NZ: Wine export prices look promising

(MSN) - New Zealand's wine exporters are in for a period of higher prices as production of wine globally falls and demand rises, according to a report.

Global wine production peaked in 2004 and continues to decline, according to a report on the global wine industry by Morgan Stanley.

In 2012, production declined to its lowest level in more than 40 years while global consumption inflected in 2010 and continued growing in 2011 and 2012.

Major new world exporters, who now account for 30 per cent of global exports compared to less than 3 per cent in the early 1980s, stand to benefit most from the shifts in supply and demand.

New Zealand exporters already achieve good prices with premium products and could do better.

"Export prices for New Zealand wine are high and rising, almost double Australia's pricing and second only to France on the global stage," Morgan Stanley says.

It says the wine markets in Australia and New Zealand are already either in balance or in shortage domestically so there may be immediate upward pressure on export prices.

The New Zealand wine industry has been plagued in recent years by an over-supply of grapes while economic growth stalled in offshore markets and the high New Zealand dollar reduced returns to exporters.

But listed wine company Delegat's Group Ltd says in its annual report that a record 2013 harvest in New Zealand was of high quality and positioned the industry to meet growth projections.

"The prospects are positive for well-branded super-premium wine producers with established routes to market," the company said.