Export sales increase, but many wineries struggling

The world's appetite for New Zealand wine is growing as export sales increase, but wineries will still find it challenging to sell their wine this year, warns New Zealand Winegrowers.

Wine exports by volume were up 23 per cent for the year to the end of March, with 104.7 million litres of Kiwi wine being sent overseas.

Wine exports to Australia had strong growth up 52 per cent to 33.8 million litres, exports to the United Kingdom were up 17 per cent to 35.3 million litres and the United States up 8 per cent to 20.2 million litres.

The dollar value of wine exports was up 21 per cent to $930 million for the 12 months ended February 28.

NZ Winegrowers was expecting to achieve $1 billion worth of exports this year.

NZ Winegrowers chief executive Philip Gregan said while export sales were growing he did not want to understate how tough the market was.

Wineries were coming under increased pressure to drop their prices and buyers were hesitant to commit to orders because of the added uncertainty in the global economy, Gregan said.

Last year was a record harvest in New Zealand and many wineries were still trying to sell last year's stock.

There had been talk wineries would be forced to dump wine, but Gregan said he had not heard of that happening.

Wine Marlborough chairman Blair Gibbs said one mechanism to sell excess wine was to drop the price, but the method was not sensible when it came to building a brand. Some wineries were launching new labels and selling them cheaper to protect the value of other labels, he said.

This year's harvest would be slightly down on last year's as the industry had focused on producing lower yields to preserve the value of their wine.

NZ Winegrowers predicted 275,000 tonnes of grapes would be picked, compared with last year's record 285,000.

Gregan said New Zealand's wine was increasing in popularity because it was world-class, competitively priced and the types of wine produced were suited to the modern lifestyle.

Gibbs said the key to the success of New Zealand's wine industry was its high quality.

"We can't compete against low cost producing countries."

- © Fairfax NZ News