New Zealand: A Sparkling Future

By Jasmine Lee

With growing recognition for their ability to offer high quality wines that are food friendly and value for money, New Zealand’s wines have out-performed forecasted export volumes and they are targeting new markets such as Asia.

New Zealand’s wine industry is improving leaps and bounds as the number of local grape growers increased steadily through the years; with producing vineyard areas spotting similar trends.

New Zealand’s most popular white wine export, the Sauvignon Blanc, is leading the pack with a 37 percent increase in its 2008 vintage.

Exports of other wine styles also saw an overall three percent up in volume in 2008, of which the growing popularity of Pinot Gris saw a 62 percent rise in volume. Other wines such as Pinot Noir increased in export volume of eight percent.

However Chardonnay’s exports fell 13 percent for the June year end and Riesling was down 22 percent.

Overall, New Zealand’s wine continued to out-perform in key markets. Its total export for 2008 leapt 27 percent in volume to reach 113 million litres and export value rose 24 percent, achieving NZ$992 million (US$720 million).

STRONG PERFORMANCES IN KEY MARKETS

Key markets such as Australia saw strong constant demands as exports increased 51 percent in the past year and export volumes lifted more than tenfold since 2002.
Shipments to the UK were up 22 percent where New Zealand’s wines are now the second largest category in the £8 - £9 (US$ 13.28 – US$14.94) price bracket; with a market share of more than 20 percent.

In addition, with the New Zealand dollar retreating from the very high levels of 2008, wine exports to the US recorded an 18 percent growth this year, ameliorated by the wine’s performance in the 2nd half of the year.

As with exports, domestic sales volumes had similarly benefited from the increased 2008 vintage supplies. Wine imports into New Zealand dropped while estimated sales of New Zealand wine in the home market were 60 million litres, up 29 percent on the previous year.

The increased supplies from the 2008 vintage saw New Zealand’s wines delivering startling performances in the past year, however some unmistakable warning signs have also started to emerge.

RAISING CONCERNS

The increased 2008 supplies benefitted exports and domestic sales volumes but they have also spurred greater competition and downward price pressure. This situation was exacerbated by the global recession.

Furthermore, the fallout from vintage 2008 saw a surge in bulk wine exports. Historically, bulk wine exports have accounted for less than five percent of total export volume. However in the past year this quadrupled to nearly 20 percent.

While bulk exports may relieve pressure on wineries in the short term, this promoted the drop in grape prices as a result of increased supplies. The winemaking business also faced further risk of lower profit gain as further pressures on winery margins have been imposed via the significant tax increase on wine in the local market.

VINTAGE 2009

Addressing potential setbacks identified and in conjunction with prolonged ripening, the supplies were bought back into line with market demands and one of the finest yields was produced in 2009.

The 2009 vintage come in at 285,000 tonnes — the same level as last year. The average yield was 9.2 tonnes per hectare — down from 9.7 tonnes per hectare in 2008.

Marlborough Sauvignon Blanc accounted for 57 percent of the vintage with 161,000 tonnes harvested. This was just five percent higher than the previous year; despite the substantial lifting of producing area of Sauvignon Blanc vineyards. Overall in 2009, Marlborough’s total grape intake fell one percent.

Production of Pinot Noir fell 16 percent to 27,000 tonnes reflecting lower yields, notably in Marlborough and Central Otago.

Hawkes Bay by contrast increased production 20 percent after the frost-reduced 2008 vintage. However yield restrictions limited the Gisborne vintage, while Wairarapa and Nelson enjoyed record harvests among the boutique regions.

OPENING NEW MARKETS

While New Zealand aims to continue building brand preference for the New Zealand wine and deepen their penetration into existing markets, they also target to develop new ones.
Key international markets such as the UK, US and Australia will continue to be focused upon. New markets such as the ones in Asia and mainland Europe can expect to see increased marketing and promotional activities happening.

Apart from carrying out market and channel specific promotions, seminars, and local wineries visitations, New Zealand will also leverage key blue chip (e.g. London, Sydney) events and work with strategic partners (e.g. Air NZ, Tourism NZ) to provide the wholesome New Zealand experience.

NEW ZEALAND WINE FAIR SINGAPORE 2009

The second New Zealand Wine Fair Singapore took place on November 2, 2009 at the Hilton Hotel. With over 200 premium wines from 60 of New Zealand’s top wineries such as Maria Villa and Church Road present during the tasting, the trade session was established to introduce and educate agents, distributors and buyers about New Zealand wines.

A VIP trade masterclass led by Lisa Perrotti-Brown MW, entitled ‘Get the Dirt on New Zealand Terrior’ also took place before the main tasting. Following the masterclass, Central Otago Pinot Noir Ltd hosted a tutored tasting entitled, ‘The Riches of Central Otago Wine’. It was led by Rudi Bauer, wine maker and owner of Quartz Reef winery in Central Otago.

Singapore is now New Zealand wine’s largest Asian export market, with over one million litres of New Zealand wine worth NZ$13.3 million (US$9.87 million) entering the island in the year to June 2009. This is a 320 percent increase in the value of New Zealand wine exports to Singapore since 2006.

The New Zealand wine industry, which consisted of boutique wineries by nature, produces less than one percent of the world’s wine consumption.

Partly due to New Zealand’s temperate climate, geographical diversity and long growing season, New Zealand’s wines harbour intense fruity flavours and balanced acidic structures; allowing them to greatly complement the preparation of Asian cuisine such as Chinese, Japanese and Indian food.