Cox issues NZ price erosion warning

New Zealand producers should use the latest price statistics as a “wake up call” as it “continues to erode our well-earned price premium, reputation and image,” according to New Zealand Winegrowers European director, David Cox.

Even though New Zealand looks set to overtake Spain’s value share of the UK market in the next two years as it continues to outperform all other countries on value and volume in the UK, its average price in the UK has now slipped to below £6.

Speaking at last week’s New Zealand New Releases Tasting in London, Cox told the drinks business: “New Zealand has just slipped below the average £6 retail price threshold, making our average price now £5.97 in all off-trade, compared to £6.24 last year.”

Cox added that the average price, which he expects to rise again when the next series of Nielsen statistics are revealed, remains higher than all other countries (the nearest being France at £5.11) and is “considerably higher” than the average for all wine in the UK, which is now £4.45.

“We do expect to see the average NZ price rise above £6 in the months to come,” Cox added, “as the level of UK deep discounting begins to diminish and the supply/demand gets back into balance during 2011.”

However, Cox is eager to advise his representative country’s producers that: “Although there are some distinct positives to take away from this Nielsen report (to 2 October 2010), it should nonetheless provide a further wake-up call to all wineries that we’re continuing to erode our well-earned price premium, reputation and image with the continuation of deep price discounting by some brands and the selling of bulk wine to retailers who are creating value labels and trade drivers.

“In my view it is incumbent on all of us to ensure that we get our average price back up to over £6 by the time the next Nielsen report comes out in the New Year,” he added.

Cox further explained that the country, which has increased the total volume of wine sold above £6 by 14%, has also posted a huge increase of 44% in the volume of wine sold below £6.

There is further good news for New Zealand in its performance of wines above the £9 mark. He commented: “[We have] increased substantially in the £9 to £10 price point, in fact, NZ has now overtaken Australia and is now number two behind France.”

“We’ve also increased in the £10 and above price point” he continued. “In fact NZ has overtaken Spain and Italy and here too, is number two behind France.”

“These higher price points are performing well for all wine and so it means that consumers are still trading up and this is where New Zealand performs well,” he noted.

Finally, Cox also observed just how dominant New Zealand is in Sauvignon Blanc category, with growth of 51%, taking its UK market share of this variety to 42.7%, according to the Nielsen report.

Jane Parkinson, 29.11.2010