Wine Export Trends

Kingsley Wood has devoted more than 20 years promoting wine in New Zealand.

Kingsley Wood has devoted more than 20 years promoting wine in New Zealand. Kingsley jointly owns the fine wine store First Glass Wines & Spirits in Takapuna, Auckland. Check out all the wines available at First Glass on or to order any of these following recommended wines, email us on or telephone (09) 486 6415.

Who's Going to Drink all our Wine?

Most of us who drink wine are well aware of the oversupply problems that are now evident within the New Zealand wine industry. There are many trying to put on a brave face about the situation but the reality is very sobering. NZ Winegrowers has just released its Annual Report and these are the basic facts (for the year ending 30th June 2004).

Tonnes of grapes crushed: 166,000

Millions of litres of wine produced: 119.2

Domestic sales of NZ Wine in the past 12 months: 35.5 million litres

Export sales in the past 12 months: 31.1 million litres

Export sales possibly could have been higher but the 2003 Sauvignon Blanc harvest was severely reduced by frost. However, when you take the overall production in 2004 of 119 million litres and combine domestic sales and export sales to get 66 million litres, its obvious that there is an oversupply of around 53 million litres of wine.

One of the more alarming aspects of the figures released by NZ Winegrowers is the decrease in the sales and consumption of our wine here in New Zealand. In 2000 the domestic sales of NZ wine totaled 41.3 million litres. In 2004 it was down to 35.5 million litres, in fact it was less than the 2000 total every year since then. The other very concerning fact must surely be the amount of locally made wine that we are drinking. In 1997, 1998, 1999 and 2000 we all consumed an average of over 10 litres of NZ grown wine. Since 2000, the total has decreased and last year we only consumed 8.8 litres of NZ wine each - that's less than a case of wine each of kiwi wine over a 12-month period.

New Zealand wine is dominated by four varieties.

  2000 2004
Sauvignon Blanc
Production in tonnes15,47267,773
Exports in millions of litres9,532,000 (48.6%)19,747,000 (63% of total exports)

Production in tonnes23,59335,597
Exports in millions of litres3,212,000 (17.5%)3,597,739 (11.5% of total exports)

Note: a huge increase in production, but static export figures.

Pinot Noir
Production in tonnes6,31920,145
Exports in millions of litres300,129 (1.6%)1,651,907 (5.3%)

Note: a 300% increase in production and almost a third of the tonnage of Sauvignon Blanc yet Pinot Noir is only 5.3% of total export sales compared with Sauvignon Blanc 63%.

Production in tonnes4,0909,330
Exports in millions of litres305,402 (1.7%)410,003 (1.3%)

Note: production has more than doubled and yet exports have only marginally increased.

Merlot Concerns

Merlot being the smallest of the "big four" may not appear to be a great problem but when you analyse production versus demand the situation is already quite serious.

Cabernet Sauvignon has traditionally been our main "Bordeaux" variety and it was not until the 2000 vintage that Merlot surpassed the Cabernet production. It's now accepted that Merlot with its earlier ripening is better suited to our cooler climate and the enthusiasm for this noble variety is shown in the amount of hectares now in production. Many of us enjoy Merlot and the general expectation is of a wine less firm or tannic than Cabernet Sauvignon and much more generous or fruity than Pinot Noir. People often buy Merlot expecting it to be soft and mellow, but few winemakers want to make a wine like that, they would rather produce more substantial wines, ones that need cellaring when the public want a wine to drink - immediately!

It is very apparent that sales of Merlot have fallen a long way behind production as a number of well-known wineries are still marketing their 2000 vintage wines. Already they have 4 years of stock in the winery or warehouse with the next harvest only 6 months away. The position with Merlot is highlighted by these figures: From the 2004 harvest of 9330 Tonnes, you get approximately 7 million litres of wine or 775,000 cases of NZ Merlot. In reality a lot more when you think of the number of Merlot Cabernet wines now produced. The biggest export year we have had for Merlot was last year when 410,000 litres left our shores, or 45,000 cases. There is a very serious difference between production and demand.

We don't know just how many cases of Merlot are consumed in this country each week - perhaps its 1,000 cases, possibly 2,000, but the reality check tells us that from just the 2004 vintage (ignoring substantial stocks unsold of previous years) we need to drink, sell or export around 14,000 cases of Merlot every single week of the year. There will be many new vineyard investors choking on these facts and in fact the situation is far worse for Pinot Noir and Chardonnay, but that is another story.

Take a Tip

The 2004 Sauvignon Blancs and Rieslings are now appearing in the market and while its a very big harvest, buyers are going to need to be careful about the brands they buy. First indications suggest that it is not a great vintage overall and there are a lot of fairly dilute wines around. Rieslings tasted have proved to be a bit disappointing but hopefully with some time in the bottle both of these aromatic varieties will fill out and develop more concentration in the palate. Look for the medal winners amongst the 2004 Marlborough Sauvignon Blancs, the judges have filled out your shopping list for you.

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