Improved vintage augurs well

A near 35% increase in the countrywide 2016 grape harvest could buoy the wine industry's exports to the tune of $1.7 billion by the end of next year.

However, the sector also faces some headwinds, including a high cost of production and seemingly constant volatility in foreign exchange rates.

Central Otago appears to be holding its own after an improved 2016 harvest, with quality from the larger harvest already showing positive signs.

Demand for New Zealand wine was continuing to grow in the key markets of the US, UK and Australia, global accountancy firm Crowe Horwath's viticulture specialist, Alistair King, said.

"The wine industry is targeting a goal of export earnings of $2 billion by 2020.

"After a poor [national] vintage in terms of volume for 2015, where just 312,000 tonnes of grapes came in, this year is looking considerably better,'' he said yesterday.

For 2016 the harvest was 420,000 tonnes, a 34.6% increase, which should take the 2016 vintage to around the $1.7 billion mark by the end of 2017, Mr King said.

So far, export receipts for the 2015 vintage were at $1.56 billion and still coming in.

"Progress towards the goal is on track,'' he said.

On Central Otago, he said the annual tonnage of all grape varieties was up 2.5%.

"Central Otago seems good. It was tough [earlier] with seasonal variations, but after the harvest the overall crop was in good shape, with some quality wines,'' he said.

The surprise for Mr King, originally from Roxburgh, was the 24% increase in the sauvignon blanc harvest, by 65 tonnes.

Central wineries were beginning to look at other grape varieties, including chardonnay, pinot blanc and gruner veltliner, he said.

"The major Central Otago wineries were all showing good growth,'' he said.

While New Zealand's wine exports were increasing, he had not seen any evidence yet of a global glut of wine.

He praised the efforts of marketers at New Zealand Winegrowers, saying the international thirst for New Zealand wine, produced around the country, was such that it would now be very unlikely for supply to exceed demand.

"While wine is one of our top exports, it only accounts for around 1% of the global industry,'' Mr King said.

He cautioned a limiting factor in the industry was that the cost of production locally was high, which put the finished product in the highly competitive premium sector.

"More favourable exchange rates, particularly against the US dollar, would add some impetus,'' he said. At present, the kiwi was around the US70c mark; the mid-US60c point would be more helpful.

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