Quality bottles success

CHLOE WINTER
Last updated 14:03 27/08/2014
wine exports
STRAIGHT ROW: An export order filled, capped and ready for labelling.

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In just 30 years, Marlborough sauvignon blanc has carved out a big name for itself and played a large part in putting New Zealand wine on the international map.

This year exports reached a record $1.33 billion, and the growth shows little evidence of slowing down.

Wine reporter Chloe Winter looks at New Zealand's wine export markets - where are they, how they developed and what the future holds.


Most would agree it all began in London in 1985 when a group of influential people got their first taste of Marlborough - a Cloudy Bay sauvignon blanc.

Something about it created a wave of excitement, wine writers and consumers quickly spread the word and, as they say, the rest is history.

Thirty years on, New Zealand wine is still making a name for itself. It's now exported to more than 100 countries worldwide, creating trade worth more than a billion dollars.

And still leading the charge are British consumers, with New Zealand sitting just behind France in terms of premium wine sales. More than 51 million litres of New Zealand wine were shipped to the United Kingdom this year, totalling $318.6m.

Melanie Brown, founder of newly launched online wine shop The New Zealand Cellar, started her new website with UK wine consumers in mind. She says the market is expanding, but the thirst for sauvignon blanc still plays a key role.

"Obviously sauvignon blanc will always dominate, but New Zealand is now producing, or shall we say, found our own distinctive style of chardonnay, so export volumes of this grape are also increasing.

"Pinot noir is not far behind and it is exciting to see plenty of good value [wine] being exported and gaining momentum."

When asked what it was about New Zealand wine that ensured its popularity, Brown said consistency had been key.

"New Zealand has gained a great reputation for consistently producing high-quality wines and that has helped create such a strong market in the UK.

"The commitment will now be for New Zealand producers and winegrowers to continue to produce consistently top quality wines and not get ahead of themselves by producing less than average wines to appease strong export markets," she says.

‘"[They need to ensure] quality over quantity and build on growth strategically with a fundamental goal to never let our standards or quality slip."

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"My personal opinion, and this isn't a view of the industry, but I think a lot of people will agree, it was Cloudy Bay 1985 vintage that [opened the UK market]. I happened to be working there at the time and it created a wave of excitement around the high end of the trade in the UK," he says.

"Although there had been New Zealand wines sold there before, it was really that Cloudy Bay sauvignon from Marlborough which I think marked the start of the modern era of New Zealand winemaking and exports."

The UK remains one of the country's major markets, second in volume and value only to our neighbours across the ditch. Canada and the United States are next, with the Netherlands round out the top five.

But these markets are only the tip of the iceberg.

Clive Weston, managing director of major wine distributors Negociants New Zealand, says Cloudy Bay opened the door to the UK market.

Weston says New Zealand wine is taking over the world as wine companies make international markets their priority. Weston has seen New Zealand wine thrive in all major markets and is slowly watching it tackle others as demand for New Zealand wine continues to grow.

"There is no question about it. Price equals perception and we definitely maintain our high quality position in the UK.

"We are more cemented in the UK than we are in the United States but in the US we've really just scratched the surface. The potential is enormous," Weston says. "It's a big market, it's really 50 markets in one and it's just going to take a bit of time to crack, but it's definitely there for the taking."

There is also another layer of smaller markets which are still "extremely important for us going forward", Weston says. They include Norway, Sweden, Denmark, Finland and other non-wine producing countries.

Then there is China.

"There are a lot of people saying it is going to be the largest wine consuming market in time, but the cost of entry is significant," Weston says. "I would suggest that until government or the large corporate beverage groups drive a wedge into mainland China for New Zealand, it's going to be too expensive for a lot of New Zealand and Marlborough wineries to penetrate that market.

"The pendulum can swing in our favour but we might be talking 40 to 50 years for that to happen."

Other Asian regions, such as Singapore and Hong Kong, are also starting to recognise New Zealand wine.

An extra 17.3m litres of New Zealand wine was exported in the 12 months ending June 2014 - taking the total export volume to 186.9m litres, higher than all previous years, including 2008 when New Zealand wine flooded overseas markets causing prices to plummet as demand dried up.

Despite a record harvest this year, Weston says New Zealand will not oversupply international markets again.

"The difference this time is the demand is there, so the price is going to hold up . . . [and] provided the investment in marketing overseas is made effectively, the demand will continue to outsource supply."

Reaching all these markets hasn't been an easy feat, Weston says. It's taken a lot of work from the wine companies, the winemakers, the viticulturists, the grape growers, and the marketing teams.

"There is no doubt New Zealand is now absolutely recognised as a quality wine producing country . . . we are in an excellent place. We are seen as high quality, we are seen as set, we are seen as nimble, we are seen as different," he says.

"We have our own identity."

And it is Marlborough's flagship variety - sauvignon blanc - that is, without a doubt, leading the charge.

"That's what put Marlborough and New Zealand on the map . . . Marlborough has become credible because of sauvignon and then there is a trickle-down effect of the other varieties that go to market with the word ‘Marlborough' on the label, be it pinot gris, pinot noir, or chardonnay.

"While Marlborough is naturally the region which is most recognised overseas from within New Zealand, Central Otago has done a very good job as a region for pinot noir - there is no doubt about that," Weston says.

"The more established we are and the more recognised we are as a premium producing country, then over time the more the trade, the media and the discerning wine consumer actually wants to drill down to the next level."

So, as wine drinkers fine-tune their tastebuds, they will start to identify the differences between each of the grape-growing regions, Weston says.

"When people get to know Marlborough they want to know about the sub-regions - they want to know about the southern valleys, they want to know about the Awatere [Valley], they want to know about the Wairau [Valley].

"These things take time, but the discerning consumer with genuine interest in the higher end of the market is going to be looking at those points of difference."

New Zealand Winegrowers chief executive Philip Gregan says over the past few years the industry has "built up real momentum in export markets".

"Marketing and selling wine internationally is an extremely competitive business. There are producers from all over the world trying to sell into key markets all with high quality products. So the key is to stand out from the pack and New Zealand does that well."

Producers had to take credit for continued hard work, he says.

"[They are] now looking to some newer opportunities notably China and some of the European markets for example, Sweden, Germany and Netherlands."

But has this overseas success come at the cost of the domestic market?

Throughout New Zealand wine sales have dropped 6 per cent year-on-year, with 50.1m litres of wine sold in the year ending June 2014. The previous year, Kiwi consumers drank 51.7m litres.

The last time sales dipped was in 2010, when 46.5m litres were sold.

Weston says New Zealand needs to be seen to be strong in "our own backyard to be credible overseas".

"Home is where the heart is . . . so when visitors come in from overseas and they can't find wine they start to question whether it's a real brand from a real producer."

About 15 years ago, the country's domestic market was 60 per cent Australian wine, 30 per cent New Zealand and 10 per cent the rest of the world - now it's 60 to 70 per cent New Zealand wine, 20 to 30 per cent Australian wine and 10 per cent the rest of the world, he says. "So there has been a big shift into the domestic marketplace over the last decade and a half, but we need to keep it going strong."

Gregan says the drop in sales from domestic markets is a result of short supply.

"The sale of New Zealand wine in New Zealand is very supply-demand driven. When sales of New Zealand wine are abundant New Zealand sales go up, when supplies are tighter sales fall.

"Going forward, sales into New Zealand will be supply dependent, but will also be influenced by the domestic taxation regime and the dominance of supermarkets in the market. We can never become too export dependent, but we must never forget that New Zealand consumers were the first ones to embrace our wines as well."

- The Marlborough Express

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