Stop discounting your wines, says Oz Clarke

OVER THE FENCE - BY JON MORGAN

OPINION: British wine writer Oz Clarke recalls his first taste of New Zealand sauvignon blanc: "Brightness, clarity, clean flavours, that tangy, zesty ping on your palate, the way that your mouth burst out with your saliva glands just throwing themselves into turbo-charged overdrive. It made your eyes bright, it made you sparkle with excitement and say 'what a wonderful flavour!' - a flavour that didn't exist in the world of wine before New Zealand came along."

Then he adds: "You've got an enormous market in North Europe of people who will pay the full price for sauvignon blanc. They don't need to have it discounted. Have you gone completely mad?"

It seems we have. We are discounting our flagship wine in bulk sales to British and European supermarkets - at prices that are clearly unprofitable.

The reason is simple: We have too much sauvignon blanc and the investors who have bankrolled the industry in recent years need the cashflow to keep making their loan repayments.

The good news for the industry is that this period of over-supply won't last. The glass-half-full members of the wine industry expect normal service to be resumed by this time next year.

It would be unfair to describe Clarke as a glass-half-empty chap, but in an interview in the industry's official journal, New Zealand Winegrower, he warns that we are in danger of following the German liebfraumilch riesling into obscurity. Liebfraumilch, a semi- sweet white wine, enjoyed a century of market dominance before being lured into disastrous over-supply by British supermarkets.

But winemakers I have spoken to are positive this won't happen to sauvignon blanc, which makes up 75 to 80 per cent of our wine exports. An adjustment in plantings is under way and in the meantime this year's harvest is expected to be down markedly. Cool weather in the main growing regions of Marlborough and Hawke's Bay is affecting the grape yield. It appears we are victims of our own success. New Zealand sauvignon blanc burst on to the wine world in the early 1990s, inspiring in wine buffs everywhere the reaction described by Clarke. The flavours of gooseberry, passionfruit and green pea, particularly from Marlborough, were revelationary.

The grape is easy to grow, has high yields, is cheap to make into wine and can be found on the shelves soon after harvesting. For a winemaker used to waiting years for payback on most wines, sauvignon blanc is a handy source of cashflow.

The only flaw - if you can call it that - is it has a short, for wine, shelf-life. Wait longer than 18 months to taste it and, most of the time, you won't experience those typical zesty flavours. As its popularity soared, investors in search of a quick buck financed an increase in plantings. Everything was proceeding smoothly, with demand more than matching supply, particularly in years when frosts took their toll.

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That was until 2008. By then, growers had installed frost- fighting equipment and when the weather leading up to harvesting was perfect - a drought that devastated other forms of agriculture - the sauvignon blanc reached the tipping point every producer wants to avoid, where demand was over-matched by supply.

The industry could have coped with a one-off, but the next year it happened again. This time, it coincided with a world recession and bankers tightened their hold on the wine industry's investors. The need for cash became more urgent.

That's where the industry finds itself now. The sauvignon blanc wine not needed for bottling is being sent to Britain and Europe in big plastic containers to be bottled there, sometimes blended with other countries' wine, and sold cheaply.

It is this that Oz Clarke finds madness. He says we don't need to do this, that there's still enough people prepared to pay good money for our sauvignon blanc wine. He thinks industry leaders should have acted to prevent the bulk exports, but when asked for a solution he has to admit that as a free marketer he can't see one.

Terry Dunleavy, editor of New Zealand Winegrower and a industry stalwart for almost 40 years, responds with three ideas of his own. He thinks the big wine companies should take a lead, stand together and refuse to supply cut- rate wine to Britain. He also urges banks to "examine their consciences" about lending to newcomers without deciding whether there is room in the market for more wine and not force the established winemakers to cope with problems not of their own making.

He asks if the Government can help by financing a marketing campaign based on New Zealand's world leadership of sustainable winegrowing.

This last idea has the scent of a winner. Already, growers looking for a marketing advantage are having their wines tested for the residues of unwanted chemicals and getting the all-clear.

Every industry has to go through what I would kindly describe as a "growing experience" every decade or so. Problems such as the wine industry's over-supply come along to remind farmers and growers to be constantly alert for pitfalls.

Every time it happens, adjustments are made, efficiencies are instituted, a new marketing line is developed, and business continues, a little smarter and warier than before.

This is the wine industry's wake- up call. It has to learn from this and make sure it doesn't happen again - at least, not for 10 years or so.

The liebfraumilch example is there as a warning. This is Clarke again: "A hundred years ago the kings and queens of England drank German wines. German wine is now completely reviled in the British market."

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