Overproduction sparks thoughts of regulation

Sir George Fistonich, managing director of award-winning winery Villa Maria, says regulation would be good but is unlikely. Photo / Paul Estcourt

In old world Europe, crushing grapes into wine is not as simple as it sounds.

France, Germany and Italy are among a number of countries that have regulatory systems controlling what grape varieties can be planted, where, how much and even how to make the wine.

The so-called appellation systems have controlled the supply of wine and protected those within the local industries, in some cases for centuries.

But here in the brave new world it is the freedom from regulation that has helped to drive a fast-growing, innovative industry.

However, success that saw exports race towards $1 billion also spurred a vast increase in plantings, which in turn drove a massive rise in harvests and turned shortage into surplus. Surplus meant lower retail prices, less valuable grapes and falling land prices.

People sitting under the financial blowtorch of falling returns and asset values may well yearn for the protective systems of the stuffy old world.

However, wine critic Michael Cooper says introducing regulations would not benefit New Zealand.

"I think one of the key reasons for the success of the New Zealand industry has been its very high degree of innovation and the freedom of people to experiment, to push boundaries, to go to new regions, to plant new varieties and it's still after all a very young industry."

Half the more than 600 wineries in the country were set up after 2000, he says.

"There's such a state of flux it's far too early to talk about setting things in concrete."

New Zealand Winegrowers chief executive Philip Gregan says the organisation is talking to the industry about matching production to demand.

"Our job is to provide information to growers and wineries ... but at the end of the day the final decisions rest with them," Gregan says. "We can't order them what to do."

There has been plenty of discussion about whether the French system is the right model for the future, he says.

"It would require significant changes to the way things would need to be done in New Zealand and it's not a model that we are advocating at the moment."

Jayson Bryant, owner of Auckland specialist wine store The Wine Vault, says lots of people planted vines that should have been stopped.

"Whether it's a kind of Government-industry body or whether it's just an industry body that's fairly tough ... I think they should have said, 'Look, you're going to lead to the downfall of New Zealand wine, we can't afford you, we won't accredit you, we won't have you, you'll just be vin ordinaire,"' he says.

Sir George Fistonich, founder of Villa Maria Estate, says regulation would be good but is unlikely.

"In this day and age control is probably a word nobody really wants to hear about."

Delegat's Group managing director Jim Delegat also says regulation is unnecessary.

"The markets take time to develop and at this time we have an imbalance brought about by speculative and overly optimistic plantings that are going to take a year or two to work through."