27 Aug 2008

Big wine operators doing well, small ones struggling

2:01 pm on 27 August 2008

Bigger is better when it comes to surviving in the wine business.

That's the conclusion of the latest economic survey of the New Zealand wine industry, conducted by the international accounting firm, Deloitte.

Paul Munro of Deloitte says it found large scale operators are in good health financially, and doing better than their Australian counterparts.

But he says smaller growers and wine-makers are struggling.

"They have struggled, once again, to demonstrate that they have a business model that can generate the sort of profit margins that the investments they need to make actually require," he says.

New Zealand Winegrowers' chief executive, Philip Gregan, confirms that the level of excise duty on domestic wine sales remains one of the biggest headaches for smaller producers.

He agrees that this year's larger than expected grape harvest presents some challenges as well as offer some opportunities.

"Over the last 10 or 15 years we have been short of our major export varities noticeably sauvignon blanc. That is why we regard the increased harvest as an opportunity but it will also represent a significant challenge," he says.