Despite some short-term concerns the recent success of New Zealand wine is expected to continue, according to New Zealand Winegrowers annual report published today.

Exports of New Zealand wine grew 18% in volume in the past year to 27.1 million litres, and reached $NZ 281.9 million, the first time they have exceeded the NZ$250m mark, according to New Zealand Winegrowers annual report published today.

New Zealand Winegrowers Chair Peter Hubscher said: "The growth continues the trend of recent years, and we expect it to continue medium to long term."

However, Hubscher cautioned about the short term future. "Vintage 2003 at just 76,400 tonnes was much smaller than expected, and will curtail export growth in the year ahead. While there will be greater availability of some wines from vintage 2002 (notably Chardonnay and red wines based on Pinot Noir, Merlot and Cabernet Sauvignon) the reduced production of Sauvignon Blanc from the current vintage means many wineries will struggle to fulfill export demand in the year ahead. The vintage shortfall is very frustrating for both the industry and our consumers."

There was also concern about the strength of the New Zealand dollar. Hubscher said: "The rise in the New Zealand dollar in the past year is having a demonstrable effect on export returns, which are down from NZ$10.73 per litre for the June 2002 year to NZ$10.39 per litre this year. These lower returns are compounded by higher grape prices, low growth rates in major economies, and the intense competition in international markets make exporting a more difficult exercise than in recent times. We have, of course, no control over these issues and hope these conditions do not endure for any period of time."

Longer term Huscher said the main challenge facing the industry was clear to all. "The vineyard area is expanding rapidly and within five years vintages of 200,000 tonnes or more are a real possibility. With much larger vintages the challenge is simple - we will need to profitably market and sell greatly increased supplies of our premium wines in export markets. This will require a greatly enhanced sales and marketing effort, individually and collectively," he said.