Can NZ avoid another wine glut?

As New Zealand harvests its second bumper vintage in a row, one winery owner has expressed concern that the country will repeat the oversupply pricing problems of 2008.

“Sadly this year there’s a big danger that we’ll have a glut again,” Robert Wilson, co-owner of Hawke’s Bay producer Trinity Hill, told the drinks business. “So many people have invested in vineyards that aren’t really needed.”

Although acknowledging that New Zealand Winegrowers “has really fought hard” to prevent the country undermining its prices, as well as stressing that the 2014 vintage was likely to result in “some great wines”, Wilson “concluded: “We have to accept that New Zealand wine is now a volume driven business.”

However, New Zealand Winegrowers’ CEO Philip Gregan welcomed the prospect of another large harvest as necessary for the country to meet its growing sales around the world. According to the generic body’s Annual Report 2013, exports of New Zealand wine have increased in value by 22% since 2009.

In the UK, New Zealand’s second largest value export market after Australia, the country’s average price in the off-trade is currently just over £7 (Nielsen Dec 2013), placing it ahead of every other country of origin. Speaking to db a year ago in the wake of the large 2013 harvest, Gregan stressed the importance of protecting this strong price position.

Despite the potential threat to this strategy from two consecutive large harvests, he observed: “While vintage 2013 was large, vintage 2012 was small so you get a better perspective by adding those vintages together.” Indeed, Gregan added, “some wineries were still quite short on wine after 2013, hence a desire for a larger crop this year.”

What’s more, he assured, “the big difference between now and 2008 is that there are no new vineyards coming into production over the next three years so we are just as likely to have small as large harvests over that time. There is no tsunami of new vineyards to boost production over that time.”

Far from agreeing with Wilson that producers have planted more vineyards than are needed, Gregan argued that there was a need for further plantings.

“The prevailing view is that while the crop may be larger this year this is no certainty for the future,” he told db. “As such when combined with rising sales we are going to see quite a few new vineyards planted over the next few years.”