New Zealand – Little wonder

for such wineries, and Adamson has planned a campaign to focus on this sector next year.

The UK is still, unsurprisingly, New Zealand’s number one target market, taking about 39% of exports – that’s over 19% of New Zealand’s total wine production. Even so it represents just 1.5% of UK retail volume and 2.3% by value, with retail sales of about 1.3m cases. In 2000 this figure was just 607,000 cases with a 1% share, an impressive rise for five years in a competitive market. With an average price of £5.96, the nearest competitor, Australia, is a whole £1.68 behind (at £4.28) and New Zealand wines are still well ahead of the market average of £3.86.

However, in times such as these, producers are naturally keeping their eyes open for other opportunities around the world. North America, New Zealand’s second largest market with a 25% share of sales, saw exports rise 13% (by volume) in the year to the end of May 2006. Canada and the Netherlands were both up 23%, and sales to Ireland leapt an impressive 63%. Australia currently takes about 20% of NZ exports, but is in fact the fastest growing market with shipments rising 40% on last year.

Nobilo, New Zealand’s second largest wine producer, has been in the UK market since the early 1990s. But Australian parent company Constellation has also been busy exploring other markets. “In the last six or seven years we’ve had the benefit of massive investment from Hardys and Constellation, which has made a big difference to distribution and continuity,” says Tom Maling, export director for Nobilo, Constellation Europe. “The industry can’t keep up with demand from the US and Australia. Canada, Germany, Denmark and Ireland are also posting good increases. Our main challenge is taking a disciplined approach to developing new markets.”

Bigger companies are playing an increasing role in the New Zealand industry, and now 60% of all New Zealand exports by volume are through the big five companies: Montana, Villa Maria, Nobilo, Delegats and Matua Valley. The recent absorption of Montana into Pernod Ricard’s portfolio shows that even New Zealand is not immune to the global trend towards consolidation.

“No doubt further consolidation will take place as our domestic market is too small, and to compete successfully in export markets usually requires scale of production,” predicts Joe Babich, MD, Babich Wines. “A few small wineries with strong reputations might buck this trend. Some consolidation will come about through overseas mergers or acquisitions.

Constellation taking over Vincor put Nobilo and Kim Crawford in the same camp for example. Recently Goldwater merged with the New Zealand Wine Fund, which owns Vavasour. Canterbury House has been taken over by Waipara – I would expect such events to increase, not to decline. The impact on the industry will most likely pattern Australia where the big get bigger and in most cases stronger, while the small might well struggle to survive.”

Villa Maria, which also owns the Vidal and Esk Valley brands, has a wine to fit more or less any channel in any market. “Consumers see [Villa Maria] as a reliable, high quality brand that they can trust and we see demand for it in all trade channels,” explains Lynn Murray, marketing controller, Hatch Mansfield. “But it is critical that New Zealand tries to maintain its premium image. It has a unique position which is the envy of many other categories. To remain competitive it is important that producers don’t sacrifice quality to achieve volume aspirations. Producers can still remain competitive and do not necessarily have to go down the ‘pile it high, sell it cheap’ route.”

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