KEY POINTS:
New Zealand winemakers are joining forces to launch an assault on the Asian palate, with the latest trade mission targeting Shanghai as a lucrative new market.
Just last week, a group of New Zealand winemakers treated that city's top restaurant and hotel executives to a night of Kiwi
wine, hoping it would help prise open a niche for our exporters.
Stephen Bryant, New Zealand Trade and Enterprise's sector manager for wine, said the push into China and across Asia was part of a diversification strategy designed to move the industry away from the traditional markets of the UK, US and Australia.
These three countries currently account for 80 per cent of New Zealand wine exports.
"We are saying we need to ensure we have a better diversification in terms of our markets. Asia is the obvious one - it's [close] to us, and there are rising incomes - there's a growing propensity by consumers to consume Western products, and wine is one that is growing quite steadily."
Bryant said careful research had identified five Asian cities as prime targets. These were Singapore, Hong Kong, Shanghai, Seoul and Tokyo.
New Zealand's total wine exports last year were worth $512 million, a growth of 18 per cent by value. For the first time, more than 100 million litres was sold, and the 185,000 tonne vintage was up 30 per cent on the previous year.
MAF estimates that New Zealand wine production will grow at least 10 per cent a year for at least the next decade.
The idea is that a good portion of this increase will be soaked up by the newly affluent wine drinkers across Asia.
Wine stores in Singapore, Hong Kong and China do stock New Zealand wines, but until now there has been little promotion of New Zealand wines as a category.
"We're not saying it's a bonanza - but there's a lot of interest in China, and things are picking up, and as consumption increases, the Chinese infrastructure for distribution and everything has to be built up, as well."
Historically, there has been a bias across Asia towards red wine, but the trade missions have found that the freshness of sauvignon blanc appeals to the young - especially in Singapore, where it fits well with the hot climate.
Bryant said New Zealand currently exports $14 million worth of wine to Asia, which he hoped would increase to more than $50 million in three years.
One New Zealand winemaker who knows more about China than most is Paul Kelly, owner of Karikari Estate Vineyard.
Kelly is now doing business with one of China's biggest winemakers, Changyu, based in Yantai, north of Beijing. The two companies collaborate to share technical and marketing knowledge.
New Zealand had a tough job getting established as a wine maker in new markets, said Kelly, since it was difficult for it to compete on price. New Zealand is not a big wine producer, and there are a number of countries that produce acceptable wine similar to the ones New Zealand produces that can sell them much cheaper.
"People appreciate it's a quality product, but when you get into world markets - and highly competitive world markets - it's a tough, tough market place."
When New Zealand wines were selling at top dollar, they were competing against other expensive wines, including those from the Old World that had established reputations. Newly affluent wine drinkers would either choose something French, for instant, since it would impress others, or something cheap. New Zealand wine was neither well known or cheap.
"If they don't know your wine and you're not a huge low-cost producer, it's not easy to access those markets, because people say, 'Wait a minute - you don't have the volume to give me low cost, and why should people who don't know about you pay a premium price?'
"It's a long, hard slog to introduce people to something they don't know about because they go for the low-cost or the extreme, iconic high-end way."
New Zealand needs to be a bit more diversified, because it's a small domestic market and the wine industry has grown significantly.
Kelly said there was already an obvious natural affiliation between New Zealand and its major wine market in the UK. Such a relationship could be built with Asia and developing countries, but it was hard work. "It's a difficult market, but New Zealand has to continue to seek new markets and China is certainly one that everyone's looking at. But it's very, very tough."
Finance Minister Michael Cullen confirmed this tough global environment in a speech given to the wine industry on Friday. There was more wine being made in the world each year than was actually being consumed, he said. "Predictably, competition is increasing from large-scale, low-cost countries, capable of rivalling our producers not only for cost, but also for quality."
The place for New Zealand wines in existing markets needed to be secured, along with the development of new destinations. Cullen said the industry was "seeing positive signs of increasing volumes" going to Canada, Ireland and the Netherlands.
Nearly three-quarters of the wine sold overseas is sauvignon blanc, a variety that Paul Kelly said was being increasingly being made cheaply at good quality in Chile and Argentina.
Cullen's speech was given at the opening of the "Syrah Symposium" in Hawkes Bay. Syrah is a variety that the industry hopes it can start exporting in greater numbers, staying ahead of those countries seeking to emulate New Zealand's success in making sauvignon blanc.
Cullen used his speech to identify another problem in the wine industry, that of the large number of "capital constrained" small and medium-sized wineries. Groups of small growers joining forces to share sharing marketing would help some of these smaller producers, he said.
"We're also seeing more foreign ownership of wineries - some banner brands such as Montana, Nobilo, Matua Valley and Cloudy Bay. These purchases are a sign of confidence in the industry," said Cullen
Foreign owners could also "introduce expertise to the local industry and open up access to global marketing channels".
It's channels like these that the wine industry hopes will help smooth the path from a New Zealand vine to a Shanghai sommelier's cellar.
