Lessons for Australia from New Zealand debate

Kiwis bid to spread their wings

An interesting debate took place in London recently, organised by Hatch Mansfield, the UK agent for New Zealand producer Villa Maria. The focus was on looking beyond Marlborough sauvignon blanc.

TKR has thought for the past decade that this should be a priority. Confusingly for TKR, NZ sauvignon blanc has continued to gain popularity around the world in that decade, a trend that looks set to continue.

However, it’s right the future is discussed. According to a report in The Drinks Business on June 23, Hatch Mansfield’s managing director, Patrick McGrath MW, believes new regions need to be embraced.

But, as has been found in Australia, regionality is not enough. It needs a stronger anchor then just an expanse of land. The suggestion from the debate was that several growers band together and tie a variety to the region. It’s an idea that Australia should take note of.

New Zealand-born, UK-based, Peter Crombie MW, is quoted as saying:

“The average consumer thinks sauvignon blanc equals Marlborough equals New Zealand and they don’t give a damn about regionality. But slowly, gently, we can make it clear – not too much, too loudly – but so that the average consumers learns more. Should more emphasis on regionality be on the label? Yes, we need to inspire people to ask the question and initiate the conversation.”

Another MW, Rebecca Gibb, pointed out that regionality was of interest to few consumers coming down on the side of variety, suggesting NZ embrace,

“albariño from Gisborne, chardonnay, syrah and South Italian and Spanish varieties such as godello.”

The Drinks Business article continued:

“There was a strong argument for New Zealand creating its own distinct styles of varietals that didn’t bear comparison to other countries and regions, led by big companies with the capacity and brand standing to invest.”

There was a lot of discussion about the power of brand New Zealand, which has high rating among consumers (something Australia had, then lost, but is slowly regaining, although it’s a greasy pole to climb).

The New Zealand 2016 vintage was up 34 per cent on 2015 at 436,000 tonnes. Full details are yet to be released but the 2015 figures were, by variety:

  • Sauvignon blanc 66 per cent
  • Pinot noir 8 per cent
  • Chardonnay 8.3 per cent
  • Pinot gris 6.2 per cent
  • Merlot 2.7 per cent
  • Riesling 1.4 per cent
  • Syrah 0.5 per cent
  • Gewürztraminer 0.4 per cent
  • Cabernet sauvignon 0.3 per cent
  • Other/unknown 6.0 per cent

New Zealand wine exports in 2015 (some figures missing from the annual report):

Country Value NZ $ Change Price per litre
USA NZ$372 million Up 13 per cent NZ$6.91
Australia NZ$362.1 million Down 5 per cent NZ$6.30
UK NZ$354 million Up 11 per cent NZ$5.92
Canada NZ$95 million Up 20 per cent NZ$9.90
Netherlands NZ$6.74 million Up 24 per cent NZ$6.15
China NZ$27 million Up 9 per cent NZ$14.57
Singapore NZ$20.7 million NZ$13.09
Hong Kong NZ$17.7 million Up 5 per cent NZ$12.64
Ireland NZ$17.5 million NZ$6.95
Japan NZ$13.8 million NZ$11.55
Sweden NZ$13.6 million NZ$8.08
Other NZ$67.3 million NZ$8.47

The NZ bottled export FOB price was down 1 per cent to NZ$8.23 ($7.93) a litre. That’s way above the Australian average export price of $2.85 a litre, and above the average Australian bottled export price of $5.29 a litre.

The NZ bulk white wine price was down 5 per cent to NZ$3.78 a litre ($3.60), while Australia’s is a mere 98 cents a litre. Not only are the New Zealanders getting more for their wine but the leading variety, sauvignon blanc (86.5 per cent of all wine exports in 2015), fetched an average of NZ$1666 ($1587) a tonne in 2014. The average Australian wine grape price in 2014 was $441 a tonne.

New Zealanders are drinking more of their own wine, with domestic sales up 24 per cent in 2014. Exports to Australia may have dropped 5 per cent in value but we still took about $337 million worth of wine and only sent them about $74 million worth of wine. We do have to take into account population: NZ’s is 4.47 million versus Australia’s 24 million.

Supermarket wars rage on

No matter the dislike for large retailers such as Woolworths, Coles, Tesco and Sainsbury’s, they need to do well, as they sell a lot of Australian wine between them. Tesco has been having a hard time these past few years, but first-quarter results show a turn for the better:

  • Group like-for-like sales grew of 0.9 per cent in the 13 weeks to May 28, 2016
  • UK like-for-like sales rose 0.3 per cent
  • International like-for-like sales rose 3.0 per cent

Tesco has been consolidating, selling off Kipa in Turkey, and Giraffe cafes and Dobbies garden centres in the UK. The sale of UK coffee shop chain Harris + Hoole has also been agreed.

Tesco is taking the fight for consumers to Aldi and Lidl, launching seven new exclusive fresh food brands that have had a deflationary impact on sales of about 0.7 per cent. Showing the effect that the discounters have had on the established supermarkets, the cost of a weekly shop at Tesco is now 6 per cent lower than it was in September 2014. Tesco has also reduced its SKUs by 18 per cent, with wine not escaping the cut.

Own label wine brands will continue to gain greater shelf space in all supermarkets. Last weekend I bought a six-pack of GR10 Heathcote Shiraz from Dan Murphy’s for $50. It’s a stunning wine. I asked Dan’s if there were others worth seeking out, and was put on to the winemaker, Nick Badrice, who said: Our aim with the GR range of wines is to seriously over-deliver on quality – the price tag makes it exceptional value for money so I recommend that you keep an eye out for subsequent GR wines as they land in the store.”

Combine own label with the increasing pressure that local authorities are putting on new licences, add in the power of police and the effect the health lobby is having, and the sale of wine is getting more difficult by the day.

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