Wine industry urged to be vigilant
An international accounting firm has urged the Kiwi wine industry to take a measured approach to getting the most out of new year's grape harvest.
PricewaterhouseCoopers prepared the first New Zealand Wine Insights report to follow on from the work it did for the Strategic Review of New Zealand Winegrowers in 2011.
"A large swing past 2011 levels may not be beneficial to the industry and it is in the industry's interests to be vigilant to this outcome and to take a measured approach to a large vintage in 2013," the report says.
It explains the cold flowering in December 2011 would have a negative impact on the yield expectations for vintage 2013, but a warm flowering in December 2012 would be expected to more than compensate for last year's budding.
"The easing of restrictions on yield control by some wineries and vineyard managers seeking to increase production on the back of higher prices for grapes could result in a large vintage in 2013, should climatic conditions be favourable at flowering."
The report summarises the trends the industry is experiencing including renewed confidence to invest in land, rising prices for vineyards and viticultural land during the second half of 2012, a significantly reduced supply of bulk wine because of the lower 2012 vintage, particularly Marlborough sauvignon blanc, and wineries seeking growth opportunities.
The report writers estimate that growers renegotiating their grape contracts should be able to achieve at least the same price as in 2012, of about $1500 a tonne.
The report recommends wine companies adopt a financial market risk management framework that protects NZ dollar profits and cashflows of the business.
The 2011 review acknowledged that some wine companies and growers were finding the trading conditions extremely tough.
Some growers and wineries had run into trouble and some ended up having either formal or informal insolvency action taken against them. Many others had been working with their banks to find ways to manage their situation. The report suggests that companies facing financial pressure get professional help.
The Marlborough Express