The wine industry says a drop in the tonnage of grapes harvested this year is a positive step towards balancing production with demand.
The harvest of 266,000 tonnes is down 7% on last year's record.
But the chief executive of Winegrowers New Zealand, Philip Gregan, says the industry is facing its toughest trading conditions in 20 years.
Mr Gregan says the smaller harvest will help the industry's problems of rebalancing grape supply and wine demand, and the stocks of unsold wine.
However, he say growers are still struggling because of the high dollar, a slow economy and the oversupply of wine, which is causing tough trading conditions.
Mr Gregan says this means consumers will continue to benefit from a wide range of New Zealand wines at fantastic prices.