However what we do know is that the supply demand balance is critical for the industry. Produce too many grapes and too much wine (compared to sales) and ultimately both grape and wine prices will come under pressure with negative consequences as a result. On the other hand if some tension is kept in the supply demand balance, we know this ultimately will deliver the opportunity for price increases.
The lesson in this is that we must watch the market carefully and not get ahead of ourselves - quite a balancing act as we all know. But at least the industry has a measure of control over the size of the vintage (weather aside) so to an extent the crop size and the supply/demand balance are controlled by the industry.
What about the markets? Well we know the USA and Europe are still trying to come to grips with all the financial and structural issues arising from the global financial crisis and recession. What is much less clear is how much progress, if any, they will make in 2013. China and the developing world seem to be doing somewhat better but at the moment these are still relatively small markets for New Zealand wine.
However the high and volatile NZ$ exchange rate (a direct consequence of the economic turmoil) is having a direct impact on our sector. Today the NZ/US cross rate has gone over 0.84 and we know that will directly affect the profitability of sales into the USA.
There are measures wineries can take to mitigate some of the risk from exchange rate movements (hedging, diverting sales into markets with strong currencies, perhaps selling in NZ dollars but there are market place consequences from this), but ultimately a high NZ dollar will impact the sector and everyone in it.
And the future for the exchange rate - well there will be all the theories in the world, of course, but it is really a major unknown with the ability to have a major impact on profitability, good or bad!
What else do we know about the year ahead?
We know Pinot Noir 2013 and associated events represent a major opportunity to promote our wine to a highly influential audience. We know we must seize the opportunity that these events and other like them present.
We know that being, and being seen to be, socially responsibility is of increasing importance for our sector. The year ahead will see the new alcohol act come into force and the industry will need to respond positively to the challenges this new legislation presents.
We know that sustainability is increasingly important to the industry and that we are now in a better place than ever to tell our sustainability story that we have worked so hard to build over the past 20 years.
We know that government can be a force for either good or bad for our sector. We have proposals in with the government around bulk wine controls and geographic indications and we are working very positively with NZTE in China and Europe, and with MFAT in APEC, WWTG, OIV and a number of other areas.
But are there any negative surprises in store from the government? Hopefully not, but no one in the sector knows for sure of course.
I could go on and on, but there is one thing every grower and winery in the New Zealand wine industry knows with absolute certainty - the most prosperous, sustainable future for our sector will be built by focusing on producing quality grapes and wine.
Best wishes for a prosperous 2013 - let’s hope all the surprises in the year ahead are positive ones. ν
