NZ acts on lessons of 2008

14th February, 2013 by Gabriel Stone

Philip Gregan, CEO of New Zealand Winegrowers has stressed the country’s need to protect profitability by raising prices.

Photo credit: Peter Burge

Photo credit: Peter Burge

Speaking to the drinks business, Gregan admitted that, following the glut of discounted New Zealand wine released onto the market in the wake of the large 2008 harvest, “there have been a lot of lessons learned.”

Among the most important of these, he continued, “is that our core business is being quality oriented and being true to what we can do well.”

Aligned with this aim, he said: “In the long term it will be about lifting prices – it has to be. We believe ultimately that the area for vineyard planting is constrained. The laws of supply and demand are immutable.”

With New Zealand wine’s average retail price in the UK currently standing at £6.41, considerably higher than the total UK wine average price of £5.03 (Nielsen 05.01.13), Gregan predicted: “You’ll see an increasing offer about £10 and a drop out of the sub-£5 bracket, so the average price will go up.”

He set this shift as part of a wider move by producers worldwide to adopt a more balanced approach to their UK business model. “It’s fair to say that producers around the world were subsidising the UK market because it’s seen as so important. That drove volume but you can only do it for so long.”

Despite the pricing challenges of the UK market, Gregan reported positive feedback from importers of New Zealand wine. “People still see a significant opportunity for New Zealand wine in this market – and at higher price points not lower,” he remarked.

To support this quality focus and accompanying price hike, Gregan pointed to an ongoing positive evolution among New Zealand’s wine producers. “There’s an increased confidence about what we’re doing and why we’re doing it, whether that’s Central Otago Pinot Noir or Hawke’s Bay Syrah,” he observed.

At the same time as the country hones these flagship strengths, Gregan stressed the importance of a continued focus on experimentation. “We don’t have history so what we can bring to the world is continued innovation,” he remarked, pointing to current examples such as Brancott Estate’s launch of an age-worthy Marlborough Sauvignon Blanc.

While the large harvest of 2008 presented pricing and image problems for New Zealand, Gregan pointed to the boost this extra capacity offered for winemakers looking to push the boundaries.

Philip Gregan, CEO of New Zealand Winegrowers

Philip Gregan, CEO of New Zealand Winegrowers

 

“Up until 2008, our supply of Sauvignon Blanc was so tight that there really wasn’t room to do too much innovation,” he explained. “With a greater supply people asked ‘Can we do something different?’ and you started getting these barrel fermented, sparkling and wild ferment wines that are really exciting in terms of style and diversity.”

Despite the opportunities to strengthen its UK position, NZWG’s government funding remains primarily targeted towards developing less established markets.

Chris Stroud, who took on the newly created role of European marketing manager for NZWG last year, explained: “My role is more European based,” as he highlighted Germany, Sweden and the Netherlands as a priority focus.

Turning to his UK strategy, Stroud spoke of “trying to maintain the status quo”, with a main focus on “keeping the media informed”.

Gregan supported this approach by emphasising that, while mature markets such as Australia and the UK remain “a huge part of our business”, the advantage of this media focus was that “the British media influence is not just in the UK.”

Among the other important markets for New Zealand at the moment, Gregan described the US and Canada as going “incredibly well”. Meanwhile the country’s free trade agreement with China has made it “a very significant medium to long term project”, with NZWG establishing a regional manager in Hong Kong last November.

Leave a Reply

Your email address will not be published. Required fields are marked *

Please note that comments are subject to our posting guidelines in accordance with the Defamation Act 2013. Posts containing swear words, discrimination, offensive language and libellous or defamatory comments will not be approved.

Subscribe to our newsletters

2 x Buying Assistants

Berry Bros. & Rudd
Battersea and Basingstoke, UK

Temporary Christmas Sales Support - Wines & Spirits

Harrods
Knighsbridge, London, UK

Head of Wholesale

Hispamerchants Ltd
London, UK

Sales Manager

Hispamerchants Ltd
London, UK

National Sales Manager

Maverick Drinks
Field based, UK

Regional Sales Executive

EWGA
Gloucestershire, UK

Senior Content Writer

Rude Wines
Ledbury, UK

Events and Trips Manager

Berkmann Wine Cellars
London, UK

Sales Account Manager - On-Trade

Berkmann Wine Cellars
East Scotland, UK

Account Manager Central London

Speciality Drinks Ltd
London, UK

The World Bulk Wine Exhibition

Amsterdam,Netherlands
20th Nov 2017

The Drinks Business Green Awards 2017

London,United Kingdom
20th Nov 2017

The Global Spirits Masters Lunch

London,United Kingdom
1st Dec 2017
Click to view more

Green Awards 2017

Deadline : 21st October 2017

The Global Riesling Masters 2017

Deadline : 30th October 2017

Click to view more

Champagne Masters 2017

The only Champagne blind tasting in the UK, the competition will reward the best wines in the following categories:

The Global Rosé Masters 2017

With wines from the palest of pink to almost ruby red, bone dry to almost cloyingly sweet, reductively handled to barrel-aged, as well as gently spritzy to fully sparkling.

Click to view more