Wine industry mulls supply cut

Economics, rather than industry edicts, will eventually cure oversupply problems savaging the wine industry, says Neudorf Vineyards co-owner Tim Finn.

Mr Finn, part of a five-man leaders panel who spoke at the Romeo Bragato wine conference in Blenheim last week, said winegrowers could not be forced to restrict or cut production, even if it was in the best interests of the industry.

Dog Point owner Ivan Sutherland had earlier told the forum that 15 per cent of vines should be pulled out, especially those outside optimal growing areas.

He urged wineries to stop focusing on increased production and return to an artisan approach.

Mr Sutherland said vineyards had to stick to varieties that worked well and not try to be everything for everyone. "We have to face the fact that when times were good, there were a lot of speculative plantings, and some of them were out of sheer romance."

The milestone of $1 billion of wine exports surpassed by Kiwi wineries this year was tainted by 20 to 30 per cent bulk wine of questionable profitability, he said.

"Isn't it better to be in an undersupply situation? It would help get better price points, pay growers better and make companies more profitable," Mr Sutherland said.

However, Constellation New Zealand chief executive Joe Stanton said talk was easy. "Who's going to pull the first vines? Me or the other bloke? That's the question everyone is asking. A 10 per cent reduction in vineyard area would most definitely help, but it probably won't happen unless we get government support."

He could not see that happening, he said. Wine companies and growers had to come to an agreement, so that both operations were sustainable.

Growers had told Constellation they needed between $17,000 and $20,000 a hectare to operate comfortably, he said.

"That's a long way from being achieved.

"We have to find some way to bridge that gap."

New Zealand Winegrowers Association deputy chairman Steven Green, who owns Carrick Wines, of Central Otago, said oversupply was a problem all over New Zealand and was not limited to Marlborough sauvignon blanc.

Carrick had been pressured to lower its prices by distributors, but had refused because the brand was too valuable "to be trashed overnight".

There seemed to be an expectation things would come right by themselves, Mr Green said, but they wouldn't. "We can't just sit back and wait for two years, three years or four years. We've got to change and adapt now."

Mr Finn told the Nelson Mail the industry could pressure and recommend to growers to pull out hundreds of hectares of vines, "but will anyone listen".