The statement by New Zealand Winegrowers chairman Stuart Smith that all will be well within the wine industry if the community continues to “be guided by an unswerving commitment to quality” raises two important questions, which are interrelated. The consideration of these questions provides an excellent insight into where Winegrowers has gone wrong, and what can be done to improve its future performance.
The first and most obvious question is “what is meant by quality”. Some within the industry suggest quality is defined by consumers and relates to the satisfaction they feel when they buy wine and drink it with consideration for the price they paid. This definition is itself an elusive concept that is as mercurial as the tastes of consumers, their expectations and perceptions of brand.
At one level it allows all wine to be deemed ‘quality’ as long as the price is low enough to reduce all expectations of enjoyment to a mercantile base. This may not be what Stuart Smith means when he talks of unswerving commitment to quality, although the recent performance of New Zealand wine, in particular its slump to an average market value of below NZ$10 a bottle suggests it is.
Certainly from a political perspective, this post-modern definition where everything is possibly ‘quality’ is most suitable for sounding authoritative without having a clue. But it is hardly what New Zealand Winegrowers intends when it announces that New Zealand has the highest per litre price of any nation’s wine being sold at the centre of the world’s fine wine trade, the UK.
What Winegrowers means when it talks up its prices is that high prices are what defines wine quality, and there is some substance in that approach. Given an open market, wine sells for the price its image demands, although some marketers argue that the potential for high price is moderated by supply. High quality will get you a good price, but scarcity and high quality will deliver the highest price of all.
So first, New Zealand needs to establish a reputation for the quality of its wine. Quality in this sense is defined by the opinions of those in the fine wine trade who are most influential. New Zealand has gone a long way in boosting this quality reputation by assiduous lobbying, some would say greasing, of the wine commentators of the principal wine markets where its producers are active. The generic promotion of New Zealand wine, aided to no small degree by the outstanding performance of a handful of brilliant winemaking individuals, has been excellent, and the wine world in general agrees that New Zealand wine is good stuff.
But is it good enough to pay top prices for? Does the best New Zealand red wine fetch similar prices to those that are considered the peak of quality, wines such as burgundies from Domaine de la Romanée-Conti, or clarets from Châteaux Margaux, Latour or Cheval Blanc?
The short answer is no, and before the marketing boffins leap in with claims of rarity inflating the value of these top French labels, this may be the case with the great burgundies, but Châteaux Margaux, for example, produces more wine each vintage than the entire New Zealand wine industry does of high class cabernet-merlot. That is some 20,000 cases which it successfully sells, mostly in advance of release, for more than 10 times the price of New Zealand’s top wines.
Suddenly New Zealand’s claims of quality appear less than impressive. Not because the wine is not good, but because it has not been ‘positioned’ as high quality.
The reasons for this are not hard to find. The first place to look is in the vineyards and wineries where there is no structure in place to assert a quality wine culture. Vines are planted anywhere, without any consideration for the quality of wine they will produce, and there is no means of differentiation such as the world’s fine wine community recognises. There is no value in regionality when the regions (Hawkes Bay, Marlborough, etc) are not defined according to their winegrowing capacity; there is no link between region and grape variety; there is no production imperative that links quality with volume of production; there is no qualification defining the use of qualitative wine claims such as reserve, estate, and private bin.
Indeed, none of the tools used by the rest of the fine wine world to deliver a quality impression are at play in this country. Add to that a culture that promotes its wines on the basis of winning competitions in which the best producers do not even compete, an industry-wide endorsement of packaging that defines the commodity wine trade (screwcaps), and the breathless promotion of the most simplistic, popular wine style made (sauvignon blanc) here as the standard by which all of New Zealand wine should be judged, and it is easy to see why the world resists paying top dollar for it.
New Zealand Winegrowers claims that the industry has been hit by a perfect storm. Yes, a storm of incompetent leadership that led them down this garden path in the first place, exacerbated by the greedy self interest of industrial producers and a banking community that was prepared to back the craziest winegrowing schemes that often lacked the most basic understanding of the business in which they were investing.
If you go fishing in a small boat in a big wind without life-jackets, don’t blame the storm when disaster strikes. Perfect or not.
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Good man.Honest straight forward and to the point.Stay tuned for The Wine Industry’s big announcement at The Bragato Conference this week. Stuart Smith advised growers that he and Gregan had kept the industry informed of ‘The Perfect Storm” looming on the horizon at last years Bragato conference. I think he whispered it in The Supper Room of the Taradale Community Hall.We growers pay levy’s so that NZWG can let a very Spotty Dog on The Board wag his own tail in the bulk market at the expense of his contracted growers . Interesting times.
Well done Keith. Wine Companies with a foot in both the bottled and bulk wine camps are not helped by the antics of the spotted dog who has the added benefit of being a NZWG board member. Driving the price of grapes down to a level approaching the cost of production and yield levels to unreasonably low levels just create further problems that may be longer lasting that the short term better profits the larger wineries are enjoying presently. Check out the Deloitte’s benchmarking survey for the wine industry vintage 2009 here http://www.deloitte.com/view/en_NZ/nz/industries/Wine/index.htm
Is there any truth in the rumour that the Commerce Commision’s look into NZWG was self inflicted? Maybe a better matter to investigate is collusion on prices or commonly called price fixing.