A bumper 2018 wine harvest will support export volumes and value, but the down side could be pressure to drop prices.
Another consideration is the present flaring trade tensions in the UK, Europe, US and China, where demand for New Zealand’s relative luxury status wine could soften, from any fallout from the tensions, ASB senior rural economist Nathan Penny said.
The 2018 grape harvest "jumped" on 2017’s level. The national harvest was up 6%, or 23,000 tonnes to 419,000 tonnes and a 4% increase in yield accounted for most of the harvest lift, Mr Penny said.
"The larger harvest will support export volume and value growth this year," he said.
For the year to May 2018, export values rose 3.3% compared with the year earlier, mainly due to higher export volumes. Prices lifted just a touch, he said.
"However, we expect this year’s larger harvest to put some downward pressure on prices," he said, citing the global trade tensions.
Regionally, the Waipara Valley has bounced back from last year’s difficulties and the harvest was up by more than 33%.
The Central Otago Winegrowers Association said last week the tonnage for the district was up by about 15%, rising from its usual 8000 to 10,000 tonnes to 11,500 tonnes.
Mr Penny said in addition, harvests increased by more than 20% in Hawke’s Bay and Wairarapa. Of the main wine regions, only Gisborne had its harvest dip, down by 20%. Marlborough posted a modest 4% increase.
For the week ending July 13, Mr Penny said the ASB commodity price index rose 0.4% in New Zealand dollar terms, but it was the kiwi’s weakening against its US counterpart which provided the gain for the week.
Mr Penny said all the major index components posted falls during that week. Forestry and fruit posted the largest falls, both dipping 1.1%, while dairy and sheep-beef prices posted more modest declines of 0.5% apiece.
