February / March 10
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FROM THE DESK OF THE CEO
Reflections on the past decade
By Philip Gregan, New Zealand Winegrowers Chief Executive Officer
Was anybody listening?
I stand to be corrected but I believe it was in August 2002 that John Grant was a keynote speaker at the Bragato Conference in Christchurch. Anybody who was present that morning will well remember his speech – descriptors such as compelling and riveting hardly do the presentation justice.
John began by saying that he could smell something in the air in the New Zealand wine industry. That something was gold fever - the gold of course being Marlborough Sauvignon Blanc. John then went on to warn about the dangers of ‘gold fever’.
Given developments post the 2008 vintage that speech often comes back to me as a warning that more people should have heard and heeded. Perhaps if they had, then some of the challenges the industry is now facing could perhaps have been avoided in the first place. And it is not as though his warning was not repeated on more than one occasion subsequently. It raises the question of how we get the real message about our industry out to new and potential investors, not just the headlines.
Nature Friend and Foe
In the past decade, nature has had its say for good and bad. Yes, we have had some very good even excellent vintages, but perhaps the biggest difference from the 1990s can be summarised in one word – ‘frost’.
2001, 2003 and a number of later vintages were marked by significant frosts. In 2003 that led to a crop about half as big as it should have been – just 75,000 tonnes of grapes were harvested.
Those frosts engendered huge uncertainty about grape supply. The market response from was decisive and massive. Grape prices rose sharply and more and vineyards were planted to assure supply. The frosts (and/or cool flowerings) then effectively masked the growth in vineyard area and ultimately encouraged the planting of more vines than was needed.
Vineyard owners also invested heavily in frost protection. As a consequence, the vineyard landscape in Marlborough, Waipara and Wairarapa became studded with wind machines, a sight not seen in New Zealand before. Those wind machines in turn then generated opposition from some neighbours (similar to bird scarers the decade before). The result: a new resource management issue for the industry to focus on, albeit a variation on an old theme – cross boundary effects.
Nature rounded out the decade by delivering an over-abundance of grapes in 2008, and a very high quality harvest in 2009.
If there is a message about nature from the past decade, it probably is that we should never take it for granted – but any good farmer already knows that. Another message, of course, is we need to work harder to get our vineyard data more accurate
Where all those grapes came from?
That must be the question virtually every viticulturist in the country asked themselves after vintage 2008 delivered a harvest much bigger than virtually anyone expected. If nothing else, vintage 2008 bred a determination to be more accurate with yield assessment in the future. About time, I hear the wine marketers saying!
Swing away from Chardonnay?
In the early part of the decade, the ABC club (Anything but Chardonnay) was perhaps seen as a slightly weird fringe element amongst wine aficionados, but who would have guessed that within the decade in some markets (eg New Zealand and Australia) Sauvignon Blanc would overtake Chardonnay as the pre-eminent white wine variety. New Zealand Sauvignon Blanc brands have been both an initiator of that change and a beneficiary. However, it has brought with it major challenges for some of our Chardonnay producers. It also raises the issue for us of our heavy reliance on one grape variety and the risk if the market moves away from that style. If nothing else, it means we must watch and listen to markets very carefully.
$1 billion of exports?
At the beginning of the decade, our total exports were somewhat less than $200 million – today they are in excess of $1 billion. That growth is a stunning achievement which growers and wineries should be very proud of.
In the market, it has seen New Zealand brands grow in prominence and reputation. New markets have been developed with real progress being made in Asia and in Europe, beyond the UK, for the first time.
In New Zealand, the $1 billion export mark was a very public achievement. It has elevated wine to one of this country’s major exports.
Australia our largest market!
I well remember when Chris Yorke showed me the results of one of our Export Projection Surveys which foreshadowed a huge jump in exports to Australia through to 2010. While I knew we were doing well in Australia, the forecast increase was colossal and I simply did not believe this was going to happen. How wrong I was! In the past 10 years, exports to Australia have grown from less than $25 million to nearly $350 million today. Stunning!
Why has the growth happened? Lots of hard marketing work and investment obviously. The WET rebate has helped, and perhaps being in the right place at the right time, i.e., with our wine styles/brands resonating with emerging trends in modern lifestyles and cuisine. Continuing to invest in a market worth $350 million is an obvious priority for the next decade.
There are many other issues I could comment on from the past decade but space does not permit. The decade ahead I am sure will be full of just as many challenges and opportunities as the past 10 years. As we address those we should not forget to look back for some lessons of how or perhaps even more importantly how not to move forward.
Cheers
Philip Gregan
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