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Empty shelf space remains empty after a burgulary in an Auckland fine wine shop - Source: ONE News -
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Anyone buying cheap wine in supermarkets should spare a thought for the companies producing them, if a presentation in Blenheim on Friday is anything to go by.
Prices for bottled wine, grapes and vineyard land are falling, according to The New Zealand Wine Company Ltd.
The maker of Grove Mill, Sanctuary and Frog Haven brands is listed on the NZAX and held its annual meeting on Friday.
The problem is an oversupply of wine that has coincided with the global economic downturn to make 2009 a watershed year for the New Zealand wine industry.
"Grocers in the UK and Australia have purchased large volumes of bulk wine below the cost of production," the presentation said.
Eight of the top 20 New Zealand wine brands in the UK are now new labels created by grocers to sell surplus New Zealand wine.
The New Zealand Wine Company is not providing earnings guidance for 2010 because of ongoing wine oversupply problems and market distortions from bulk wine sales.
The company reported a 37% fall in profit to $1.28 million in the year to June 30 and cut its dividend payout for the year to 4c a share from 8c a share in 2008.
It estimates that the country has a bulk wine surplus of 40 million litres, or 4.4 million cases.
The company is increasing investment in sales and marketing, is expanding distribution channels, tightening cost controls, limiting its harvest and is marketing its products as sustainably produced to respond to the conditions in the industry.
