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New Zealand Wines Keep Focus On Core Varietals, Look To Maintain High-End Image

April 17, 2012

New Zealand wine shipments to the U.S. totaled more than 3.6 million nine-liter cases in 2011, up 4.2% over 2010, when shipments soared by 39.6% according to Impact Databank. The strong New Zealand dollar is still posing challenges, but major U.S. importers are holding the line on prices. This year’s lighter harvest will ease concerns about future price erosion—an issue that arose in bumper-crop years of 2009 and 2011.

Most New Zealand wine importers are focused on existing product ranges, with little emphasis on innovation. Some have dropped underperformers to concentrate on Sauvignon Blanc, which comprises more than 90% of New Zealand wine sales in the United States, according to trade group New Zealand Winegrowers.

Constellation Wines U.S., importer of three top New Zealand brands—Kim Crawford ($17–$33 a 750-ml. bottle), Nobilo ($14–$22) and Monkey Bay ($11)—has eliminated several New Zealand wines from its portfolio. “We decided to pare back and focus on Sauvignon Blanc and Pinot Noir, although we’re having some success with the Kim Crawford Chardonnay as unoaked Chardonnays become more popular,” says Kate McManus, vice president of marketing, imports and innovation for Constellation. “When people shop for New Zealand wine, they’re shopping for Sauvignon Blanc.” Constellation also imports Drylands Sauvignon Blanc ($16).

Following the change of Nobilo’s closure from cork to screw cap in 2011, the brand has been growing at double digits, finishing last year up 15.2% to 296,000 cases. In light of that success, Monkey Bay is now sealed with a screw cap as well.

New Zealand is the seventh-largest exporter of table wines to the U.S. market (including bulk), leaving plenty of room for growth. “The U.S. is still underdeveloped for us, with New Zealand wines comprising about 1% of the imported wine market,” says David Strada, U.S. marketing manager for New Zealand Winegrowers. New Zealand has about 700 wine producers, but only around 100 brands are exported to the United States. Many New Zealand producers are seeking U.S. importers, Strada adds.

Jonas Steen, global brands manager at Delegat’s Wine Estate, owner of Oyster Bay Wines ($15-$19), also sees potential for growth. “The category has achieved a lot, but it still has growth potential,” Steen says. “Our research shows that awareness of New Zealand wine remains relatively low, and that consumers are only starting to understand the category.” Oyster Bay’s U.S. depletions were up 22.3% last year to 302,000 cases, according to Impact Databank. Along with Kim Crawford, Oyster Bay was one of two New Zealand wines to win Impact “Hot Brand” awards this year.

Treasury Wine Estates is building its Matua Valley label ($13-$30) in the on-premise, says Angus McPherson, managing director of the company’s Rosemount Brand Business Unit. Bucking the current trend, McPherson says the company is preparing several New Zealand launches in the U.S. over the next 12 months. “Pinot Noir is starting to gain traction, and we expect interest in other varietals to rise as the category and its consumers mature,” McPherson says.

Importers say maintaining a top-shelf image for New Zealand is crucial to promoting growth and preventing price erosion. “New Zealand consistently over-delivers on quality, giving consumers a value perception of the category that has helped it avoid much of the price erosion suffered elsewhere,” McPherson adds.

“We expect the category to continue growing at a healthy pace for the next few years,” says Frank Polley, vice president of marketing at Pernod Ricard USA Wines & Champagnes, importer of Brancott Estate ($15-$33). “Supply will help dictate where that growth comes from. The fact that the 2012 harvest will be down by as much as 25% will help enhance value.”

In the on-premise, Jesse Webster, beverage director of AvroKO Hospitality Group, with four venues in New York City (and a fifth scheduled to open in Napa, California this summer), focuses on lesser-known New Zealand wines at Public, the group’s restaurant featuring Asian-influenced cuisine made from Australian and New Zealand ingredients. The 2008 Pegasus Bay Sauvignon Blanc-Semillon blend ($66 a 750-ml. bottle) is the restaurant’s most popular New Zealand wine. “New Zealand’s reputation for producing more expensive wines has created a consumer perception that they’re of higher quality than those from Australia,” he says. “If the New Zealand wine industry continues to avoid overproducing and flooding the market with subpar wines, it will keep growing in the United States in a positive way.”

USA – Leading New Zealand Wine Brands
(thousands of nine-liter case depletions)
Brand Importer 2008 2009 2010 2011 Percent
Kim Crawford Constellation 300 349 390 450 15.4%
Oyster Bay Oyster Bay Wines USA 155 186 247 302 22.3%
Nobilo Constellation 315 276 257 296 15.2%
Monkey Bay Constellation 160 165 184 171 -7.1%
Brancott Pernod Ricard USA 140 146 142 152 7.0%
Matua Valley Treasury Wine Estates Americas 85 93 115 107 -7.0%
Total Leading Brands 1,155 1,215 1,335 1,478 10.7%
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