UK wine importer urges NZ to focus on high-quality production

By DiTA DE BONI

New Zealand wine exports to Britain could reach almost $200 million, surpassing last year's $146.9 million total, if producers resist the urge to compete on price with other New World producers, says a visiting distributor for one of this country's biggest wineries.

Patrick McGrath, managing director of Hatch Mansfield Agencies, which distributes Villa Maria and Esk Valley wines, says New Zealand should not be afraid of a reliance on sauvignon blanc and should continue to keep average pricing up to avoid flooding foreign markets with cheap wine and losing credibility.

"New Zealand should build its image around sauvignon blanc. There's no doubt the best sauvignon blanc in the world comes from this country."

Mr McGrath has been distributing New Zealand wines in Britain for about 10 years and says that as wine consumption there has increased so has the awareness of New Zealand as a quality brand.

Britain boasts the 20th biggest wine consumption a head in the world - ranked just behind Australia - rising from 2.87 litres in 1970 to 13.99 litres in 1997.

Unlike new export markets, where New Zealand vintners have struggled to differentiate themselves from their Australian counterparts, British consumers have long distinguished between the two countries and now associate New Zealand with a "reputation for quality," he says.

Since the first wine exports in the 1960s, Britain has become New Zealand's largest export market, buying just over half of all wine exports.

While New Zealand wines are part of the New World portfolio that has grown to 33 per cent of the British market, the country's production is dwarfed by Chilean, Australian and South African wines. Where New Zealand differentiates itself and can grow is the sterling 5 and over category, Mr McGrath says.

New Zealand wines make up less than 2 per cent of the over-all British wine market but 10 per cent of the higher-priced category.

Huge shipments of cheap Australian and Chilean wine have now linked those two countries with a much lower price category - some as low as sterling 2.99 a bottle. "Those types of wine, frankly, can't possibly be that good," he says.

New Zealand wineries have so far not had enough wine to engender comparisons with huge wine conglomerates across the Tasman such as BIL Hardy.

New Zealand producers continue to scramble to keep up with a steady growth in British and worldwide demand.

Mr McGrath says he is worried by the massive growth of small agencies. Of the 365 wineries in New Zealand, only 21 produce over 200,000 litres of wine a year, and several are rushing into exporting "without thinking."

"You've got to follow a strategic plan to export properly, and I feel there will be casualties the way several wineries are going about it at the moment.

"Not only is the UK running out of agents to properly plug the wine, but there is a danger that up-and-coming agencies will undercut the high-quality New Zealand name."

Previously, New Zealand exporters have kept in with distributors in Britain by sacrificing product from the domestic market for export.

Mr McGrath will not go as far as saying vineyards "dropped the ball" by not anticipating a considerable upsurge in wine consumption overseas.

He says the case of Corbans Wines, which encountered difficulties last year when High St wine chains Victoria Wine and Thresher merged and then rationalised, leaving the label in limbo, demonstrates the importance of a good distributor in the British market.