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NZ chief predicts growth slowdown

Published:  23 July, 2008

The New Zealand wine industry's major growth phase is over and with that will come consolidation, says the head of the country's 1,300 grape growers and winemakers.

Stuart Smith, chairman of New Zealand Winegrowers, said that given the nation's size, both events were always going to happen and that it was an exciting new phase' in the country's winemaking history.

Speaking to Harpers at the New Zealand annual trade tasting in London last week, Smith said: We're really at our extent of plantings in Marlborough, and close to capacity in other areas. The major growth phase is over.' He said this was natural for a small country that only came to the wine world's attention 20 years ago.

New Zealand is small. We're not an Australia. Last year's harvest was our biggest ever, but we will never have the production to mirror what's happened there. We're not going to have great big brands like Hardy's or Jacob's Creek - it's just not possible for New Zealand. But there will be consolidation - there must be consolidation. It's happening slower than I thought it would, but it will happen.

Branded wines make servicing key markets such as the UK more economical. Having brands adds legitimacy as it lets consumers get hold of wines more easily, identify with New Zealand wine, and expand to boutique wines.'

He said while Australia and the US (and to a lesser extent Asia) were key markets for New Zealand, the UK was the most important: It's a bit like Broadway: if you can make it here, you can make it anywhere.'

But he added that just because the Kiwis had proven themselves in the British on- and off-trades, there was no time to rest on their laurels: New Zealand wine is not new any more,' he said. We've found our place in the market after lots of hard work, but we still have to continue to deliver.'

Smith said one reason NZ wines could still garner an average of almost 6 a bottle (well above the market average of 3.84) was because winemakers had avoided chasing each other down the hole of deep-cut promotions - and long may that continue.'

While Sauvignon Blanc and Pinot Noir would remain the backbone of the country's industry, he was excited by the rise of aromatics such as Pinot Gris, international varieties

such as Tempranillo and more single-vineyard wines.