An opinion piece by Keith Stewart
The decision by Pernod Ricard to move the headquarters for the largest sector of New Zealand’s wine industry to Sydney is no more French arrogance than it was when earlier corporate owners of New Zealand wine companies abandoned the vineyard roots for other environments in which they felt more comfortable. Pernod Ricard’s shifting of control across the Tasman is what happens when you sell your assets to gain “investment”, and this example comes with perfect timing; just as New Zealand is considering how much of its strategic assets to flog in order to maintain a popular perception of prosperity. It is evidence we should take great care with our most valued possessions.
The recent history of New Zealand’s wine industry is littered with sales of major assets to big capital investors, all of which were championed as a means by which the industry could gain sound capital backing, long term stability or international market clout. Any or all of these arguments were put forward in support of investment by large Australian wine companies in the ‘60s, multinational drinks corporation Seagrams in the ‘70s and local financiers in the ‘70s and ‘80s.
But none of those investors paid any attention to the long-term needs of the New Zealand wine industry and its fundamental attributes, or to the nature of the community of which it was becoming an important economic and cultural component. Those investors, who were represented by the big brand wines of McWilliams, Corbans, Penfolds, Montana and Cooks, saw New Zealanders as people who would provide them with profits, whether they gained this through wine sales, or when they finally could no longer pretend to know about the business of winegrowing, by persuading politicians to bail them out of their “unwise” investments from public funds.
The heady years of the first round of the New Zealand wine boom ended with an extensive grape pull funded by a central government which had angry farmers banging at its doors. Those farmers, deemed growers by wine industry executives, but in effect the real investors in New Zealand’s wine development, whose livelihoods depended on its success, had been grossly misled by most of the larger wine producers who would soon exit the industry once they had the government safety net in place.
Now we face the failure of the second round of the New Zealand wine boom, and guess what? The same large capital corporations have got into serious trouble doing the same dumb things that their predecessors did 25 years ago. The markets may have been different, and the corporations may have different names this time around, but the fundamentals are the same.
At the root of the problem is the belief that money, per se, is a good thing. Well, not if it is applied in stupid ways. Most credible observers of winegrowing in New Zealand have deemed that success here depends on careful attention to the details of very individual winegrowing, winemaking and wine sales. Hands-on in the vineyards, in the winery and in the marketplace. You can’t succeed making wine in this country by remote control.
Yet that is precisely what administration regimes at most large local wineries have insisted on. It is called industrialisation, and it depends on a monoculture from vineyard all the way through to head office. So when Pernod Ricard announces it is moving head office for its New Zealand winemaking operations to Sydney, it is not just moving for corporate efficiency, it has already moved away from the real world of New Zealand winemaking. (The Press Release states that ‘Premium Wine Brands [headquartered in Sydney] will be responsible for… production, viticulture and supply chain.’)
It has also distanced itself from the New Zealand wine industry and its cultural foundations, as well as from its production base.
Pernod Ricard’s decision to shoot off across the Tasman is neither in the best interests of New Zealand’s wine industry, nor of New Zealand’s economy. Nor has it any regard for the social consequences to the wine-growing communities of Marlborough, Waipara, Hawkes Bay and Gisborne. Pernod Ricard has already made its attitude to the growers of Gisborne very clear, so the downside of this decision, for all those clamouring for the value of overseas investment, is considerable.
And what of the value? Since its “investment” here, Pernod Ricard has made no contribution to improving the overall value of New Zealand wine. Indeed it could be fairly argued that through its role as an international shifter of massed consignments of New Zealand wine through global retail portals, it has played a greater role than any other in the dramatic reduction in the value of New Zealand wine on international markets that has put New Zealand in its currently threatened position.
The truth of Pernod Ricard’s position vis a vis New Zealand was made very clear in its press announcement in Australia (but not released in New Zealand). That piece of PR made two things obvious: the first that it has no belief in the notion of New Zealand as an individualistic winegrowing nation where local conditions are extremely variable; and secondly that winemaking needs to be hands-on. As if moving head office was not evidence enough, the statement equated New Zealand as the source of Sauvignon Blanc, a monoculture created initially by Montana, the brand that Pernod Ricard recently decided to kill off in the international market.
In spite of overwhelming evidence to the contrary, they may be right, and under current commercial laws that is their prerogative. I just have a sneaking feeling that those of us who are actually committed to this country will have to pay the bill for their failure. Again.
The other piece of PR frankness, probably unintended, was in the line of their final press release, made after they thought media coverage of their impending departure was less than sweet. ‘Pernod Ricard remains highly committed to New Zealand, its people and the long term development of its wine and spirits portfolio’, the statement said. How arrogant is that; lumping New Zealand and its people in the same category as their wine and spirits portfolio? Perhaps somebody in the New Zealand office should tell Paris that Pernod Ricard does not make spirits in New Zealand.
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