MarketWatch: New Zealand 2012 Wine Grape Harvest Down 18%

From MarketWatch:

New Zealand's wine grape harvest for the 2012 season fell 18% on the year due to the cool spring and summer, which may see the supply and demand balance swing back to favoring growers, New Zealand Wine said in a statement Friday.

The industry body said a survey of the vintage showed 269,000 metric tons of grapes had been harvested, down from 328,000 tons in 2011.

"The 2012 vintage is very similar in size to 2010, but given sales growth in the past two years, the reduced crop will introduce a new tension to the sectors' supply demand balance," New Zealand Wine Chief Executive Philip Gregan said. "As a result it is very clear the focus in the next year will be on value rather than volume growth."

The country's 1.1 billion New Zealand dollar (US$786 million) export wine industry has faced a number of headwinds since a bumper grape crop in 2008. That, coupled with an exponential rise in the number of vineyards, flooded the global market with bulk New Zealand wine just as demand was falling due to the global financial crisis. As a result, prices for New Zealand wines fell sharply, particularly in the industry's second largest export market of the U.K.

Not only is supply from New Zealand likely to be down but the Californian wine industry is also being squeezed by a shortage of grapes after growers stopped planting vines due to price erosion, both of which will likely help prices in New Zealand.

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