ON TRACK - NEXT STOP ASIA
Michael Cooper reviews the year in New Zealand
IF YOU visit one of New Zealand's 600-plus wineries you'll find a positive feeling in the air. "Over the past decade, we have made many projections about sales growth," enthuses Stuart Smith, chair of New Zealand Winegrowers, at the beginning of his annual report. "Each year we have seen them fulfilled and even surpassed. This year is no exception; the industry is right on track for $1 billion of exports by 2010."
Why is the New Zealand wine industry flourishing? Stuart, part-owner of Fairhall Downs winery in Marlborough, believes the industry has stuck to its guns on three key issues: "quality, a strong and unified national brand, and fulfilling the expectations of ever more discerning retailers and consumers."
The figures tell the story. Since 2000, the area of bearing vines has spread from 10,197 to 27,416 hectares; the number of wineries has leapt from 358 to over 600; and the country's total production has soared from 6.69 million cases to 22.8 million cases of wine. The signs of expansion are everywhere. Peter Yealands, who recently launched his Yealands Estate range from the 2008 vintage, has established New Zealand's largest privately owned vineyard, draped across 1000 hectares of the lower Awatere Valley, from the foothills of the Kaikoura ranges to bluffs overlooking Cook Strait.
Driving through North Canterbury last year, it was impossible to miss the flurry of vine plantings at Cheviot, 70km north of Waipara. Expatriate Kiwi David Teece, professor of global business at the University of California, Berkeley, and his wife, Leigh, planted their first vines above the Waiau River in 2004. Now their first wines are on the market, and they're impressive. The standout is Mt Beautiful North Canterbury Sauvignon Blanc 2008, a richly scented, mouthfilling wine with intense, vibrant passionfruit/lime flavours, smooth and dry.
In the deep south, Fiordland farmer Graham Deaker has produced one of the first Southland wines from grapes grown in the Te Anau basin. Only 400 bottles exist of Point Burn Vineyard Pinot Noir 2008. "Some said, ‘You'll never grow it down here,' reports Graham. "I just thought I would give it a go and it turned out pretty good."
Following a bumper harvest, winemakers are smiling in many regions. In the Wairarapa, the 2008 crop was more than twice as big as 2007; in Central Otago, it was nearly three times larger; in Canterbury, four times larger.
Overall, New Zealand winegrowers harvested a massive crop of 285,000 tonnes in 2008, a 39 per cent leap on the previous record, set in 2007. An eight per cent increase in the producing vineyard area contributed to the bonanza, but the major influence was a generally mild growing season. After the heaviest-yielding vintage of the past decade (averaging 10.4 tonnes of grapes per hectare), New Zealand sauvignon blanc, pinot gris, riesling, gewurztraminer, viognier and pinot noir are all in record supply.
In Marlborough, where heavy rain in late March and early April disrupted the harvest, the total crop soared from a then record 120,888 tonnes in 2007 to 194,639 tonnes in 2008 (a whopping increase of 61 per cent).
One of the region's top small-scale winemakers views 2008 as a vintage of the "haves" and "have nots". "I would hate to have been relying on the fertile sites that many prefer for getting herbaceous characters in sauvignon blanc. The heavier crops that they start with have been exacerbated by the rains, increasing crop levels well beyond those needed and leaving them vulnerable to botrytis. However, the "haves" - those who worked hard in the vineyards, controlled yields and harvested a week before the rains - will produce white and red wines "that are looking great, with bright, vibrant flavours and balanced acidity".
Unlike the bumper harvest further south, in Hawke's Bay the crop was 18 per cent lighter than in 2007; in Gisborne, 8 per cent lighter. As a result, the total national harvest of grape varieties grown widely in North Island regions - notably chardonnay, merlot, cabernet sauvignon and syrah - was smaller than in 2007.
After doubling their output in four years, many winemakers are now questioning the rate of growth. "In the short term, it lays down a challenge to the industry to sell through a larger than expected quantity without undermining New Zealand's position in the market," admits New Zealand Winegrowers. "In the longer term ... we must ensure we do not outpace our markets or our infrastructure."
Salvation doesn't lie in the tight domestic market, where in 2008 the average Kiwi consumed 11.1 litres of New Zealand wine - down from 12.2 litres the previous year. Exports have exploded over the past decade, however, from 16.6 million litres in 1999, worth $NZ125.3 million, to this year's 88.6 million litres, worth $NZ797.8 million.
Australia, which in 2008 imported over 2.7 million cases of New Zealand wine, worth over $NZ246 million, has now emerged as the country's most valuable export market. The British imported more (3.3 million cases) but paid less ($NZ240 million), while the 2.2 million cases exported to the US generated $NZ160 million.
"Everything according to plan" is the current export story, according to the industry. In the UK, an average bottle of New Zealand wine now commands £6.47 - more than £2 more than wine from anywhere else. In just two years, Australia's imports of New Zealand wine have doubled.
The next step is Asia, where New Zealand recently snapped up a free trade agreement with China. Hong Kong and Singapore are tariff-free for New Zealand wine, and free trade agreements with Japan, Korea and India are also in the pipeline. Asian markets are now seen as brimming with potential.