The Losh Cause – New zeal for New Zealand
At first glance, a change of marketing slogan by New Zealand's generic wine body seems fairly unremarkable but a second look at the ambitious growth plans the new message is intended to underpin suggests the country is looking to make quite a splash. Chris Losh for one thinks New Zealand could well pull it off.
The final week in July saw Wines of New Zealand unveil its latest "international brand awareness message". Out goes "Riches of a Clean Green Land", which has served the country well for no less than 15 years, and in comes "Pure Discovery".
This being New Zealand, there are no big budgets involved. A mere NZ$100,000 (US$76,000) of market research was carried out before the launch of the new message, which will not be the subject of any giant media campaign. Moreover, the new message itself suggests something of a softly softly approach by the New Zealand generic body. Working on the not unreasonable assumption that 'if it ain't broke, don't fix it', Wines of New Zealand has clearly opted for evolution rather than revolution.
"We never went into the process thinking 'we need to change what we're doing', which is why the change isn't radical," says Warren Adamson, head of Wines of New Zealand's UK office. "We're in a very good place. What we need is to keep that momentum going."
So why, I hear you ask, has a rather minor tweak to a generic marketing message, unheralded by major media investment, attracted my attention?
Well it is not the change of message but the growth targets New Zealand hopes it will help the country reach that are the story here. And while the change of slogan may be understated, the targets suggest that New Zealand is no shrinking violet. They are extremely ambitious.
In 2006, New Zealand exported slightly more than NZ$500m worth of wine. The intention is to double that by 2010 to NZ$1bn, then again, to $2bn by 2015.
Since the country's average price per litre is reasonably steady at NZ$8.50, that would equate to around 13m cases of wine by the end of this decade, and some 25m cases by 2015. Currently, the country exports 6.4m cases of wine, worldwide. No wonder Adamson is talking about momentum.
Clearly, it's a bold strategy and one not short on verve. But the more sceptical observers might cast their mind back a decade and recall Australia's equally bold and typically confident 15-year plan for its wine industry.
So are New Zealand's big plans likely to head the same way? It's unlikely.
For starters, Australia is a far, far larger producer, and its projected doubling of volumes always carried an inherent danger that it would be hard to sell. The planting programme, too, was totally uncontrolled, Klondike fever resulting in a headlong rush to plant and a subsequent tidal wave of wine being unleashed on the world around the start of the millennium.
New Zealand, by contrast, has been planting heavily for a decade, yet demand still outstrips supply, markets remain on allocation and prices have stayed high. Not only is there plenty of slack still to take up, but the risks are lower. Yes, doubling volumes in four years is a big increase, but the evidence suggests that the 6m extra cases should find a home reasonably painlessly.
Even if they don't, with such (relatively) small volumes at stake, any subsequent oversupply would not have the same deleterious effect as Australia's headlong descent into glut.
Certainly, there should be no shortage of grapes - which is what held the country back at the start of this decade. Vineyard area has trebled in the last decade, and there are no signs that the Kiwis are in any way stopping planting.
So much for the theory, then. Can New Zealand pull it off?
The answer is probably, but to do so, it will need to reach new consumers.
New Zealand's three biggest export markets are (in order) the UK, the US and Australia. All three are in growth, the latter two significantly more than the former.
In fact, the UK is showing signs of being a near-mature market. It's still solid and moving upwards, but the 2.5% volume increase of 2006 is nowhere near the level that New Zealand needs to hit its intended targets.
"New Zealand can keep growing at 18%, at least internationally," says Dan Jago, head of Tesco's wine and spirits, and as such the most powerful drinks buyer in the UK. "There's a lot of the [global drinks] market that hasn't fully explored New Zealand yet." In other words, don't expect double-digit growth from the UK's all-powerful supermarkets.
Australia, hit (with cruel irony) by terrible shortages and a dearth of good Sauvignon Blanc, will continue growing in the short term at least, but the key to the expansion is probably the US.
Currently the country takes 1.5m cases of Kiwi wine a year, which is a drop in the ocean. A doubling, or even trebling of volumes Stateside is in no way out of the question, particularly bearing in mind that the country is less price-sensitive than most of Europe. Nobody, moreover, is better positioned than New Zealand to cash in on the country's burgeoning love of the Not Chardonnay grape varietal.
There are, of course, some big ifs. If the US economy turns from 'summer cold' to full-blown flu, it is sure to hurt a high-priced wine producer like New Zealand. And the weak US dollar also does New Zealand no favours.
A shift in consumer fashions away from fresher, more aromatic white wines and back towards softer, more full-bodied ones like Chardonnay would be bad news for the Sauvignon Blanc-driven country too.
But these remain unlikely problems, and in the medium term this is a voyage of Pure Discovery that looks to be well worth taking.
Last month, ex-Brown-Forman exec David Cox became Europe director for New Zealand Winegrowers. He spoke with Chris Mercer about what attracted him to working for a generic body and about New Zealand’s...
At first glance, a change of marketing slogan by New Zealand’s generic wine body seems fairly unremarkable but a second look at the ambitious growth plans the new message is intended to underpin sugge...
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