New Zeal and Winery

With the official launch of the impressive Craggy Range winery, Steve Smith is poised to fulfil his ambition – to focus the world’s attention on single vineyard wines from New Zealand.  Susy Atkins reports

ON A HOT DAY in Auckland, at the height of the New Zealand summer, Steve Smith MW looks done in. Or, as he puts it, "knackered". Hardly surprising.  It’s only two days after the official launch party for his new winery, Craggy Range, in Hawke’s Bay, and that was some shin-dig to organise.

Hundreds of guests crowded the lawns in front of the spectacular state-of-the-art winery, listening to Dame Kiri Te Kanawa singing live, and generally making merry as the sun set behind a dramatic range of hills.

For Smith, who has been waiting for the official opening since the project was first conceived in 1997, it must have felt great.  And sure enough, although he may look exhausted, his characteristic ebullience is still in evidence as he starts to talk about the project.

Craggy Range is billed as a partnership between Smith, 41, and Australian millionaire businessman Terry Peabody. Mega-bucks (some suggest around $NZ60m) have gone into its astonishing, arguably rather flash winery, named The Giant, in Hawke’s Bay, while Smith, a former viticulturalist for Villa Maria, has been given free hand in devising a range of premium wines.

The launch – one of the most significant in New Zealand for several years – comes at the start of a difficult transition period in the New Zealand wine industry. Not long ago, Kiwi wines were mainly produced by privately owned, fairly modest wineries.

But in the past few years off-shore companies have acquired no less than 70% of the country’s concerns, including notable takeovers of industry giant Montana (by Allied Domecq), Nobilo/Selaks (Constellation) and most recently, Wither Hills (Lion Nathan).

The word is there are plenty more deals to be made, especially as New Zealand faces up to a grape glut in 2005 onwards, so the progress of this new, privately owned Hawke’s Bay operation will be fascinating to watch. Not least because in Steve Smith, Craggy Range has one of the best known figures in Kiwi wine.

A graduate of Lincoln University in the South Island, Smith worked closely with the highly influential Dr Richard Smart in the 1980s, helping to introduce what are now standard viticultural techniques such as canopy management and Scott Henry trellis systems.

In 1987 he joined Villa Maria (New Zealand’s third largest wine company and still privately owned), settling there for a long period, gradually expanding his viticultural role to take on public relations and export issues in key markets such as the UK and the US.

Managing director, George Fistonich is rightly credited with nurturing much young Kiwi talent at Villa Maria, and Smith is a typical example of this.

He finally left after 11 years and after a long period in the 1990s running his own consultancy, officially joined forces with Peabody to start Craggy Range in 1998, not only as director of viticulture and winemaking, but also overseeing all marketing decisions – a rare meeting of responsibilities.

Now Craggy Range is making the most of Smith’s high profile (in 1997 he was named by Decanter magazine as one of the 50 most influential people in the wine world) and his face features on its glossy literature.

It all sounds splendid, but with New Zealand wine exports about to move into difficult times, what with takeovers, over-crowded markets and the anticipated glut, how will a major new contender like Craggy Range fit in? Smith has his answer – a unique selling point.

This winery is trading on the fact that it produces only single vineyard wines.  In this way, Smith is fulfilling a lifetime’s ambition.   "After spending so much time at Villa Maria, particularly working on the reserve wines, I could see particular vineyards that clearly stood out," he says.

 "I feel certain that there are not enough single vineyard wines in New Zealand. This concept just hasn’t been taken far enough here.  "It’s hard to come up with something that the others aren’t doing, but we are naturally driven by my viticultural background, and the marketing premise of Craggy Range is carefully built around terroir," he continues.

"At an everyday retail level, Marlborough Sauvignon Blanc is still what many consumers want, and we must not lose track of that. But with on-premise and at the premium end of the market, there is now a much wider, independent appreciation of what New Zealand can do outside of this one style.

So we pick the best sites, and produce wine that is distinctive of that spot."  He firmly believes a focus on terroir is important for the New World, which is hardly surprising coming from a viticulturist, but a more interesting point of view when you consider his marketing role.

"Vineyards, not regions, are the future for premium wines.  We need to market that idea, let people know about a specific place like Hawke’s Bay Gimblett Gravels." 

This translates into two ranges of single vineyard wines: the first, a "Varietal Collection" including a Sauvignon Blanc, a Chardonnay and a Pinot Noir from the Te Muna vineyard in Martinborough; a Merlot, Syrah and Chardonnay from the Gimblett Gravels area; single-site Sauvignons from two vineyards in Marlborough, and a Riesling from another spot in the same region (although Smith appears less keen in general on Marlborough than on Martinborough and Hawke’s Bay and this may possibly be reflected in the future).

Expect this range to expand.  The Waipara region in the south, for example, is being investigated. In the UK, this tranche of wines will retail at around £10-£15. 

The Prestige Collection tier (£20-£30) comprises single varietal or blends made in "minute" quantities, once again from one site only, and it includes: Sophia, a flagship red made from Merlot and Cabernet Franc (an "exciting" blend that could become "New Zealand’s equivalent of Australia’s Cab-Shiraz" according to Smith); an as-yet-unnamed Syrah; The Quarry (Cab/Merlot); and a Chardonnay called Les Beaux Cailloux, all from Gimblett Gravels single-vineyard fruit.

The wines will be marketed heavily in the US, now showing unprecedented interest in New Zealand wines, particularly "cult" labels.  "The US will be our biggest market, and we expect 60% of Craggy Range wines to go there eventually," Smith predicts.

He is undoubtedly serious about America – when we meet, he is about to fly to the States for another launch event there.  Poor distribution networks may well be the undoing of weak wineries when the glut hits, but Craggy Range operates in the US through Kobrand, which also sells Louis Jadot and represents Taylors.

"That was a great opportunity, as they were looking for a strong New Zealand brand," says Smith.  Perhaps surprisingly, Australia is "another strong market for us" according to Smith "and it will probably account for 10-15%."

Good press reports, notably from James Halliday, have helped his cause in Oz. In the UK, Craggy Range is sold through Paul Boutinot’s Capricorn Wines Ltd. Waitrose is the major purchaser and the only supermarket involved so far, although independents are a main target.

"That suits Craggy Range’s image and our style of business," Smith says. "This is a highly personal, handson operation." He says he is looking for "strong on-premise coverage" as well.

It’s not unusual to see New Zealanders focus their attention on the US right now, but what do the Brits think of this? Kim Tidy, national account manager of Capricorn Wines Ltd, says: "Steve is rightly excited about the US, but it is a difficult market, as each state is different.

The UK market is still very important for a New Zealand company to have any credibility in export.  It is the number one market and everyone expects you to be represented in the right way. But a lot of wineries starting out want to export to many different places and Steve is making that clear from the start."

There will be no obvious launch of a second label, but work has already started on a second titular company called Capricorn Wine Estates created to sell another tier of less expensive, this time regional wines that do not fit the Craggy Range image.

So far there has been an unoaked Hawke’s Bay Chardonnay called One Tree, made exclusively for Waitrose, working closely with the wine team there. Retailing at £7.99, it is apparently typical of the sort of second label release we can expect from the Craggy Range team. "I’m not keen on making £5-£7, easydrinking beverages," says Smith.

"I just don’t want to work in that field." A rosé from Merlot has been made but not released yet, and there are plans for a lower tier Pinot Noir to reach the UK in the future. 

In the domestic market, there are three brands – Red Rock, White Rock and Struggler’s Flat, the latter a Pinot Noir from Martinborough. Smith says he has "a reasonable amount" to do with these wines, but that staff are employed specifically to work on the declassified Craggy Range brands.

His name appears on the label for One Tree Chardonnay ("I was persuaded…" he says), but not the words Craggy Range.  "It means we can be very aggressive about declassifying Craggy Range wines," he comments. "Most wineries which do it, make clear reference to the main label and see the link as an advantage.

But we have kept the branding quite separate, because I worry that it sometimes stops consumers trading up to the higher end.  It was something I learned from working at Villa Maria. I suspect their Cellar Selection range suffers a little from the excellent Private Bin wines lower down."

He may be enthusiastic about the potential for single vineyard wine, but he is much more critical when it comes to New Zealand’s industry in general.  "Look, I just think we could do so much better in every area of the wine business.

For example, marketing. It is generally a problem here.  There are very few wines that have professional marketing people working on them."  Smith continues, "You only have to taste our top wines.

They are world class without a doubt, but we have far too many wines that are not. So here is a country with a great opportunity, and I fear it is getting hijacked by brand driven, price-point driven, multinationals. I hope I’m wrong. I hope to see New Zealand regarded as one of the great places in the world to make fine wine."

With Craggy Range, Smith has an enviable opportunity to make wine as he wishes, with the backing of Terry Peabody.  He admits that this is "it" for him, and others agree that a great deal is riding on his success.

"He will have to work very hard for this," says Margaret Harvey MW of London-based merchant Fine Wines of New Zealand. "It’s a very big step for him, and Craggy Rangemust be seen to perform. Frankly, it’s a huge amount to take on, but if anyone can pull it off, Steve Smith can."CV

STEVE SMITH MW – CV

1962: born and raised in the Canterbury Plains of New Zealand’s South Island

1983: graduated from Lincoln University with an Advanced Diploma in Horticultural Experimentation. Joined renowned viticulturist Dr Richard Smart as research technician.  Awarded scholarship to University of California in Davis for further research

1987: joined the Villa Maria group (which includes Esk Valley and Vidal wineries) as group viticulturist, a post he held for over 11 years.  Directed a number of significant vineyard developments throughout New Zealand

1991: took part in the public relations and business efforts of Villa Maria in export markets such as the UK and US

1995: began to play a more active role in winemaking, especially blending

1996: passed Master of Wine examination.  The same year he left Villa Maria to found a consultancy business.  Clients included Rustenburg and Hamilton Russell in South Africa

1998: Craggy Range formed with Terry Peabody

CRAGGY RANGE – AT A GLANCE

Where? Hawke’s Bay region of New Zealand’s North Island When founded? 1998; "The Giant" state-of-the-art winery opened January 2003

Founders: Australian businessman Terry Peabody, with Steve Smith MW as a shareholder and general manager

The Wines: Specialises in single vineyard releases from several regions of New Zealand including Martinborough, Marlborough and Hawke’s Bay. Two tiers under Craggy Range label, the Varietal Collection and the Prestige Collection. Second label wines run as a separate operation under various brand names that include Red Rock, White Rock, One Tree and Struggler’s Flat