Tough times ahead for wine grape growers

The wine industry must do more to promote its wine or risk having too much product, say industry executives.

With volumes expected to nearly double from 118,000 tonnes to 200,000 tonnes between the 2002 and 2006 vintages, overseas markets will have to triple or quadruple to meet the supply, says New Zealand Winegrowers chief executive Philip Gregan.

His organisation spends around $2.8 million on its promotional programme, but that amount would have to at least double within the next few years, he said.

Wine grape plantings soared 37 per cent in two years from 12,200ha in 2000 to 17,400ha last year, by which time winemakers said the industry's own survey showed the country had enough land under grapes to meet expected export demands in 2006.

On the basis that anything planted since last year may turn out to be surplus to requirements, the industry has been cautioning prospective winemakers and growers to make sure they have markets in place before they start planting.

And a former Treasury official who helped devise the Government's vine-pulling subsidies in the mid-1980s, Martyn Nicholls, warned this year that the sector was heading for a fall.

Mr Nicholls returned from working as a merchant banker in London with a warning that New Zealand will be hard hit by the looming global wine glut.

A Marlborough vineyard owner, Mr Nicholls said that to meet the coming glut, New Zealand would need to quadruple its exports in the next four or five years in some varieties.

He expected that by 2006 the Marlborough region's vineyards would be selling at a fraction of their current price.

Montana managing director Peter Hubscher said yesterday that the wine industry could cope with a record 160,000 tonnes of grapes this year, well up on the 76,400 tonnes crushed after last year's frosts and 40,000 tonnes up on the 2002 harvest.

He said that a bumper crop, if it occurred, would not be a problem because there was demand for New Zealand wines overseas.

But Saint Clair owner Neal Ibbotson said far more needed to be done by the industry.

"New Zealand needs to ... increase the promotion and marketing of the Marlborough and New Zealand brands in wine drinking countries all around the world," he said.

"We have only just scratched the surface with marketing."

Mr Ibbotson said it was hard to get some people enthused about forking out for promotional levies, because they had difficulty seeing the long-term benefits.

But marketing was the responsibility of every winery in Marlborough and companies had to be prepared to spend more than they were.

He said Marlborough had been lucky because sauvignon blanc's brand had "basically sold itself", but other products such as pinot noir now had to compete.

"To do that we need to promote our brand," he said.

"I believe there is a huge potential for Marlborough success throughout the world but it won't happen without promotion."

Mr Ibbotson said the Government was also responsible for promotion, because it took $120 million from the wine industry each year in excise tax.

Mr Gregan said New Zealand Trade and Enterprise, a Government agency, had a strong relationship with New Zealand Winegrowers and provided expertise as well as about $100,000 a year for promotion.

Trade and Enterprise had also helped regional groups such as Marlborough Winegrowers, a new body comprised of grapegrowers and winemakers, to get a foot in the door of international events.

Marlborough Winegrowers chief executive Michelle Beckett said future promotion would be "user-pays".

That meant wine companies would contribute between $600 and $6000 to generic marketing, depending on the promotions they joined.

With huge plantings, promotion had never been more important, Michelle Beckett said.

Sauvignon blanc would sell itself to a certain extent but pinot noir and chardonnay were a different story, she said. "We can't sit back and say savvy blanc will do it for us."

The Marlborough Winegrowers business plan outlined a number of promotional possibilities, Michelle Beckett said.

These included promoting Marlborough wine at events such as the Hong Kong Fashion Show and having foreign wine critics visit Marlborough.

- NZPA