Supply squeeze means end of NZ wine under $10

The sub-$10 bottle of New Zealand wine faces extinction, growers and retailers say.

Slumping harvests caused by bad weather have removed former gluts, with the industry now talking of shortages of Marlborough sauvignon blanc.

NZ Winegrowers says production dropped 18% to below 200 million litres in the year to June 30 and an export-fuelled 10% rise in sales to 242 million litres removed former surpluses.

“We are very low on stock. Wineries will have to choose their customers and they will have to forego some of the lower margin market segments,” chairman Stuart Smith says.

“We will see a rise in imports as New Zealand growers divert product to the export market and short the New Zealand market.”

Prices for bulk wine paid to growers have increased $3 per five litres but because there have been no recent new plantings the shortage will continue and prices are expected to rise further.

This contrasts with recent years, when vineyards have struggled to find markets for all their output.

Lion, whose labels include Lindauer, Corbans, Huntaway and Wither Hills, led the way by announcing a 5% hike in prices last week.

“The vintage is in short supply compared with other years. It’s not like beer, you cannot make wine on demand,” Lion spokeswoman Liz Read says.

Lion will prioritise what supplies it has to meet promises made to international customers.

However, winemakers Joe Babich and Allan Scott have said they have no plans to raise prices yet.

Mr Scott says the buying power of the supermarket chains gives him less scope to increase prices but he, too, expects fewer cheaper wines, and they will increasingly be imported from Australia.

Babich Wines also won’t be increasing prices “at this point”, managing director Joe Babich says. “We have never been at the lower end of the market but we are expecting the grapes to go up in price next year.”

Retailers confirm the end of cheaper New Zealand wine. Glengarry sells many premium European wines and says the $20-plus market will not be affected.

“In 2011, New Zealand wines sold for far too low a price,” general manager Liz Wheadon says. Last week, Glengarry was selling Dusky Sounds Riesling for $7.99 a bottle.

“Some of the big names have cleared stock at silly prices over the past few years. We won’t see much of that.”

Foodstuffs says promotions will stay unchanged but cheaper wines might have to use imported grape juice to make up the shortfall.

“During the glut, a lot of suppliers protected their brands by introducing good quality wines under different labels. These will most likely be the casualties of the lower yield,” Foodstuffs spokeswoman Antoinette Shallue says.

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