of product and an economic downturn.
The situation has already forced wine-makers to sell top brands in "clean skins"
- alternative packaging - for huge discounts.
But the situation could spell disaster for parts of New Zealand's $1.4 billion wine industry, with sources predicting by this time next
year, many more small wineries will have gone under or been absorbed by
bigger players.
This year's vintage was up 40 per cent, with vineyards producing a
record 285,000 tonnes of grapes.
That volume, and the juice produced, caused a glut at a time domestic wine sales are down almost 6 per cent on last year and the export market is getting tougher. With supermarkets using wine brands as "loss leaders" to get buyers in the door, drinkers are in for a dream run.
Wine buyer Simon Templeton, of the Mill Liquor Group and the www.vineonline.co.nz discount website, said good-quality sauvignon blanc
was already selling at half price.
"There's a Sav-alanche coming our way. There are quality Marlborough
sauvignon blancs selling for under $10 a bottle, not much more than what you pay for a glass in a bar."
With next year's vintage expected to be as good as this year's, wineries are expected to leave grapes rotting on the vines as they count the cost of harvesting and storing grapes and juice with no way of selling the
end product at a profit.
John Caro, of Caro's Wines in Auckland's Parnell, said the market
was "extremely competitive" and he was expecting his toughest period in the 12 years he and his brother had owned the shop.
"This is the most brutal market situation that we've seen. It's all good news for the consumer though."
Apart from ideal growing conditions, this year's increased volume has been caused by vineyard creep, with thousands of hectares planted with grapes in Hawkes Bay, Marlborough, Nelson, Canterbury and Central Otago.
In August, New Zealand Wine Growers reported 585 wineries in its annual report. Now there are 616 registered.
Wine writer Timothy Giles said every "retired barrister, doctor and still-fluid property developer wants to own their own vineyard".
"They are holding on to a lot of wine. You walk into wineries and they are literally creaking, every tank, every barrel, every vat
is full of wine."
To move that volume, well-known brands are "clean skinning" - rebottling
wine under new labels. Supermarkets, wine shops and liquor outlets are doing the same.
Consumers Institute chief executive Sue Chetwin said there was nothing wrong with the practice because there was so much choice available.
"It may be good wine and it may not be."
Giles said there were some "terrific" deals available as "bloody good"
winemakers rebottled wine under new labels.
"The wineries that you haven't heard of will be the best bargains."
Competition is expected to get worse next year with as much as 20 per cent of this year's vintage still left to sell as the March vintage
is harvested. The export market is unlikely to soak up the glut under current economic conditions.
"You only need a couple of big export orders to be cancelled and the whole market is flooded with cheap 'sav'," Caro said.
New Zealand Wine Growers chief executive Philip Gregan described the
market as "incredibly tough".
Others in the industry predicted "fire sale prices" as smaller wineries, under pressure from banks as their land value plummeted, dumped wine to improve cash flow.
