NZ's wine in danger of gaining 'industrial' tag

By DITA DE BONI

New Zealand wine may be soon caught up in a pitched marketing battle between "old world" and "new world" wine producers in the hotly contested European retail market.

Wine bodies in countries such as Italy, France and Germany, are reported to be considering labelling wine from "new world" countries - Australia, South Africa, New Zealand and Chile, for example - as "industrial."

That would make the wine a far less inviting proposition for European wine drinkers than their own "natural" or "agricultural" domestic product.

The distinction is in name only, industry bodies in Australia and New Zealand say, but could further entrench non-tariff barriers used by the European Union to protect regional markets from an influx of popular "new world" product.

Australian Wine and Brandy Corporation manager Sam Tolley says the issue is politically motivated.

"Wine producers in some of those countries are putting pressure on their Governments to protect them from outside competition."

Mr Tolley says Australian wine exports to Britain - 140 million litres in the year to July out of total shipments of 288 million litres - now rank second only to France's in market share and are "dominating the mid to upper price point."

Britain is also New Zealand's largest export market, swallowing 68 million litres in the year to June 1999.

Most of Australia's exported wine was produced by huge domestic concerns, including Penfolds, Southcorp, BRL Hardy and Mildara Blass.

European producers say product from such large wineries should be labelled "industrial" because of the sheer size of vintage, but Mr Tolley says the size argument is misleading. "Quality is more than equal from the Australians - that's why we dominate that upper price point," he says.

"Europe sees its marketing advantage as heritage and tradition, and wants to emphasise that to the detriment of other product."

New Zealand Wine Institute chief executive Philip Gregan is a member of the New World Wine Group, established in 1998 to lobby trade bodies to ease export tariffs.

He says the proposed classification system is "just rubbish."

"You could go to France or Germany and see wineries that are just as large and technologically advanced as ours. Similarly, you could go to some small New Zealand wineries and see them using very traditional winemaking methods."

There are several non-tariff barriers that New Zealand wine must clear before making it into Europe.

New Zealand cannot sell sweet wines on the Continent, it cannot put more than two different varieties of grape on a front label, and it is barred from exporting product made with grapes from more than one region.

Our winemakers are also prohibited from using the geographical indicator "New Zealand," which some sources think is an attempt to further muddle country-based marketing efforts in the region.

Mr Gregan says it is hard to tell how much revenue New Zealand winemakers are missing out on from the "crazy rules" imposed on them by European authorities.

He says the EU will be up against strident opposition if it tries to take any talk of a classification system further.

Montana managing director Peter Hubscher says the rumour is a long way from becoming an issue, but new world wine producers are keeping a watching brief.