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RABOBANK REPORT RECOMMENDS SUPPLY IMBALANCE
Date: Fri 24 Oct 2008
Rabobank's just released Golbal Focus report on the New Zealand wine industry has recommended a careful manipulation of supply to ensure that international demand is not met and strong prices are maintained.
Having demand exceed supply is the strongest position a wine producer can hope to enjoy. Rushing to change this imbalance and match supply with demand will ultimately place downward pressure on prices. the report, authored by Rabobank senior analyst Adam Morris, says.
Relatively small volumes, a distinctive product and a long-term premium pricing strategy have positioned New Zealand’s wine exporters ahead of competitors in a global wine market typified by oversupply and downward pressure on prices. This has been the cornerstone of sustained success of New Zealand wines in export markets. it adds.
The report also offers support for pinot gris, citing low acidity and the suitability of its 'light' flavoured wine for 'Chinese' cuisine. In a report based on the fundamentals of market supply and demand, this comes across as a rather subjective analysis of two very complex areas of winemaking and consumer awareness.
The report also points out that the domestic market remains vitally important for the wine industry, taking 49% of production in the past year. It reasserts throughout that market and production planning must be based on quality not quantity if long term profitability is to be the goal.
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