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New Zealand and SA making too much #wine

New Zealand’s grape harvest has jumped by more than 20 per cent on last year, prompting concerns of another supply glut, although an industry body says that demand is coming back into balance with sales.

According to New Zealand Winegrowers, 324,591 tonnes of grapes were harvested in the 2011 season, a 23 per cent increase on 2010 and about 14,000 tonnes more than expected.

The growth was centred on the South Island, boosted by good growing conditions, especially Marlborough, which now accounts for more than three-quarters of national volume. The region experienced a 34 per cent rise in harvest this year to 244,893 tonnes.

Philip Gregan, chief executive of New Zealand Winegrowers, said that after two years of sliding prices the organisation expected things to be stable this year, with a “reasonable supply-demand balance”.

In 2010 sales of wine were equivalent to 310,000 tonnes of grapes, Mr Gregan said, depleting inventories, which should boost the demand for grapes in the coming months. “We’re cautiously optimistic. There are still challenges in the industry but the feeling, certainly amongst the wineries, is that things are starting to get better, they’re getting the sales and they can see there’s good demand out there.”

He conceded that profitability levels “remain an ongoing concern”, with restoring incomes a focus for wineries and contract growers. Experts remain concerned, however, after a number of businesses borrowed heavily, in particular in Marlborough, resulting in a hit to margins when wholesale grape prices dropped.

Paul Munro, a partner at Deloitte, said that while he had seen some signs from clients that demand was picking up, production ideally would not have climbed as much, to help demand.

“Anecdotally, we’re probably seeing some small positive signs, that there is a little bit of stronger demand out there globally, but it’s nothing to get that excited about, to be honest. It’s heading in the right direction but it’s a small step.”

Grapes destined to be turned into sauvignon blanc, which account for more than two-thirds of New Zealand’s grape production, made up most of the increase, rising 50,000 tonnes to 224,412 tonnes. Grapes for pinot noir rose by almost a third, overtaking grapes for chardonnay as the second most harvested.

Production fell in all parts of the North Island, with Wairarapa and Hawke’s Bay down 9 per cent and Gisborne down 21 per cent.

Vintage Or Glut?

2011 grape production (tonnes and change on 2010):

New Zealand 324,591 (up 23 per cent)

Hawke’s Bay 35,533 (down 9 per cent)

Wairarapa 3598 (down 9 per cent)

Marlborough 182,658 (up 34 per cent)

Central Otago 6196 (up 15 per cent)

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