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?Expect to pay higher prices for New Zealand wines

Published:  22 January, 2014

Price pressure is escalating on New Zealand wines as short vintages and a lack of new plantings mean demand is exceeding supply.

Price pressure is escalating on New Zealand wines as short vintages and a lack of new plantings mean demand is exceeding supply.


Speaking to at yesterday's New Zealand wine annual trade tasting in London, chief executive of New Zealand Winegrowers Philip Gregan, is optimistic about the future of his country's wines and expects that in the mid-term demand will exceed supply until 2017. 

Gregan said: "If we look back five years our export volume was 80 million litres. Now it is upwards near 178 million litres of wine. We over doubled our export volume in the last five years. Even with 345 tonne vintage in 2013, everybody is still very comfortable. We know that some people were even looking for more grapes. 2012 was a really light year.  And although the previous years had been a bit tighter, last year really put the exclamation point on demand exceeding supply."

The lower production volumes of 2012 have left New Zealand with very low stocks and pushed excess stock from previous years through the supply chain. Gregan said: "That is why the cheap wine has disappeared. The 2008 larger vintage has moved through. New Zealand wines are back to where we were in pre-2008."

"In the medium term, demand is going exceed supply no doubt about it. We haven't had new vineyards planted since pre-2008. We had some vineyards planted this year.  Meaning we really have a fixed vineyard area through 2017. Our supply then is relatively fixed," said Gregan.

With relatively fixed supply and the continued popularity, particularly in the UK, of New Zealand's most well-known variety Sauvignon Blanc, there is expected to be increased pressure on price. Chris Stroud, marketing manager for Europe for New Zealand Winegrowers, said: "Sauvignon Blanc is the number one variety in the UK, overtaking Pinot Grigio for over a year or so now, and it is a variety that is still growing. People are shooting into the taste. The average price is over £7 now."

With the higher price point, consumers are expecting to get a premium product, and this is not lost on Gregan, which is why sustainability continues to be a critical part of the New Zealand wine story.

Gregan said: "Our wines aren't cheap, so people want to be assured of where the wine is coming from and that it is produced responsibly. At the end of the day we do it for the consumer. We do it because we want to make better wines. It is the best way to produce a wine that is a pure expression of the place. A big part of that is where the wine is from and the environment where the wine is produced. It is a reinforcing exercise"

Looking to the year ahead, Gregan is optimistic.  He said: "Our industry coming into 2014 is in a really great and positive position."