Speaking at a conference organised by the Food, Drink and Agriculture group of The Chartered Institute of Marketing in London last month, David Cox, director Europe for New Zealand Wine Growers outlined the country's "rebalancing" plans designed to raise the price of its wines in the UK, which takes about 4% of its total output.
New Zealand wants to re-establish itself as a "mass/niche" exporter and avoid the same fate suffered by Australian wine producers of continued falling prices, remarked Cox.
For most of the past 10 years, New Zealand wines have enjoyed "sustained double digit export growth", said Cox. But, since the 2009 season, supplies have surpassed demand, and this has undermined the premium enjoyed by the product.
In 2009 rather than an average price for a light wine at retail of £4.26 for a 75cl bottle, New Zealand wines commanded £6.44 a bottle, "despite the deep discounting landscape out there", reported Cox.
However, since then, New Zealand wine has increasingly been sold through promotions and discounted brands at a much lower average price of around £4.58 today due to the overcapacity, he said. Today it is "more like a scene from Psycho", he added.
In 2011 New Zealand growers are expected to produce about 310,000t of grapes even compared with "bumper vintages" of 285,000t in 2008 and 2009. "Basically, we are making more than we are selling and the spectre of bulk wine has come in as people wanted cheaper wine," he said. Bulk wine exports in 2011 are expected to reach about 30%, he added. He cited a Tesco-branded Marlborough region Sauvignon Blanc called Ocean's Edge that was discounted from £7.99 to just £3.99 a bottle.