US to become NZ’s biggest market by ’16

The US is to become the largest market in volume and value for New Zealand wines by the end of this year, according to Philip Gregan, CEO of New Zealand Winegrowers.

Gregan predicted that Marlborough will be fully planted by 2020

Speaking to the drinks business in London this week, Gregan said that the US market for wines from New Zealand, particularly Sauvignon Blanc, was outgrowing the country’s current two largest export countries, the UK and Australia.

“The biggest growth is from the US… the US is going to become number one, and it will probably be number one by volume and value by the end of this year,” he stated.

Continuing he explained, “The UK, Australia and the US are all very close at the moment but looking at the growth trends, and the potential, then the biggest potential is in the USA.”

He then confirmed that currently the UK was New Zealand’s largest export market by volume.

According to Gregan, helping the New Zealand’s international image for wine were its national rugby team, the All Blacks, and the Lord of the Rings trilogy of films, which were filmed entirely in the country.

He also said that the quality and character of the wines was key to the country’s export success.

“When people have bought a bottle of New Zealand Sauvignon Blanc in a restaurant over the past 30 odd years then it has consistently been a really good bottle of white, and our wine style fits with the modern wine style – they are modern whites for modern people; it’s a really good fit.”

Furthermore, Gregan revealed that the country would be hosting an inaugural International Sauvignon Blanc Celebration (ISBC) in Marlborough in February 1-3 next year to shine a spotlight on the variety.

Helping to fuel New Zealand’s international growth has been increased plantings of Sauvignon Blanc in Marlborough particularly, although Gregan told db that the region had almost reached capacity.

“There are not many places where there aren’t vineyards,” he said, noting that there was possibly 5-10,000 hectares left where vines could thrive.

“Everybody can see that the end is nigh and the remaining land will be planted out in the not too distant future… probably within five years,” he forecast.

Last year’s harvest was New Zealand’s biggest on record, yielding 445,000 tonnes of grapes, 72% of which were Sauvignon Blanc – or 320,000 tonnes.

Looking ahead to this year’s vintage, Gregan assured db it would be smaller.

“In 2014 there was a pretty special combination of things that led to an increase in supply, and the chance of that repeating itself is pretty slim… I don’t know how big 2015 will be, but there is no doubt it will be smaller,” he commented.

As a result, Gregan predicted that producers would reduce their wine allocations to domestic customers to supply the increasing demand from export markets.

He also said that the trade should expect price increases on New Zealand wine, which in the UK presently has an average price of £7.20 in the off-trade.

When asked if there were any threats to the continued growth in demand for New Zealand wine, in particular Sauvignon Blanc, Gregan said that the challenge wasn’t from rival Sauvignon-producing countries or regions, but New Zealand’s own growers and vintners.

“The biggest threat to us is ourselves: complacency and a failure to continue to innovate,” he said.

“We need to continue to invest in Sauvignon Blanc and Pinot Noir, not capitalize on what’s there and take from it, but put in more for the future – be that investing in improving vineyard quality, wine branding, or innovation.”