An analysis by Bob Campbell MW

New Zealand Sauvignon Blanc producers were taken by surprise when the 2008 vintage yielded a massive 66% increase in production over the previous year. Pressure from the high crop and from mid-harvest rain caused considerable tension between some winemakers and their grape grower suppliers.

That pressure will now be felt in the market place as producers try to find a home for an unprecedented volume of wine while attempting to maintain high prices. New Zealand wine currently has an average price of £6.47 in the competitive UK market, the highest of any wine country and well above the UK average of around £4. The retail price of New Zealand wine in the UK has risen by 4.7% in the past year, according to Nielsen figures. There is now concern among some producers that a massive increase in supply may erode export prices and margins.

Sauvignon Blanc accounted for 76% of total exports in the year to June 2008. Producers have so far been unable to satisfy world demand for the wine which is allocated in every market. An expansion in the productive vineyard area of Sauvignon Blanc produced a record crop in 2007 despite poor flowering which reduced average yield by 10-15%. That record crop allowed sales to increase by 13% in the UK, New Zealand’s largest wine market, and by 31% in Australia, the second largest market. A fall in the value of the US dollar resulted in a decline of sales by 1% in that market as suppliers shifted their wine allocations to more profitable countries. Canada, New Zealand’s fourth largest market grew very strongly by 51%. '

Chris Yorke, global marketing director of New Zealand Winegrowers, believes that demand for New Zealand Sauvignon Blanc is so strong that the current increase in production will still not satisfy worldwide thirst for the wine. “Overall New Zealand is on a steep growth curve looking to triple exports in the five years to 2010. Vintage variation has created some unexpected highs and lows but when these are averaged out we are on track to achieve our production and sales targets,” claims Yorke.