Big harvest 'should not hurt recovery'

A much bigger grape harvest shouldn't derail an encouraging recovery in wine sales and prices, says Nelson Winegrowers Association chairman Mike Brown.

A 2011 national vintage of 324,591 tonnes, a 23 per cent rise on last year and 14,000 tonnes more than predicted, has raised some concerns that it may prolong the wine glut which has left many in the industry struggling to make a profit and survive. Most of the growth came from the South Island, including Nelson, where the harvest was up 32 per cent to a record 7854 tonnes.

However, Mr Brown said this year's Nelson vintage was only slightly higher than that recorded in 2009. There were clear signs that market prospects had improved in the past six months and most wineries should be able to sell what they produced.

Almost 80 per cent of last year's sauvignon blanc crop – the industry's most important barometer – had been sold, which was several months quicker than in recent years, while both the bulk wine price and average export prices were higher, he said. The bulk wine price at close to $8 per litre was now the highest it had been for 18 months, with most of the growth coming from Australia, Britain and United States markets.

"We are in the best sales position since the 2007 vintage, which is really encouraging as sauvignon blanc is the engine room of the industry."

While it would take another two to three years for the industry to fully recover, he said the association was confident wineries would be able to sell a crop that was only 4 per cent higher than forecast without disrupting markets.

Chief executive Philip Gregan said profitability levels remained an ongoing concern despite forecasting sales would rise 7 per cent over the next year.

Mr Brown said there were also signs of a more sustainable stance on pricing.

More confident wineries had relaxed their yield caps a little, which had taken the pressure off their growers.

While some of the big overseas wine buyers had initially taken advantage of the oversupply situation, there was now "a bit more mutual awareness" that it was in everyone's interests for prices to be fair and profitable.

The upturn had probably made banks rethink whether it was worth winding up more heavily indebted wineries, he said.

"You would have expected to see a flurry of receiverships after the vintage and once the crop was in the winery. That the banks haven't followed that strategy shows there are signs of a recovery.

"The fewer stressed sales there are the better for everyone, including the banks."

Mr Brown said a feature of the 2011 vintage in Nelson was the effect warm and wet weather midway through harvest had had on grape varieties.

Whites picked earlier had fared the best – gewurztraminer cropped particularly well, with 277 tonnes picked compared with just 97 tonnes in 2009.

"In my 10 years in Nelson I've never seen a gewurztraminer crop like it."

Settled spring weather during flower set followed by good rain had produced heavier bunches and yields of close to 10 tonnes per hectare, rather than the normal three to four tonnes.

However, reds, in particular pinot noir, had not fared so well and had been affected by the high humidity and disease, he said.

With sauvignon blanc, pinot noir and chardonnay making up more than 80 per cent of wine produced in Nelson and the dominance of the first two growing, Mr Brown defended the region's right to call itself the centre of aromatic wine.

Just over 16 per cent of this year's vintage was of so-called aromatics pinot gris, gewurztraminer and riesling. The riesling crop actually fell in recent years.

While plantings may not have increased, Nelson had focused on aromatics because they did well here. Wineries had enjoyed plenty of medal success with them and that justified using them in marketing, he said.

"Marlborough is all about sauvignon blanc and Central [Otago] is all about pinot noir, and there was a chance to stake a claim with aromatics."

Sauvignon blanc and pinot noir would continue to dominate because that's what most consumers wanted to drink both at home and overseas, he said.

NELSON WINE STATS T

The 2011 harvest was a record at 7854 tonnes, surpassing the 7740 tonnes produced in 2009.

It was 32 per cent higher than the 2010 harvest, which was one of the biggest regional jumps in production.

Almost 55 per cent of Nelson wine made in 2011 was sauvignon blanc, followed by pinot noir (16 per cent), chardonnay (10 per cent) and pinot gris (9 per cent).

Nelson, with 39 wineries and about 60 growers, is the fifth largest wine region with 2.4 per cent of the national crop. Marlborough has more than 75 per cent.