Wine industry licks wound of funding cut

By DITA DE BONI

The wine industry's cohesive international presence looks shaky as wineries review next year's budgets for offshore promotion.

Many have told the national industry body they may not be able to take part in light of a funding cut from the Trade Development Board (Trade NZ).

The Wine Institute, representing the country's 300-plus wineries, says growers are disapppointed over Trade NZ's decision to halve its direct funding to the institute from $150,000 to $75,000 in the coming financial year.

As a result, wineries themselves will have to contribute more to the cost of the events.

Trade NZ announced it would slash funding to the industry in March, saying that other industries' need of the money was more acute.

Another reason given for the cut was that the "verified impact" of the assistance to the wine industry had been "relatively low" - $2.79 million out of total industry exports of $125 million.

Trade NZ expects to see $100 of foreign exchange earnings for every $1 contributed through the Export Networks scheme.

But the Wine Institute says a low "verified impact" under Trade NZ's system of assessment might mean it is surveying the wrong group.

Export marketing manager Anne-Marie McKenzie says Trade NZ surveys all wineries in an attempt to gauge how its contribution is being used, although its funding actually goes to the Wine Institute to use for generic offshore promotional activities.

"The small wineries often don't see the funding as having an impact on them, unlike if they got a cheque in the mail, for example.

"Perhaps it is a problem of communication. Perhaps we should brief wineries before the survey and explain that they should acknowledge Trade NZ as a funder of these activities."

Ms McKenzie says that the survey issue, however, is just one part of why Trade NZ funding has been reduced.

"Their view was that the money was seed money - to help us get on our feet, and there was a sunset provision to that arrangement.

"But obviously we are disappointed, because there are just so many opportunities to take advantage of. In the US, where we started to build a presence, there is so much more work to be done. We can't afford to [scale] back our promotional activities, especially with the bumper vintage we are expecting next year."

About $35,000 of the institute's $75,000 will be used for eight promotional events in the US. It will spend $2 million on export-promotion events this year, with the difference made up by winery levies and private sponsors.