22 Aug 2012

Turn seen in wine industry prospects

9:45 am on 22 August 2012

New Zealand Winegrowers says this year may mark a big turnaround for a sector that's emerging from years of oversupply and falling profitability.

In its annual report the company says export earnings grew by 8% in the past year to almost $1.2 billion. Export and domestic sales also increased by 10%.

The amount of wine sold overseas has risen by almost 80% since 2008.

But NZ Winegrowers says that's going to change this year because a smaller harvest has produced the tightest supply in five years.

"We've sold 240 million litres of wine to July this year, and in vintage 2012 we've produced 194 million litres short - so we are 46 million litres short," says chairperson Stuart Smith.

"I think we will see much less low-value wine in supermarkets in New Zealand. We'll also see less wine in the supermarkets in the UK - particularly some of the own-brands that wineries have been supplying at quite low prices."

Mr Smith says this year is still going to be very difficult for many growers because better grape prices won't be enough to compensate for the lower yields.

But he says wineries are already negotiating much higher grape prices for the 2012 vintage.