Kiwi vintners to benefit from global wine shortfall
NEW ZEALAND is not making enough wine for the first time in more than 15 years, compounding a global shortage, an overseas report says.
United States financial analysts Morgan Stanley said in a research report that global demand for wine outstripped supply by 300 million cases last year, leading to ‘‘the deepest shortfall in more than 40 years’’.
The report said declining production was being driven by vinepulling in Europe, where subsidies were being eroded, and minimal new plantings in ‘‘new world’’ producers such as New Zealand, South Africa and Chile.
But demand continued to grow, with North America and China now the main drivers of consumption growth.
The result
was likely
to
lift prices for wine exports globally, and ‘‘new world’’ wines were bestplaced to benefit.
Winegrowers New Zealand chief executive Philip Gregan said North America was New Zealand’s second most important market after Australia, and China was rapidly expanding.
Rising demand in those markets was welcome news, he said.
However, a global shortage was more likely to raise prices for producers of cheaper wine, rather than high-earning Kiwi wine.
‘‘We’ve grown exports from zero to $1.2 billion from the late 1980s and, during that time, there was a global surplus. So the global scene is part of the overall framework we work with, but its impact on us here is hard to say.’’
Morgan Stanley also noted that New Zealand headed into undersupply last year, as a rebound in exports coincided with a fall in production.
Vineyards stopped planting between 2009 and 2011 because of a wine glut and, although planting had resumed, Gregan said it would take at least four years for those vines to mature.
Meanwhile, New Zealand wine exports had more than doubled from 2008, rising to more than 170 million litres. A small vintage last year exacerbated demand.
‘‘You take the two things together and you are getting in a shortage situation, and that’s reflected in the rise in grape prices,’’ Gregan said.
The average price for grapes is now $1650 a tonne, a sharp increase from $1239 a tonne two years ago.
Despite its success, Morgan Stanley noted the New Zealand market was still small, with exports of only about a quarter of Australia’s.