Jul 10, 2012
Drinkers partial to a cut-price bottle of wine might be advised to
stock up, as industry players say rampant discounting is set to subside
as supply becomes more balanced with demand.
The sector had a
tough few years after a wine glut in 2008 that resulted in a 27-million
litre oversupply, eroding wine, land and grape prices as the global
financial crisis deepened.
But at 269,000 tonnes, this year's
national grape harvest was 18 per cent smaller than the record 2011
vintage of 328,000 tonnes.
NZ Winegrowers chief executive Philip
Gregan said that after a cool spring and summer the expectation among
growers and wineries was that the 2012 grape harvest would be smaller
than last year.
The 2012 vintage was a similar size to that of 2010, Gregan said.
the sales growth of the past two years, combined with this year's
smaller crop, would "introduce a new tension to the sector's supply
demand balance", he said.
Stuart Smith, NZ Winegrowers chairman,
said that after the glut Marlborough growers had been forced to
advertise in local newspapers to try to sell their stocks of grapes.
completely flipped around now - the ads we're seeing are wineries
looking for growers and they're advertising now for the next 
vintage," Smith said. "It's not scientific, but I think that's a very
good indication of what's going on out there."
He said one winery
had already indicated the price it was willing to pay for grapes from
the 2013 vintage, which was 30 per cent up on this year.
"It's a very positive thing for the industry."
Smith said increased grape prices would translate into higher retail pricing for wine.
"I would expect we'll start to see less wines available at the bargain basement prices," he said.
Cameron, winemaker at Auckland-based Invivo Wines, said wineries would
have to put their wholesale prices up as a result of more expensive
There would be less discounting over the next 12 months
and retail prices would gradually increase over the next two to three
years, he said.
"The $12.99 bracket might move to $13.99 or $14.99, that sort of thing, and $18.99 might move up to $20.
"That is all very much dependent on the size of the harvest in 2013, 2014 and so on."
Jakicevich, managing director of specialty wine retailer Glengarry,
said stagnant economic conditions had left consumers less keen to spend
big bucks on wine, meaning retailers would be limited in their ability
to raise wine prices.
But he agreed that the heavy discounting of the past few years should ease.
"We won't see the deep-cut discounting and the bargain basement prices ... we'll see a bit more normalisation," Jakicevich said.
Shallue, communications director for Foodstuffs NZ, which has
operations including New World and Pak'n Save, said the company was
aware of this year's smaller grape harvest.
"However, the record
vintage produced nationally in 2011, and the continued oversupply of
wine globally, means that this has not had an impact on retail wine
prices in our stores to date," Shallue said.
"We cannot speculate on future supplier or retail pricing trends for this product category."
Winegrowers president John Clarke said that with a healthy vintage
reported this year - and a steadying of the wine market in general - it
was "payback time" for the growers from his region who had taken a hit
over the past three to four seasons.
"Growers will certainly be looking for a much better return in the coming season," Clarke said.
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