New Zealand Wine Glut

On January 1 the Marlborough Express reported there is a surplus of New Zealand wine on the horizon and also concern how some lower quality fruit might compromise the image of New Zealand wine around the world.

I think the panic is very premature and is the natural evolution of the industry. It is not a bad thing to have bulk wine produced for lower price points coming from New Zealand. California has a very robust bulk or cheap wine industry and the boutique wine industry thrives too.

In fact, the boutique wine industry in California is so robust they have their own group called Family Winemakers of California who offer legislative and marketing support for these micro producers.

It may come as a surprise to some in New Zealand, but you all ready have cheap and inexpensive wine in the USA.untitled-22 This ad from 2006 shows some very low price points at a time when press releases were heralding demand was exceeding supply.

You will notice a couple of very inexpensive wines from California too. The fact they exist has not “killed” the wine industry. It is just a different set of customers and expectations.

Someone has to scavenge the bottom to keep the system clean.

Fearing the dark is silly, put this low end wine in a box and move on.

The New Zealand wine story is very much like California with both large global wine companies and the micro producers who excel at crafting fine wine for a small select group of consumers. California does not produce one and only one tier of quality and consumers do not punish the region for doing so.

It might be time to take a page from the California play book and have a similar group representing “the little guys” in New Zealand.  Or at least, for those that believe they are in the fine wine business to stand up and perform a Haka to the world and share their unique and wonderful stories.

This is where New Zealand excels with a rich mosaic of stories to share that are very real, very personal and most of all, evolving on a daily basis. With easy to use and low cost social media tools available today, everyone should be engaged with the global conversation of wine.

Welcome to the newest chapter of the New Zealand wine experience and Web 2.0.

The article mentioned can be read here Marlborough Express.

PS. The word glut was theirs not mine.

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9 Responses to “New Zealand Wine Glut”

  1. Paul Hopkins Says:

    I need to digress first but if you stay with me you’ll understand why.

    The concept of brands typically relates to companies but it would be fair to say that regions have also become brands in their own right, I give Champagne, Rioja, Chianti and Sancerre as examples and I would suggest that New Zealand Sauvignon Blanc is also now a brand in its own right.

    With these regional wine, consumers are rarely interested in the producer’s name and this is why propriety own labels have become so successful. They relate to regions and styles and I believe, that this is one of the problems that New Zealand wines will face if this oversupply becomes a wine glut. As the value of NZ Sauvignon Blanc drops, brand value will drop with it making it even harder to reduce stock levels. I predicted that in Australia there is going to be an abundance of $9.99 NZ Sauvignon Blancs in 2009 which will irrevocably damage NZ’s reputation and export price. NZ Sauvignon Blanc is now 20% cheap in Australia than it was 4 years ago despite the increasing costs of production and transportation. Oversupply with inevitably force the price of grapes downs and ultimately the price that consumers will pay for the wine and because many consumers see New Zealand Sauvignon Blanc as a single brand this will effect the whole industry not just the producers who are forcing the price down with large discounts.

    Ultimately the companies that are guilty of the largest discounts will be able to ride the storm best as they typically have more effective distribution channels.

    Paul [winepodaustralia.blogspot.com]

  2. Ron McFarland Says:

    Paul

    You are right, that when the brand becomes the region rather than the people behind the wine, the game changes. This is why I use California as a reference point, as they have lots of wines that consumers could care less about, yet sell in great quanitites and profit because of the effective distribution you mention.

    California also has a very healthy boutique wine indsustry that survives on the artisan nature of the wines, memorable consumer experiences and the stories that go with the brands.

    This is the choice for brand New Zealand to remain with the singular theme or step up and tell their individual stories. This is why the reference to the Haka.

  3. Paul Brannigan Says:

    New Zealand wine has an enviable position in the international market as a boutique, quality wine-producing nation. It is this image that greedy farmers and corporate giants who know little or care little about quality are slowly corroding; their only concern is plying sugared up, chemical laden pish with the highest possible margins through distribution channels to uneducated, cheapskates at the highest possible margin.

    Why does the bulk market have to be catered for at the expense of an entire wine producing country’s image and why should we condone these formulaic, sanatised versions of wine, produced by farmers, not winemakers (a term it seems used only to impress their friends as contractors do all the real work) who squeeze every drop of juice they can from their fields with total disregard for quality? Unfortunately it is the produce from these wineries that many new buyers of New Zealand wine try first, they represent New Zealand on the international market and in their blind greed for profit, these companies can’t see the long term damage they are doing.

    Comparing New Zealand Wine exports to Calfornia’s, a nation now synonymous around the world for having perfected bulk production at the expense of quality to the detriment of its image (Gallo, Blossom Hill and the rest of the ‘greats’: millstones around the neck of those producing high quality wines) says it all. It will only be a matter of time before tankers of Kiwi Savvy will be arriving in ports across the world as fruit juice for the masses. It will then be these so-called bottom feeding scavengers who will weild most power on the international market and, futher on down the line, back in the vineyards as all that cash amassed will be used to shape their idea of how New Zealand wine should taste.

    Don’t ever condone New Zealand wine being put into a box. It is not so much the industry’s death but moreso the rolling over in attitude to allow Villa Maria, Allan Scott and the rest of the corporates free reign to drop standards to whatever level suits them whilst playing on New Zealands good image.

  4. Ron McFarland Says:

    Paul

    That’s a Haka!

    You are right that California has perfected the bulk wine game, yet California still has some very fine wines too. They are known to consumers by the name on the bottle and the story that goes with the wine. Many of these have very loyal followings too. People who follow the wineries blogs, particpate in their wine clubs and visit if they can.

    The artisan handcrafted side of New Zealand wine has the potential to do this too. Consumers do not know they exist.

    Just yesterday, a California based, wine marketing friend commented on the tremendous value of the New Zealand wines we import. Especially compared to wines that say Napa on them.

    Need more Haka’s in my opinion.

  5. Karen Childers Says:

    Yes, California boasts a thriving artisan wine industry. These aren’t the brands typically found on grocery store shelves or in the big box wine warehouses. They’re not about volume – rather, they’re about the passion, the energy, the lifestyle, the very personal nature of the vineyards and the wine. Most of these wines deliver exceptional quality. They aren’t inexpensive, but quality typically isn’t. In other words, they’re all the things bulk wine is not.

    I think there’s a market for artisan wines from New Zealand as well. Like the market for California’s small producers, these are people who appreciate fine wine and more importantly, the story behind the wine. If New Zealand wine marketers can bring these stories to life and make the wines into a very personal experience for the consumer, they will have success. And if it’s a bottle of wine that offers great quality for a lower-than-expected price, that’s all the better!

  6. Fiasco Wines Says:

    Interesting comments by John Forrest in that Marlborough Express article…like..”John Forrest said oversupply could cause major problems for Marlborough’s image and the price it could demand for future vintages”

    I distinctly remember John making earlier comments in the Express when 2008 Sauvignon Blanc (bulk) was being flogged off for $3/L in Australia. Apparently then, it was good to have low priced Sauvy in the market….it would then entice another tier of drinker, then they would trade up in time…????

  7. Paul Le May Says:

    I would like to know how I can obtain some “Artisan Savignon Blanc”
    I live in Sydney

  8. Ron McFarland Says:

    Paul

    I would go to a nearby wineshop and ask the staff to help you. Tell them you are looking for a small production, less than 5000 cases, Sauvignon Blanc from New Zealand.

    Might be fun to select a couple to compare and enjoy with friends.

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