Bumper grape crop augurs well for vintage

Last updated 07:47 10/02/2014

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New Zealand wine exports are expected to continue growing this year, according to the latest Rabobank Wine Quarterly report.

"New Zealand wine exports are firmly back in growth given the higher supply available from the record 2013 vintage, and the share of bulk wine in the product mix is again rising," the report says.

"Export volumes grew 10.3 per cent in the first 10 months of 2013, while their value grew less strongly by 2.9 per cent over the period."

Exports to northern European markets had strong growth in 2013, while the United States continued to be the best performing market.

The report also suggested this year's grape harvest could be the country's biggest ever.

"The 2014 New Zealand wine harvest has yet to get under way, but favourable growing season conditions and early indications suggest that last year's record vintage could potentially be rivalled in 2014," Rabobank says.

That could give New Zealand a competitive advantage over many other southern hemisphere wine producing countries, most of which were expecting smaller vintages this year.

"The 2014 Australian wine harvest is well under way, and very early expectations are for a slightly smaller crop," the report says.

Australia suffered another severe and widespread heat wave this summer could affect the size of the harvest.

The grape harvest is also expected to be down in Chile, where the cold rather than the heat has been a problem, with the country's main agricultural regions affected by frosts.

Estimates of damage to the crop varied "but the general sense is that the 2014 harvest could be reduced by as much as 15 per cent, with the production of chardonnay contracting between 20 per cent and 40 per cent," the report says.

Early indications were for South Africa's harvest to be about 4.5 per cent smaller than last year, while Argentina's was expected to be normal.

The report also pointed towards slowly improving prospects in the British wine market, New Zealand's second largest export destination (by volume) after Australia.

"UK wine consumption took a severe hit when the storm clouds rolled back in 2008 and has struggled to regain traction ever since," the report says.

"Fortunately, signs suggest the economic environment is ever so gradually improving in the UK.

"The regional economy in London, which contributes 20 per cent of UK GDP and is especially important for the on-premise trade, is generally outperforming other parts of the country," Rabobank says.

However, wine exporters would also have to adapt to changing drinking behaviour in Britain.

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"More and more consumption has shifted away from on-premise and into the home, making brand building an even more difficult proposition," the report says.

When people do go out, more wine is being drunk with food, with "old pub formats" making way in favour of more contemporary options.

"Incumbent market leaders, such as Australia in off-premise and France in on-premise, will need to adapt to such trends as consumers look for more food- friendly options."

- Fairfax Media

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