Premium wine key to recovery

Wineries, growers told to concentrate on quality

BY MICHAEL BERRY

New Zealand wine industry leaders are pinning their hopes on patience and marketing – patience from investors and banks and marketing to open up new export markets and revitalise old ones.

The struggling industry would not come right on its own and people making a living from grapes and wine must adapt, according to five leaders who spoke at an industry forum at the Romeo Bragato wine conference in Blenheim yesterday.

New Zealand Winegrowers chairman Stuart Smith chaired the five-man panel.

The men agreed companies must adapt by putting more money into overseas marketing and concentrating on quality to make it through the global downturn with a solid business and reputation.

The main targets were Scandinavia and the east coast of Asia, including Hong Kong, Singapore and China.

NZ Winegrowers deputy chairman Steven Green, who owns Carrick Wines of Central Otago, said oversupply was a problem all over New Zealand, and was not limited to Marlborough sauvignon blanc.

Carrick had been pressured to lower its prices by distributors but had refused because the brand was too valuable "to be trashed overnight".

There seemed to be an expectation things would come right by themselves, Mr Green said. But they wouldn't.

"We can't just sit back and wait for two years, three years, four years; we've got to change and adapt now."

The New Zealand wine industry had to ensure it picked only the fruit it could sell, and fewer vines would help, the leaders said.

Dog Point owner Ivan Sutherland said 15 per cent of vines should be pulled out, especially those outside optimal growing areas.

He urged wineries to stop focusing on increased production and return to an artisan approach.

His calls echoed those last year when Delegat's Wine Estate managing director Jim Delegat caused waves by saying 20 per cent of Marlborough vines needed to be pulled out.

Mr Sutherland said vineyards had to stick to varieties that worked well and not try to be everything for everyone.

"We have to face the fact that when times were good there was a lot of speculative plantings, and some of them out of sheer romance." The milestone of $1 billion of wine exports surpassed by Kiwi wineries this year was tainted by 20 to 30 per cent bulk wine of questionable profitability, he said.

"Isn't it better to be in an under-supply situation? It would help get better price points, pay growers better and make companies more profitable," Mr Sutherland said.

However, Constellation NZ chief executive Joe Stanton said talk was easy.

"Who's going to pull the first vines? Me, or the other bloke? That's the question everyone is asking.

"A 10 per cent reduction in vineyard area would most definitely help, but probably won't happen unless we get government support."

He could not see that happening, he said.

Wine companies and growers had to come to an agreement so both operations were sustainable, he said.

Growers had told Constellation they needed between $17,000 and $20,000 a hectare to operate comfortably, he said.

"That's a long way from being achieved ... we have to find some way to bridge that gap."

Growers' average gross income this year was $10,400 a hectare, according to NZ Winegrowers.

An average Marlborough sauvignon blanc grower capped at 12 tonnes a hectare made about $1200 a tonne. That equates to $14,400 a hectare.

- The Marlborough Express