Exports prove bottler for NZ wineries

REDUCING THE GLUT: The wine sales boom has been generated to a significant extent by exports of discounted bulk wine.

Booming exports have helped the wine industry reduce its glut by about 40 million bottles.

New Zealand Winegrowers now expects exports for the year ending June 30 to be 220m litres – 15m more than originally expected.

However the total value of the exports will remain at about $1.1 billion, roughly the same as the previous year, as the price received per litre has fallen.

"This new forecast suggests 2011 sales [to June 30 this year] will exceed production from the 2010 vintage by 30m litres, meaning lower stock levels for many wineries going into the current harvest," Winegrowers' chief executive Philip Gregan said yesterday.

The difference of 30m litres equates to 40m standard bottles.

"This stock reduction is an important step in rebalancing the sector," Mr Gregan said. "It is very pleasing that bottled wine exports are continuing to grow at 10 per cent annually."

However, the sales boom has been generated to a significant extent by exports of discounted bulk wine, some of which ends up in supermarkets' "own brand" bottles at bargain prices.

About 30 per cent of exports were in bulk, Mr Gregan said.

A financial survey of the wine industry, released in December by Winegrowers and Deloitte, said the smallest producers were hardest hit by the combination of the glut and the worldwide recession.

Those with annual revenue of less than $1m were losing on average 31.9 per cent of their revenue – a loss of about $50 per dozen case.

However, the biggest wineries, those with revenue of more than $20m, were making an average profit of 7.9 per cent.

The Christchurch earthquake had caused some damage to the infrastructure of wineries near the city and in the Waipara sub-region, Mr Gregan said.

But their main problem would be loss of income as 70 to 80 per cent of their sales were in Christchurch where many shops and restaurants were out of business, he said.

Sauvignon blanc continued to dominate exports, but pinot noir exports increased markedly and all of this variety was sold in bottles.

The current vintage was on track for a harvest of good quality and increased quantity – about 310,000 tonnes, the same as the amount being sold over the current year.

Last year, the total vintage was 266,000 tonnes, kept down partly by adverse weather and partly by Winegrowers urging producers to restrict output in order to increase quality and reduce the glut.

Ad Feedback "The pre-vintage survey indicates wineries are responding to the stronger sales and lower stocks by lifting grape intake accordingly," Mr Gregan said. Nevertheless, low prices meant profitability remained a concern for both growers and wineries.