Official harvest figures out today (17 June) will have raised a few glasses in New Zealand’s winelands, with the 2010 grape haul down 7% – around 19,000 tonnes – on the bumper crops of 2008 and 2009.

It is rare to find a New Zealand Pinot Noir for much under GBP10 (US$14.80) per bottle in the UK, but the grape surplus of the last two years has jeopardised the country’s premium positioning in key export markets. Foreign buyers have snapped up cheap bulk wine, artificially bloating New Zealand’s export volumes, and opportunistic brands have emerged at lower price points.

New Zealand got a “huge shock” in 2008, but more recently has begun to “see some light at the end of the tunnel”, according to Philip Gregan, CEO of trade body New Zealand Winegrowers (NZWG). The trade body has used roadshows in key wine regions to persuade the country’s 600-plus winemakers, as well as growers, to make every effort to reduce production. “We’ve been working very hard to make producers understand that there’s no use producing more wine than there is a market for,” Gregan told just-drinks at last month’s London International Wine Fair.

“There were very few vines planted last year and there will be nothing planted this year,” he said.

However, New Zealand’s producers are clearly still up against it. New Zealand Wine Company said less than a month ago that oversupply problems will cause it to post net losses for its current fiscal year, despite a 10% fall in the firm’s 2010 grape haul.

“The sheer volume of surplus bulk wine sales, currently running at 28% of New Zealand’s total export sales volume, is testing the financial sustainability of the NZ wine industry,” said group chairman Alton Jamieson.

Figures from Rabobank show that bulk wine inflated New Zealand wine exports by 34% in volume terms in 2009, while value rose by just 13%. NZWG said today that it does not expect export volumes to fall back from current levels for at least a year.

Gregan conceded that some at home and abroad have profited from the surplus with “opportunistic brands” at lower prices, but he added: “This is not a position that New Zealand can occupy for any period of time, because we just can’t make money.”

Annual grape harvest yields in New Zealand are expected (...)