Posted By Peter

http://www.bloomberg.com/apps/news?pid=20601088&sid=a2YtNBb7eft8&refer=muse

Review by Guy Collins

Â Feb. 19 (Bloomberg) — New Zealand winegrowers are planting vineyards to meet rising demand for their Sauvignon Blancs and Pinot Noirs. In Europe, the world’s biggest wine market, the European Union is paying farmers to yank their vines to end a glut.

Vineyards in New Zealand more than tripled to 24,660 hectares (60,860 acres) in 2007, from 7,410 hectares a decade earlier, and will rise to 30,000 hectares by 2010, according to New Zealand Winegrowers, the country’s trade association.

New Zealand is winning fans for quality wines that are cheaper than comparable European vintages. Growth is fueled by demand for premium white Sauvignon Blancs from Marlborough, the country’s fastest-expanding wine-producing area, and red Pinot Noirs from regions such as Hawkes Bay, on North Island, and Central Otago, in the south.

“New Zealand is breaking records,” said Pierre Mansour, a buyer for U.K.-based importer the Wine Society, at a London tasting. “The 2007 harvest was the biggest to date, thanks to those new vineyards.”

Growers are also expanding into aromatic white-grape varieties typically associated with France’s Alsace region, including Riesling and Gewurztraminer, whose production in New Zealand has almost tripled in the past decade.

“We can’t fill orders we have right now,” said Philip Gregan, chief executive of New Zealand Winegrowers. “For Sauvignon Blanc, demand has exceeded supply pretty much every year since 1990. We can’t see that’s going to stop.”

EU Surplus

New Zealand’s wine industry is expanding even as global production exceeds demand by about 15 percent; the European Union is offering winegrowers incentives to remove surplus vines.

European Agriculture Commissioner Mariann Fischer Boel announced a three-year program in December to pay farmers to uproot 175,000 hectares of vines. Europe, which produces and drinks three-fifths of the world’s wine, has seen exports hindered by New World competition.

New Zealand growers have created demand at the premium end in their three top export markets, including the U.K., where Kiwi wine sells for an average 6.26 pounds ($12.21) a bottle, more than 50 percent above the British average retail wine price.

New Zealand wine exports to the U.K. rose an annualized 26 percent in the 11 months to October 2007.

Still, New Zealand’s vineyards have to deal with harsh weather. The country’s cool, maritime climate subjects wine- growing areas to high winds and plunges in temperature, which can damage crops.

“Frost has been a problem in New Zealand,” said Mansour. Some of the more recently planted vines in Otago lie as far south as the 45th parallel, comparable in latitude to northern hemisphere regions such as Oregon or the Loire in France, and pushing the limit deemed suited to wine growing.

Bad Years

“The thing about New Zealand is we have huge vintage variations,” said Tim Finn, owner of Neudorf Vineyards in the Nelson region of South Island. Yields over the past six years have fluctuated between 4.7 tons and 8.9 tons per hectare, according to figures from New Zealand Winegrowers.

Read the entire article: http://www.bloomberg.com/apps/news?pid=20601088&sid=a2YtNBb7eft8&refer=muse

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Feb 18th, 2008