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Dollar's 'gyration' playing havoc with wine industry

The volatile dollar is playing havoc with the New Zealand wine industry, say growers, but the sector is battling through tough economic times.

The volatile dollar is playing havoc with the New Zealand wine industry, say growers, but the sector is battling through tough economic times.

"The wild gyrations of the New Zealand dollar are a major problem for wine exporters, and threaten to derail the recovery that we are starting to see," said Stuart Smith, New Zealand Winegrowers chairman.

According to the organisation's annual report, total New Zealand sales (both export and domestic) rose 11 percent to 221 million litres for the June year while export value rose 5 percent to $1.1 billion.

"These achievements represent real progress against a background of increased uncertainty in the global economy," he said.

"Three years ago, the New Zealand wine sector was reeling from the combined effects of the 2008 supply shock and the global financial crisis. Today excess inventory has been sold through and we have the confidence to take in a record harvest based on anticipated demand."

He said profitability remained a key concern, however, and annual excise increases were eating into returns as they cannot be passed on to domestic consumers.

There was a need for a clear path forward for the sector and the industry organisation, he said.

"For this reason we have commissioned a major independent strategic review of the sector and our own activities."

Consultants PriceWaterhouseCoopers have been appointed to conduct the review.