New Zealand wine has seen a record export rise, according to the latest New Zealand Winegrowers annual report, with UK demand growing 11% by value and 8% by volume.

The report dated in the year to June, shows an increase of a record $1.18 billion up 8% on the previous year. The country is now the 10th largest exporter by value and 11th by volume, and second only to France in terms of average price at which its wines are sold. It is also maintaining a high average price of £6.32 per bottle.

However, after overcoming its oversupply issues, one of the concerns raised is that it could slip back into over demand due to a reduced 2012 harvest, (-18% on the previous year), reduced production (194 million litres this year will be well below last year's sales total of over 240 million litres), and stocks of previous vintages being in short supply. It also means prices are likely to continue to rise.

The report shows bulk wine has grown at an even faster rate in line with global trends, and accounts for 35% of all wine shipped abroad, with the UK being high on its list of takers. However, looking forward it expects the small 2012 vintage will significantly reduce the volume in the year ahead.

Chris Stroud, market programme manager for Europe, said: "New Zealand is still performing very well in the UK market, and in fact is the largest New World country showing growth in both volume (8%) and value (11%).

"In particular New Zealand's share of Sauvignon Blanc continues to grow and represents 49% of all Sauvignon sold in the UK off-trade and growing at 5%. With our average price of £6.32 well above the UK average of £4.99, this shows that consumers are willing to trade up to buy New Zealand wines. With the high quality of the 2012 vintage shortly to come on stream we expect this to continue in the future."

Stuart Smith, chair of New Zealand Winegrowers, said: "The vibrant and distinctive qualities of New Zealand wines continue to resonate with consumers in our key markets. In the past year exports value grew 8% to $1.18 billion and international sales volumes have now lifted 79% since 2008. This strong sales performance combined with a smaller 2012 vintage means a changed supply/demand dynamic for the sector in the year ahead."