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New Zealand wine producers 'excited' about 'rebalanced' UK market

Published:  20 January, 2015

Sauvignon Blanc continues to be the most popular variety in the UK and no other region is more synonymous with the aromatic grape variety than New Zealand, which continues to make inroads in the UK market.

New Zealand Winegrowers chief executive Philip Gregan, speaking at today's 34th annual trade tasting in London, told the country's wines are performing strongly in this market, with average bottle prices topping £7.40, and have been bolstered by the exchange rate.

"New Zealand wine is doing really well in the UK market. And certainly our wineries have been very positive about what has been happening.  We also benefited from a slightly more beneficial exchange rate was well," he said.  

Philip GreganPhilip GreganPhilip Gregan, chief executive of New Zealand Winegrowers

"For the last 12 months the average price per bottle has been over £7.30 and for the last 12 weeks it tipped over £7.40 per bottle retail. We had volume growth as well.

Gregan sees the UK wine market as far more balanced following the global financial crisis and is optimistic about the future for those selling to the trade.

"There has clearly been a rebalancing within the UK wine market, which was triggered by the global financial crisis, the fall in the value of the pound and the duty escalator. Clearly on a global scale some producers had been selling and sometimes at a loss.  But the market is coming back and now it is in much more sound place than it was six or seven years ago. The outlook with what, hopefully, is improving economics, there is a real opportunity here. And I think wineries that are here are even surprised by how well New Zealand wines have been doing over the past year," said Gregan.

Philip Gregan

UK consumers seem willing to pay more for New Zealand wines with average price per bottle up 8.1% from £6.79 to £7.34 according to recent Nielsen data.

"Of course there is always pressure to bring down the price, but the reality is that we grow grapes and make wine in cool climate viticulture areas. With that there is a trade-off between yields and flavour. So if you can't lower costs with higher yields, you have to do something else and for us it is the focus on very high quality. There is not really any other path for us to go down," said Gregan.

Following its largest ever recorded harvest in 2014, New Zealand producers are expecting a small crop this harvest, so prices should remain stable for the foreseeable future, Gregan maintained.

"One big harvest doesn't make for an over supply situation," said Gregan, adding that producers did not expect that the 2014 harvest would be followed by another bumper crop. The early stages of growing for the 2015 harvest has been challenging.

Gregan said: "There was some early frosts and the weather was quite unsettled and the main result is that the crop is going to be smaller than last year. Following the largest crop we ever had, everyone is very comfortable with that. It is nice balance between supply and demand. The signs for the vintage in terms of quality are looking pretty high quality, but there is still a way to go yet."