Sav blanc 'dumped' on Aussie market

Fairfax Media

OUTRAGEOUS: Premium New Zealand Marlborough sauvignon blanc has been sold to an Australian supermarket chain at the fire sale prices. Australian will be able to buy it cheaper than Kiwis can because of the different structure of excise tax on wine across the ditch.

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Two million litres of New Zealand's premium Marlborough sauvignon blanc from an unknown winemaker have been sold to an Australian supermarket chain at the fire sale price of $3.50 a litre.

The buyer is rumoured to be Coles Myer and it is understood it will be branded from the region of origin and will retail at about $A10 a litre cheaper than Kiwis can buy it because of the different structure of excise tax on wine.

Australians pay the tax as a percentage of the total price whereas it is a fixed price in New Zealand.

Rumours were swirling at the opening of Peter Yealands' new $30m sustainable winery in Marlborough's Awatere Valley on Friday about who might have sold the wine via an Auckland broker. It's considered by the industry to be a new benchmark low for bulk sales of what would usually be branded a premium product.

The average retail price of a bottle of New Zealand sauvignon blanc in the United Kingdom is £6 ($16.30). The wholesale price averages $8.85 to $9 a litre.

Earlier this year one million litres of bulk New Zealand white wine was sold to a liquor outlet in Ontario, Canada. Its origin has not been disclosed as it was not required to be under Canadian rules. It was labelled as being "cellared in Ontario". Both these big sales come on the back of a bumper harvest this season, resulting in surplus stock.

Winegrowers New Zealand has spent many years marketing New Zealand wines as a premium product in international markets. But chief executive Philip Gregan said he wasn't too concerned by what some of the industry perceived as desperation dumping  a situation that has seen Australia's margins on wine in exports markets severely eroded.

"There's a lot of potential for bulk wine because of the bulk harvest," said Gregan.

The wine industry expected the harvest to be between 225,000 and 245,000 tonnes this year but it ended up at 285,000 tonnes. Australia harvests 1.8 million tonnes.

"In recent years exports of bulk wine from New Zealand have been around 4 - 5 percent of total exports," said Gregan.

Bulk white has come down quite sharply in recent years, he said. It's mostly sauvignon blanc and last year, averaged between $6 and $7 a litre. It is expected to drop further this year.

"After a good vintage a winery may have a bit more wine than it can sell, so it will go into bulk wholesale between wineries," said Gregan.

If it doesn't sell it will be exported.

Gregan said in spite of the premium pitch for New Zealand wines, bulk bag and box white and pinot noir had been sold in the UK in recent years.

"There was a lot of debate in the early 1990s that bulk would be bad for the industry, but evidence to date is sales of those products has not damaged the reputation of the industry.

"What it has done is expose different drinkers to our sauvignon blanc.

"In terms of bulk wine trade compared to prices a year ago  yes, it's cheap but bulk imports to New Zealand have been as low as 50c to 60c litre.

"From our perspective we're expecting some lift in bulk exports given greater available of wine." Gregan said one impact would be a big drop in bulk wine imports.

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