"Brexit is going to happen so we might as well get on with it" - Interview, Philip Gregan, CEO, New Zealand Winegrowers

Philip Gregan, the CEO of trade organisation New Zealand Winegrowers was in London this week for the country's annual UK trade tasting. He spoke with just-drinks about Brexit, Trump and the future of Sauvignon Blanc.

just-drinks: The UK is New Zealand's second-largest market by value. What does Brexit mean for the New Zealand wine industry?

Philip Gregan: If we take the medium- to long-term view, it should be positive. There have been signals from both the UK and New Zealand governments that they would like to have a free-trade agreement.

In the short term, there is a lot of uncertainty - including the time frame - which is unsettling. But the fact is that it is going to happen, so we might as well get on with it. 

The fall of the pound is going to have consequences, there's no doubt about that. Last week, we were NZD0.58 against the pound. In the last 20 years, most of the time, we have been in the NZD0.3s or NZD0.4s. Price increases are inevitable. It's not possible for producers to continue to sell at the same price as they did previously.

j-d: Where will the price increases go?

PG: I think they are going to have to be passed on to consumers - everybody in the supply chain needs to make some money for the supply chain to be sustainable. In our experience, with New Zealand wine having the highest average price in the UK, people are prepared to pay the price so long as they are getting value for money.

j-d: When do you anticipate price increases to start?

PG: It depends how much foreign exchange cover wineries have in place and it depends on contracts they have with suppliers. Gradually, those increases must come through. And it is not just going to be New Zealand.

j-d: The US is your largest export market by value. Do you anticipate any impact from president-elect Donald Trump's proposed import taxes?

PG: No, I don't think so. We've seen nothing on the horizon specifically around wine tariffs into the US. If you look - for comparative purposes - at wine tariffs into New Zealand from the US - they are very low.

j-d: Which markets are you excited about?

PG: Certainly North America - the US and Canada - have seen very strong growth in the last few years. The US is worth a touch under NZD500m and showing incredible strength. We are also starting to see some lift in our third-largest market, Australia. The economy has been in the doldrums slightly for the last two or three years.

j-d: Are there any big marketing plans for 2017?

PG: At the start of the year, we have our four-yearly Pinot Noir celebration. We have 600 people from around 20 countries attending and there are other associated events. We have found, over many years, that the best thing we can do is bring people to New Zealand and let them have the 'New Zealand experience'. We find that 99 times out of 100, they go away as great ambassadors for us.

j-d: Sauvignon Blanc is 85% of exports - there has been talk in the UK of its popularity waning. Is that something you have seen?

PG: I don't think we can ever become complacent. That's one of the reasons we held the Sauvignon Blanc celebration last year in New Zealand - to explore different aspects of the Sauvignon Blanc story: Regionality, sub-regionality, ageing, different wine styles. If there is no complacency and there continues to be experimentation, then the trade will continue to be excited.

j-d: Does the future lie in diversifying within Sauvignon Blanc or do you think winegrowers will start to think about planting different grapes?

PG: It's about adding to Sauvignon Blanc, not replacing it. That was the case with Pinot Noir - with an incredibly strong white wine to our bow, we needed to add a red. We have worked very hard with Pinot Noir. The industry is also experimenting with Pinot Gris and Viognier but it's not about replacing Sauvignon Blanc, it's about adding to it.

j-d: How is the 2017 vintage looking after last November's Kaikoura earthquake?

PG: It was a very big earthquake. The wine that was lost was around 2%, which in the scheme of things isn't a big issue, but the major concern among winemakers was about damage to tanks and getting them fixed or arranging alternative storage prior to the upcoming vintage. That process is well advanced.

j-d: Which Asian markets are you most interested in?

PG: We have a five-year partnership with the New Zealand government body New Zealand Trade & Enterprise in China. It is really an education programme. China is a huge and important wine market but it is one where success can't be measured overnight. I think we are into year four of the programme. Our focus is on trying to educate and contact the trade - the market is just too big for direct contact with consumers. If you're to make a difference, you've got to get the gatekeepers on side - sommeliers, restaurant owners. It takes time to move the dial - it's a huge country.

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