Export wine focus turns to top table

The fine-wine lovers of the US need to know that New Zealand is on the radar. Photo / NZ Herald

A new Government-backed push into the US aims to build a super premium wine category for the billion-dollar export industry.

Economic Development Minister Gerry Brownlee said the wine industry was at a turning point as it was starting to produce quite large volumes although small compared with world consumption.

Wine exports have soared in value from $125.3 million in 1999 to more than $1 billion.

However, a 39 per cent jump in the 2008 grape harvest to 285,000 tonnes created about 27 million litres of oversupply after years of shortage, helping drive some erosion of wine, grape and land prices.

"It's almost the catch-22 point where can the increased volume you're producing maintain the higher price in the markets that are prepared to pay it," Brownlee said.

"Or do you simply find that too difficult and end up with bargain-basement prices on exceptional quality wine."

The perception of New Zealand wine internationally has remained strong but concerns have been raised about the effect of exporting cheap bulk wine.

"What we've got to try and do is get into markets where that top quality is appreciated so the bottle price is upwards of the $50 mark and that's what the attempt is all about with regards to the US initiative," Brownlee said.

The Government would contribute $1.2 million over two years matched by a similar amount from the 21 wineries involved in the initiative, which included 58 selected wines.

New Zealand Winegrowers USA had been established to lead the programme and a campaign manager would be appointed to work with wineries' distributors and undertake a programme of collaborative brand and market building.

The project was expected to lead to additional direct sales for those taking part of $50 million by 2015.

"I think that's actually quite conservative," Brownlee said. "The product that we produce is without doubt very much world class."

New Zealand Winegrowers USA chairman Steve Smith said: "We produce fine wines in New Zealand, we believe it's a sector of the market in the USA that remains undeveloped for New Zealand wine, we believe it's a sector of the market that has significant long-term sustainability in terms of creating prestige and all the benefits that come from that," Smith said. "And we think the time is absolutely right to do it."

The project would not use traditional marketing routes such as advertising campaigns and massive consumer events, Smith said.

"This is a very strategic and targeted approach that will create long-term loyalty not just a short-term popgun approach," he said.

"It's relationships within the industry and then developing really good communication strategies around that, that the fine-wine lovers of the US all of a sudden know that New Zealand is on the radar, currently they don't."

The best way to protect the reputation of a region was to ensure the stories were told about its ultra-premium wines.

"That's how the great wine countries of the world such as France work," he said. "Less than 2 per cent of their wine is fine wine but it has a halo effect over everything else."

Bownlee said the US initiative was the first in a package of measures.

Markets in Northern Europe would be analysed, a strategy developed for China, Rugby World Cup promotional activity in Europe, Australia and New York.

And $200,000 from the Major Events Development Fund would support Christchurch City Council to host the Great Wine Capitals Network meeting in November.

US WINE STRATEGY
* Build a super premium New Zealand wine category.
* Campaign manager will work with wineries' distributors on brand and market building.
* Build key relationships with sommeliers, journalists, retailers, wholesalers and distributors.
* Marketing wines in top-quality events in San Francisco, Chicago and New York.
* Consumer and trade marketing using social media networks.

THE MARKET

$214 million of exports to the US in the year ending December.

$50 million target for additional sales by 2015.