Crisis spurs chase for new wine markets

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DROP: World wine consumption has fallen, prompting a search for new markets

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Winegrowers are pushing into new markets as the financial crisis forces them to buffer the effects of New Zealand and European wine drinkers downing fewer bottles, falling prices and over-supply in the Australian market.

New Zealand wine consumption fell 4.8 per cent last year, from 918,000 hectolitres (a hectolitre is 100 litres) in 2007 to 874,000 hectolitres in 2008, according to the International Organisation of Vine and Wine's annual report.

Global wine consumption fell 0.8 per cent, from 245 million hectolitres to 243 million hectolitres.

The report says Australia and New Zealand's share of the world market fell from 10 per cent in 2007 to 9 per cent in 2008.

The volume of Australian wine exports declined 12 per cent to 702 million litres and value fell 11 per cent to A$2.66 billion (NZ$3.3b) in 2007-08.

New Zealand Winegrowers chief executive Philip Gregan said there was a downward pressure on prices.

New New Zealand wines were coming onto the market at lower prices, Mr Gregan said.

The average price of New Zealand wines in the United Kingdom was $15 (6) a bottle but some were coming into the market at under $10 (4).

There was a lot of uncertainty in the market, he said.

"We don't know what's going to happen in terms of market development and that's always a problem," Mr Gregan said.

Asia was a medium to long-term growth opportunity but would need significant market investment, he said. Sales were good in Singapore, South Korea and China.

New Zealand Winegrowers was holding promotional events this year in Tokyo and Shanghai.

Alexandra's Hinton Estate vineyard was one of the wineries hoping to exhibit at the Shanghai fair.

Winemaker Howie Hinton said the global downturn had affected his business. "It has definitely made things tighter and more competitive. The importance of good relationships with distributors, importers etc will be even more relevant this year," he said.

Wineries were feeling the pinch but the change in the value of the New Zealand dollar was starting to work in their favour again.

He was excited about the company exploring opportunities in China.

"It is difficult to break into new markets, however, not impossible. It just means working harder and smarter," Mr Hinton said.

Gibbston's Chard Farm owner Rob Hay said the higher end of the market had taken a knock in recent "turbulent times".

He exported about 3000 cases, or 10 per cent of production to Australia, the US and the UK every year.

"We have adjusted our prices by about 5 to 10 per cent. I'm hopeful people still have the money to buy wine now that it is cheaper and better value for them," he said.

Wineries were not seeing the growth that had been projected and were looking at new markets as existing ones levelled off, he said.

He was exploring exporting to Canada.

- © Fairfax NZ News