NZ wine a quality quaff

By DITA DE BONI

New Zealand winemakers should take heart that it is not size, but what you do with your exports that really counts.

Latest figures from the Australian Winemakers' Federation show Australia was the world's fastest-growing wine exporter in the year to March - but the Wine Institute here says New Zealand is doing all the same things, only on a smaller scale.

"Their advantage over us is simply one of scale, literally, as their industry is a bit over 11 times the size of ours, " says institute chief executive Philip Gregan.

Australian sales grew 34 per cent in the year, reaching 268 million litres worth $A1.35 billion ($1.6 billion).

The price per litre of Australian wine rose 2.6 per cent to $A4.66, showing a growth in bottled wine as well as the bulk-export product.

New Zealand wine makes up much less of the world market - around 0.5 per cent as opposed to Australia's 3 per cent plus - but our average price is about $8.30 a litre.

Australia's wine exports have risen 11-fold - or by about $A1 billion in the last decade - with the coveted British market representing 44 per cent of total sales and 12 per cent of market share.

New Zealand has about 1 per cent of the same market, but 10 per cent of the higher-priced category. Total wine exports to Britain from New Zealand were worth almost $68 million last year, compared with Australia's $A553 million to March.

Mr Gregan says New Zealand's overall growth rate is similar, despite the absence of bulk-wine exports. The latest figures he has show that to the end of the February year, our wine exports were worth $150 million.

The institute usually calculates its year result to June. Last year, exports reached $125 million and this year is heading towards $160 million on a "very good harvest," says Mr Gregan.

"We are succeeding because we are different and because we produce identifiable wine styles."

In emerging export markets such as the United States and Britain, New Zealand wines have distinguished themselves from the Australian product.

Mr Gregan chalks up Australia's $71 million in red wine exports to its established dominance in large-scale production of shiraz and cabernet sauvignon. Australian red is also competing favourably in Britain against long-established European red-wine producers.

"European winemakers are bound up with centuries of tradition, which makes them less flexible in the changing world market," says Australian Winemakers' Federation chief executive Ian Sutton.

New Zealand's has moved into pinot noir over cabernet sauvignon and continues to build markets with sauvignon blanc, both types that are finding favour in Australia and markets further afield.

However, Australian imports have had a dramatic impact on the domestic market here, especially in the under-$10-a-bottle category that remains the most popular.

Mr Gregan says that over the last 15 years, New Zealand wine has been reduced from 95 per cent of the domestic market to around 60 per cent.

"You could say Australian wine has eroded the domestic market share, or you could say the industry is more focused now on what it is good at."

Exporters are now experiencing the fruit of two years of hard graft preparing the US market for New Zealand wine.

"In the period from July to February this year, volume has increased 79 per cent and value 93 per cent to the US," he says.

"We were definitely coming from a low base there, but we've seen fairly consistent growth figures."

The Government will freeze tariffs on imported wine on July 1, after reducing the present 7 per cent rate to 5 per cent by that date.

Almost 75 per cent of imported product has no tariff, including Australian wine, which comprises 70 per cent, and a small volume of French champagne.