HortNews
	Strong Dollar Means Wine Exports Face Unpalatable Choices

AUCKLAND 10/07/2003 - The New Zealand dollar's strength against the United States greenback means many wine exporters are faced with an "unpalatable" choice in the industry's fastest-growing market.

About a fifth of New Zealand's wine exports go to the US, where further significant growth is expected this year.

But with the New Zealand dollar at around US60c, New Zealand Wine Growers chief executive Philip Gregan said many companies had to raise prices or accept reduced returns.

He said many producers did not have the luxury of currency hedging. "A lot are very small and sell in the New Zealand dollar, so they are seeing a very direct effect," he said.

"Either their prices are going to have to go up in the marketplace or they will have to cut their profit margins. They are the basic options and neither is particularly palatable."

Mr Gregan said the US was the market where the New Zealand wine industry had its most aggressive growth predictions.

Overall wine exports worldwide this year were projected to rise 20 percent, but the increase to the US was expected to be more than 40 percent, he said.

"If prices go up, sales will slow. Having said that, as the growth figures indicate, there is tremendous interest in the US in New Zealand wine. "However, you can't have your wine prices going all over the place."

Mr Gregan said wine makers would be hoping the exchange rate dropped to below US55c, which would be "definitely do-able in terms of US exports".

New Zealand's wine exports were worth about $275 million last year.