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New Zealand wine: A vintage vintage
Published:  01 October, 2012

The 2012 vintage is down more than 20% in places, but the Kiwis are happy to try to strike a balance between demand and supply. Christian Davis reports

The 2012 vintage in New Zealand has come in at 269,000 tonnes. That is down 59,000 tonnes, or 18%, on 2011. The growing season was the coolest on record since the early 1990s, according to Jim Robertson, Pernod Ricard Premium Wine Brands’ global wine ambassador, New Zealand brands.

David Cox, director, Europe, for the industry’s generic body, the New Zealand Wine Growers (NZWG), tells Drinks International: “The vintage was two to three weeks late. It has been cool and wet during flowering but we have had a bit of an Indian summer. The last six to eight weeks, March/April, have been glorious, particularly in Marlborough.”

So despite being down 23% in Marlborough, NZ’s largest, most important wine-producing region, the New Zealanders are far from down in the mouth about it. 

Alastair Maling, Villa Maria’s general manager for winemaking and viticulture, reckons the late burst of fine weather meant the Kiwis “got out of jail”. “There was a lot of concern with a cool summer, overcast,” he says. “It was an unusual season, one of the toughest in Hawkes Bay (a warm region best known for NZ’s more full-bodied reds, particularly varieties such as Cabernet Sauvignon and Merlot, which make up Bordeaux blends). But then in April we had the most sunshine hours in 85 years. So, winemakers have been left with a smile on their faces.”

Cox says: “New Zealand is a small country so we are not in the volume game. We want to bring value back. Smaller volume will allow growers to refuse some of the cheaper and bulk offers. It will eliminate or at least reduce discounting at entry level.”

Peter Yealands, of Yealands Estate in Marlborough’s Awatere Valley, is a larger-than-life figure in the otherwise sedate, understated, NZ wine trade. He puts things into context, saying: “New Zealand produces fewer than 1% of global wine production. We are a drop in the ocean and Marlborough is close to maximising its geographical boundaries. In my view, we have currently reached about three-quarters of maximum possible capability.”

The size and quality of the vintage is obviously the be-all and end-all for any winemaker but in New Zealand that appears more so. Apart from being a small-scale producer compared to the likes of France, Italy, Spain, Australia and Chile, NZ holds a premium price position so the last thing it wants is oversupply and a surplus. In the UK, for example, NZ’s largest export market, the average price of a bottle of table wine stands at £4.88, according to Nielsen. For New Zealand, it is a significant £6.32.

That does not mean NZ is ‘coining it’. David Cox points out that the currency rate fluctuations have damaged profit margins.

Returning to vintages, 2008 was a big vintage with yields approaching 10 tonnes per hectare. It was not great in quality and the Kiwis were left with a surplus. Cox says 2009 and 2010 were more in balance, but 2011 was high again at 328,000 tonnes, up 62, 000 on 2010. Yields were at 9.8 tonnes per hectare.

The European director sees it as three vintages which have threatened NZ’s premium price proposition. In a tight, supportive industry, apparently NZWG chief executive Philip Gregan had to talk to growers and producers about bringing down their yields, dropping grapes on the ground or leaving them on the vine rather than spilling over the crucial 10 tonnes per hectare. Sounds like something between benignly recounting the facts of commercial life and reading a riot act.

On the vintage, Gregan pronounces: “The 2012 vintage is similar in size to 2010, but given sales growth in the past two years the reduced crop will introduce a new tension to the sectors’ supply/demand balance. As a result it is clear focus in the next year will be on value rather than volume growth.”

Having dwelt on vintages, Graham Nash, wine buyer for British-based global multiple retailer Tesco, points out that if it was not for the 2008 vintage, which saw substantial price cutting on NZ’s flagship variety, Sauvignon Blanc, many consumers who purely buy on price might not have appreciated the delights of zesty, grassy Kiwi Sauvignons. 

Nash’s pragmatic point is that, despite the emergence of other varieties, NZ “cannot get away from Sauvignon Blanc” and if it is expensive and possibly scarce as a result, consumers will not buy it or try it and that does not necessarily bode well for the future.

Yealands says: “The supply/demand ratio has been coming back into balance over the past two years, and demand has been growing fast. The unseasonal weather over this vintage has impacted on production by, on average, about 30%, and more so on the Pinot varieties. This has already pushed prices up to a more realistic and sustainable level, firstly for grapes and now for wine. 

“NZ wineries are already having to allocate wine and, unfortunately, the situation will not get any better going forward as there has been no new vineyard development since 2008 and all the existing vines are now fully producing,” says Yealands.

Cooler conditions

The heartland of NZ wine is Marlborough at the top of South Island and the brand that dominates and accounts for the lion’s share of NZ total exports is Brancott Estate, formerly Montana in many markets, and specifically its Sauvignon Blanc.

Pernod’s Robertson says the cooler, wet conditions during flowering and fruit set have led to a lighter vintage but ripeness and flavour were achieved. Brancott, which claims to be the “original Marlborough Sauvignon Blanc”, started around 1979. The vines are maturing and the winemakers become more knowlegeable and experienced with every vintage. The result is that winemaking and styles are evolving.

Robertson boasts “a full suite of Marlborough Sauvignon Blanc, from sparkling to late harvest dessert wine”.

He says: “One of the most exciting new varieties coming out of New Zealand is Sauvignon Gris. Its ability to produce a unique new world wine style is exciting. We will see exponential growth for this variety in our export markets in the next couple of years.”

While Central Otago at the far southern end of South Island tends to get the plaudits for its world class – and therefore expensive Pinot Noirs – it is Marlborough that accounts for 52% of NZ’s total Pinot production.

Another variety creating some interest is Syrah. Cox, Maling and Nash draw attention to this Rhône variety which has done so well for the Barossa valley in Australia and is also creating a buzz in Chile with cool climate varieties.

Finally, the NZWG itself has undergone a strategic review by accountants PricewaterhouseCoopers. The upshot was that export countries were segmented into either ‘protect/mature’ markets or ‘growth’ markets. The UK, Ireland and Australia, NZ’s largest customers, fall into the former while Germany, Sweden and the Netherlands are deemed growth markets and therefore resources and focus is being switched to them.

Going forward Cox sees exhibitions such as ProWein and the Frankfurt Book Fair (the equivalent of the Chelsea flower Show in London – you don’t not have to be a keen gardener to attend) as key events for New Zealand wine to be seen at.

Overall, New Zealand and its wine are in a good place. Supply and demand are broadly in balance. NZ ‘owns’ Sauvignon Blanc, one of the most popular wines with mainstream consumers, and makes world class versions of one of the most sought after, Pinot Noir. The industry is broadly united and its wines command premium prices.

Surely, it can’t get much better than this?