Winemakers focus on quality to avoid glut

As the countdown to the 2009 harvest gets underway, some vineyards are still feeling the hangover from last year’s vintage as a global glut and lower prices begin to bite.

In Marlborough, which produces 70 percent of the country’s wine, a strong drive to control yields has seen some growers choosing to drop canes to limit vine fruit, while others have been shoot thinning.

New Zealand had a record grape harvest of 285,000 tonnes in 2008 but suffered oversupply in the market, with a drop in domestic sales.

The huge harvest in Marlborough last year saw the production of almost 195,000 tonnes of fruit, up 61% on the 2007 harvest. The prime wine producing weather that resulted in that record harvest has been repeated this season, with early ripening areas producing a strong fruit set following cool conditions in late December.

But the Marlborough vineyards have learned their lessons from last year and are looking to produce higher quality wines when the vintage kicks off in March.

Vavasour Winery managing director Peter Scutts says there has been a strong drive to reduce tonnage, allowing vineyards to keep their quality levels as high as possible.

“Quality control in not necessarily any stronger than it was in the past, but there are always going to be some wines that are stronger than others and this has given some vineyards the chances to eliminate those less strong ones.”

He says that while there has always been a demand for Marlborough Sauvignon Blanc, the record 2008 vintage saw supply exceed that demand, although he remains confident that the ratio will become more balanced over the next year.

Mr Scutts says that while 2008 was a successful year for Vavasour, there were still lessons learned and some wineries would be hurting. “With the combination of the phenomena that was the 2008 vintage and all of the other global problems, there will certainly be those who will be stretched financially, especially if export sales slow down.”

Export sales remain a bright spot in the industry, up 21% to the end of December for the year to date. In September a record export month saw 10.8 million litres of New Zealand wine, worth more than $100 million, exported across the globe.

New Zealand winegrowers chairman Stuart Smith says there are still opportunities to be grasped for winemakers with extra product. “Stocks were pretty low before the 2008 harvest, so this has allowed us to build them up a bit. In the past, we have been keen to explore new markets around the world, but didn’t have the products to back it up, and that is less of a problem now.”

But Mr Smith concedes it is still a balancing act to maintain prices, and he points to examples across the Tasman, where oversupply issues have led to reports of grapes left to rot on the line and growers ripping out vines in some regions, while prices plummet.

“They’re still producing more and still making more grapes than they really need, so that’s a road we don’t want to go down.”

He also warns that some companies will be facing reduced cash flows as wineries ask the vineyards for reduced tonnages, and that those vineyards might find it difficult to raise loans from banks that are sitting on their cash in the current economic conditions.

But Mr Scutts remains positive. “Banks have always had a favourable eye for the wine industry, and there is still a lot of money to be made.”