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New Zealand wineries continue to lose money and incur more debt, with the smallest wineries losing about $50 a case, according to FoodWorks.co.nz, citing a Business Day story. 

Vintage 2010, a benchmarking report by Deloitte and industry group New Zealand Winegrowers, says boutique wineries – those with a turnover under $1 million – suffered an average loss of nearly 32% in 2010, or five bottles of wine for every case. 

Many of the larger players were still profitable but at lower levels, and the short-term outlook was unlikely to improve.

The report also said the industry needed to face its growing debt problem. The fall in vineyard values had increased banks’ “anxiety” about land as security. A large number of companies were on the market, particularly in central Otago and Marlborough, and quite a few were forced sales. 

Deloitte partner Paul Munro said there were still examples of wineries across all sectors posting reasonable returns. 

He said the strong New Zealand dollar was certainly having an effect on the bottom line, but the biggest issue within the wine industry’s control was supply, particularly as the next harvest looms. 

Industry calls for growers to voluntarily reduce their volumes had helped over the last two years, but more vines were due to come on stream. 

The 2011 harvest is forecast to exceed 300,000 tonnes after dropping to 265,000 tonnes last year. 

Stuart Smith, the Marlborough-based president of New Zealand Grape Growers, said controlling supply was indeed critical to the industry. 

“Our major headwind is supply imbalance … Only produce what the market will profitably absorb.” — Source: Foodworks.co.nz

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