Top 10 markets for New Zealand Sauvignon Blanc

To mark International Sauvignon Blanc Day (5 May) we take a closer look at one of the grape’s most prolific producers – New Zealand – and the markets that are moving this versatile variety.

The total value of all New Zealand wine exports increased 10% to NZ$1.57 billion in 2016.

The total value of all New Zealand wine exports increased 10% to NZ$1.57 billion in 2016, with volumes also rising. Packaged wine exports increased 5% to 1421.2m litres, while bulk wine exports increased 1% to 71.4m.

Of that, Sauvignon Blanc made up 85.6% of exports, making it by far New Zealand’s most important grape variety, with volume exports of the grape growing in all of its top 10 markets, half of those by double digits.

“In all markets overall growth is 16% with total Sauvignon Blanc exports now 210m litres [MAT March 2017),” said Chris Yorke, global marketing director for New Zealand Winegrowers.

“Sauvignon Blanc continues to be the prime motor of growth in our biggest market the USA and is enjoying double digit growth in all our top 4 markets- U.K., USA, Canada, Australia. In China, a traditionally red wine market , Sauvignon Blanc is now our number one exported varietal – growing at 35%. Japan and Netherlands also recording strong growth (23% and 16% respectively)”.

US GROWTH

Last month, it was revealed that exports of New Zealand wines to the US had overtaken those of Australia in terms of value for the first time.

According to Rabobank’s 2017 Q2 Wine Quarterly Report, the value of New Zealand imports into the US totalled US$400million (almost NZ$500m) in 2016, having climbed 11% by value ($49m) in the last year.

In comparison, the value of Australian wine imports into the US have been on a steady decline since 2012, dropping to around $350m in 2016, placing the value of NZ imports into the US ahead of Australia for the first time.

Taking Moving Annual Totals (MAT) provided by New Zealand Winegrowers to March 12, here we round up the grape’s 10 biggest markets by volume. While they didn’t make the top 10, notable mentions go to China and Japan, which are in fact two of New Zealand’s fastest-growing markets for Sauvignon Blanc, at 12th and 13th respectively. Volumes of New Zealand Sauvignon Blanc to China increased by 35% to 775,458 million litres in the past 12 months to March 2017, while Japan’s volumes grew 23% to 758,853 litres.

International Sauvignon Blanc Day is marked each year on 5 May, with New Zealand Winegrowers leading the celebrations of its biggest grape.

“New Zealand Sauvignon Blanc is a NZ$1.3 billion export earner, massively contributing to the success of New Zealand wine overseas,” added Yorke. “If you’re a Sauvignon Blanc fanatic, then we encourage you to join the online conversation and post video clips, photographs and messages that salute New Zealand’s most well-known wine. We think New Zealand Sauvignon Blanc is a success story worth celebrating, so on May 5 raise a glass to the wine that put New Zealand on the map.”

So, which markets are driving the continuing success of New Zealand’s most-prized variety? Click through for a run down of New Zealand’s Sauvignon Blanc’s biggest markets…

(Data source: MAT volume totals to March 2017 – NZ Winegrowers)

10. Hong Kong

Volume (litres): 830,567

% change: 2%

From 2010 to 2014, New Zealand exports to Hong Kong jumped a massive 45% – from 79,000 to 115,000 cases – making it Hong Kong’s seventh largest wine importer. While Sauvignon Blanc is still the biggest driver, the increasing quality of Pinot Noir has netted it loyal fans in the city.

Speaking to dbHK earlier this year, Patrick Materman, of Brancott Estate in Marlborough, said that the natural freshness and acidity of New Zealand wines makes them perfectly suited to Hong Kong’s humid climate, sharing his belief that Hong Kong is now ready to embrace “most New Zealand varietals”.

“Hong Kong is a big market for us undoubtedly. The market is becoming so much more sophisticated, there’s a very strong sommelier presence here to introduce our styles and also a huge food culture. New Zealand wines are natural food wines, but they all have that balance of freshness and acidity which makes them suitable as an aperitifs and they suit the humid climate.”

9. Denmark

Volume (litres): 915,637

% change: 7%

Leading a trio of Scandinavian countries lapping up NZ Sauvignon Blanc is Denmark, which is New Zealand’s ninth biggest market. Volume exports of NZ Sauvignon Blanc to this market grew by 7% in the past 12 months to March 2017.

As with markets such as the UK, there are hundreds of importers and distributors of wine operating in Denmark, making it a highly fragmented category with no dominant companies in control. The relative wealth and interest in wine by its consumer base makes it an appealing market for growth, however price sensitivity, due to the amount of competition, is a factor.

According to Candean, Denmark’s wine market is expected to register marginally higher value growth during 2014-2019, compared to 2009-2014. It grew at a CAGR of 3.4% during 2009-2014 and is forecast to register growth at a CAGR of 3.6% during 2014-2019. By volume, wine consumption grew at a CAGR of 1.4% during 2009-2014 and is forecast to register growth of 1.8% during 2014-2019.

8. Sweden

Volume (litres): 1,037,921

% change: 3%

Sweden is now the eighth biggest market for New Zealand Sauvignon Blanc, having recorded a modest increase of 3% in the past 12 months to March 2017.

Sweden’s off-trade wine market is controlled by the government-owned Systembolaget chain of liquor stores, which is the country’s only retail store allowed to sell alcoholic beverages that contain more than 3.5% alcohol by volume. Producers are free to sell directly to restaurants and bars in the on-trade.

7. Netherlands

Volume (litres): 2,855,785

% change: 16%

For such a tiny country, the Netherlands packs a punch in terms of wine imports. Volumes of NZ Sauvignon Blanc increased by 16% in the past 12 months, making it the grape’s seventh largest market.

In its 2015 report, Vinexpo predicted that overall wine consumption in the country would increase steadily over the next five years, forecasting growth of 2.4% to 2018.

6. Ireland

Volume (litres): 2,874,470

% change: 1%

Of all the top 10 markets, Ireland registered the least growth, with shipments of NZ Sauvignon Blanc rising by just 1%. With Netherlands hot on its heels, and growing at a much faster rate, it’s likely that it will soon drop to fifth place.

5. Germany

Volume (litres): 6,407,544

% change: 2%

By value Germany was the fastest-growing market of any of New Zealand’s top 10 markets, with the overall value of NZ wine exports jumping 45% to NZ$14.5m in 2016.

In the past 12 months to March 2017, imports of NZ Sauvignon Blanc have increased by a modest 2%.

4. Canada

Volume (litres): 9,396,248

% change: 12%

Overall, wine exports to Canada throughout 2016 increased by 13%, with Sauvignon Blanc exports specifically growing by 12% in the past 12 months. Growth was also strong into the United Kingdom with export value up 8% to $382 million.

Activity in this market is likely to be given a boost if the beleaguered Trans-Pacific Partnership (TPP) ever passes its final hurdle. Negotiations of the 16-nation ‘Regional Comprehensive Economic Partnership’ Free Trade Agreement (FTA) have been ongoing for several years now, and would result in a free trade agreement for New Zealand, and many other countries, with the USA, Japan, Canada, Mexico, and Peru.

The TPP was signed by its 16 member states in February 2016, however Trump’s recent ascent threatens to throw a spanner in the works.

In its 2016 annual report NZ Winegrowers said: “History tells us that new free trade agreements generate significant increases in wine exports, so the potential benefits from TPP are very exciting as it would be New Zealand’s first free trade agreement with the USA, Japan, Canada, Mexico, and Peru.”

3. Australia

Volume (litres): 47,575,322

% change: 13%

Considering its close proximity, it’s perhaps surprising that Australia isn’t even higher up the charts. That is, until you consider their vast domestic production. Despite making enough wine to sate its entire population, the Aussies still import an impressive 47 million litres of NZ Sauvignon Blanc, with their appetite for their neighbour’s signature variety growing by 13% in the past 12 months.

But while imports of NZ Sauvignon Blanc are buoyant, over exports to Australia fell flat in 2016, with NZ Winegrowers attributing this to wineries diverting supplies to other markets in response to a “high exchange rate and the slow Australian economy” in its 2016 annual report.

2. UK

Volume (litres): 61,803,202

% change: 25%

The UK remains one of New Zealand’s biggest UK wine imports, coming in at number two. During the entirety of 2016, UK sales of New Zealand wine increased 15%, according to figures released by the Wine and Spirit Trade Association (WSTA) in its Q4 end of year Market Report, making it the second-fastest growing country of origin.

Overall New Zealand sold more than 63 million bottles, with 42 million litres sold in the UK off-trade, a +16% increase on the previous year, with their value increasing by 13% to £401m.

In the on-trade, New Zealand was the UK biggest importer, selling 56m litres of wine, up 5% on last year, reaching a value of £145m, up 16%.

1. USA

Volume (litres): 66,851,017

% change: 15%

Securing the number one spot is the US, which is only some 5 million litres ahead of the UK. This year, the value of New Zealand’s wine exports to the US have surpassed US$500 million for the first time, according to New Zealand Winegrowers, the majority of that driven by Sauvignon Blanc.

Over the past year wine exports to the US have climbed 11% by value ($49m) in the last year according to Statistics New Zealand and the US now represents 30% of the total value of exports.

The US is also now worth 30% more by value than New Zealand’s next most valuable market, the UK.

The New Zealand industry is aiming for wine exports of $2bn by 2020 and reached a new record of $1.63bn in the year ending March 2017. Wine is now the country’s fifth biggest export good by value.

Philip Gregan, CEO of New Zealand Winegrowers, commented: “New Zealand wine, especially Sauvignon Blanc, is very popular in the US and we expect consumer demand to continue to grow.”

“The new record level of wine exports into the world’s largest and most competitive market is an outstanding achievement for New Zealand wine exporters and testifies to the strong global demand for our wines.”