The New Zealand wine industry has exceeded annual export earnings of NZ$500m, (US$318m) according to the New Zealand Winegrowers 2006 Annual Report, released today (22 August).

The report pointed to strong sales growth, driven by international interest in Sauvignon Blanc, for the success.

The New Zealand wine industry has grown steadily in the year to 31 June, with total sales of more than 100m litres of wine and a record harvest of 185,000 tonnes of grapes.

New Zealand Winegrowers chair Brian Vieceli said the wine industry had achieved solid growth in key export markets while also growing emerging markets such as Japan, Holland and Ireland.

"We can feel confident from the achievements in the past year, which include strong sales, new markets and increased marketing efforts," he said.

"The record 2006 harvest will give us wine volumes to consolidate our presence in new markets and continue supply of our top three markets including the UK, the US and Australia. Forecasts indicate we will grow exports from around 60m litres in 2006 to over 70m litres in 2007, but still face unfulfilled market demand," Vieceli said.

However, while industry projections and surveys show strong indications of sales growth and positive future prospects, Vieceli said the future is not without challenges.

"The industry faces a number of challenges in the form of currency fluctuations, climbing Government taxes, a tough retail environment and rising input costs," he said.

Looking ahead, Vieceli said the industry is on-track for export earnings of over NZ$1bn by 2010, making it one of the largest export industries in New Zealand.

"We have an ambitious growth strategy which must be sustainable for the future of the industry. This will be achieved through the industry working together, producing premium quality wine, innovative technology advances, excellent marketing initiatives and hard work," he said.

The value of exports for the year to June was $512m, up 18% on the $435m posted in the corresponding period a year earlier.

Meanwhile in May, the 2006 grape harvest set a new record for the industry at 185,000 tonnes, up 11% on the previous mark of 165,000 tonnes set in 2004.

Vineyard plantings are expected to reach 30,000 ha in 2010, up from the current producing area of 22,000 ha.

Pinot Noir exports grew 55% and overtook Chardonnay as the country's second most exported wine style.