Smaller New Zealand harvest could spell end of deep discounts

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New Zealand Winegrowers is “relaxed” about an 18% fall in the harvest this year - the body had anticipated the crop to fall by up to 25%.

 

David Cox, European director of New Zealand Winegrowers, told Harpers “it could have been worse”, adding that he expected the smaller harvest to “drive profitable growth” and “help build value”.

 

Cox said the decrease brought the country’s supply “more or less back into balance in terms of the oversupply of two to three years ago”.

 

Howerver, while the body is realxed about harvesting 59,000 fewer tonnes than 2011 when it comes to Sauvignon Blanc, Cox said the shortage was “a pity” for Pinot Noir.

 

“It’s reputation is going from strength to strength - there will be less available but we’ll have to work with that.”

 

Cox said producers would not struggle to meet demand, but that the shortage would mean a reduction in deep discounting. However the move could encourage producers to look outside the UK market for better returns. “There will be a certain amount of prioritisation,” siad Cox, “but I do a lot of work demonstrating that the UK has good pockets of profitability, and our pricing is still very robust.”

 

Cox would not be drawn on whether we will see producers ramp up prices, though he said “it may be inevitable”. Instead he believes it is likely that promotional activity, which was necessary to deplete stocks in the past, would be “nowhere near necessary now”.

 

Philip Gregan, chief executive of New Zealand Winegrowers, said: “The 2012 vintage is very similar in size to 2010, but given sales growth in the past two years, the reduced crop will introduce a new tension to the sectors’ supply demand balance. As a result it is very clear focus in the next year will be on value rather than volume growth.”

 

The vintage was characterised by a cool spring and summer, while April ushered in an Indian summer of warm dry days and cool nights. Gregan said: “The result is that we expect there will be plenty of vintage highlights for consumers to savour and enjoy, albeit in smaller volume than 2011.”

 

Simon Thorpe MW, managing director of Negociants UK, which specialises in importing Australian and New Zealand wines, said: "From what I’ve tasted so far and from what everyone is saying it’s also a vintage of extremely high quality – certainly for Marlborough Sauvignon Blanc at any rate.

 

"So, generally this ought to be a good outcome for the NZ industry.  As well as the high quality,  there will be an undoubted tightening of supply – I believe there is very little, if any bulk wine available on the market and prices for bulk have risen sharply. This would provide a significant advantage to those brand owners and producers who control their own grape supply and are not reliant on having to buy bulk on the open market."

 

Philip Handford, of Central Otago Pinot Noir producer Grasshopper Rock, said the smaller vintage was "guaranteed to have an effect - the question is, how big an effect".

 

Read Craggy Range's Warren Adamson's blog on how the smaller vintage will affect markets, producers and prices.

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