NZ Wine Business Symposium 29-30 June 2010

The New Zealand Wine Symposium
On 29 and 30 June 2010 I attended the second New Zealand Wine Symposium at the Eastern Institute of Technology (EIT) in Napier, Hawke’s Bay in the North Island, slap bang in the middle of one of the country’s premium wine-producing areas. Delegates came from NZ, Australia, USA and Canada and represented wineries, wine marketers, government agencies, universities and various industry experts, sharing thoughts, opinions and expertise on the way forward for NZ wine.

The cryptic title of the symposium was Market to Market. The themes were not so cryptic – in a nutshell – the global oversupply of wine; the deep discounting to consumers; the proliferation of cleanskins and wholesalers’ own label wines; bulk wine shipments; and the challenges and opportunities markets associated with some of the world’s key markets for wine – the US, UK and China. As a representative of the Australian wine industry, the lessons and issues for the NZ wine industry were also highly relevant for the Australian market.

So much was discussed on diverse topics, as a taster I have compiled a shortlist of key data I garnered from the two days:

  • There is a global oversupply and all producers around the world are feeling it. Prices of wine and wine grapes are down for almost all wine regions and wine grape varieties. In Australia, many grape growers are pulling out vines and wineries are going into receivership. In Europe they are grubbing up 175,000 hectares over three years and have plans to phase out subisidies and simplify labels, to respond to consumer demand.
  • Consumers are benefiting from cheaper wine as discounting is prevalent across the board for premium to lower end wines.
  • New Zealand has successfully pitched its wines at a high price point overseas. For example, in the US NZ wine sells for around twice the price of Australian wines, and this is across the board for sauvignon banc, pinot noir and chardonnay.
  • Targeting Asian markets, particularly China, is not the answer – although it may form part of the answer. China is a complex and diverse country with correspondingly diverse consumption patterns, customs, income levels, loyalty to domestic wines, and so on. With strongly growing GDP (8.5% per annum) and assumed wine consumption growth in line with GDP growth, there are huge opportunities – even the niches are large in China. But success is far from guaranteed.
  • The UK and US are still key markets for many exporters – they are the two main destinations for Australian wine, accounting for more than 60% of Australian wine exports. Supermarkets feature strongly in the UK off-trade. In the US the three tier distribution system and distributor consolidation are key challenges. Both countries’ wine sales have been hit by falling incomes of consumers.
  • Bulk wine shipments, wholesaler own labels and deep discounting are more prevalent than ever before in the world wine industry. There is also not a clear line between premium and lower quality wine with regard to these trends – both ends of the spectrum are being bulk shipped and both are being sold as wholesaler own labels. This represents opportunities not just concerns.
  • Social networking media has a strong and growing place in the global wine market. Internet sales of wine are growing alongside this development. Understanding and embracing these trends and the various types of wine consumers will help all aspects of the wine market. See http://wp.me/pJ6Dj-1F

 Author: Dr Nicola Chandler, Wine2030, University of Adelaide.

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