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NEW ZEALAND: NZ wineries fear promotional cuts in export markets

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The New Zealand wine industry fears that its international presence may be under threat because of budget cuts in next year's offshore promotional spend.

Many wineries have told the national industry body, The Wine Institute, that it is possible they will not be taking part in overseas promotion due to a funding cut from the Trade Development Board (Trade NZ).

Growers have been disappointed by the Trade NZ decision to half its funding to the Institute from NZ$150,00 to NZ$75,000 for the next financial year.

The result of the cuts means that wineries themselves will have to contribute more to the cost of promotional activities.

Trade NZ announced its cuts in March, saying that other industries' needs were greater. It also said that the "verified impact" of the assistance to the wine industry had been relatively low - $2.79m out of total industry exports of $125m.

Trade NZ expects to see NZ$100 of foreign exchange earnings for every NZ$1 contributed through the Export Networks scheme.

But the Wine Institute said the low "verified impact" might just be a result of Trade NZ's system of assessment in which it might be surveying the wrong group.

The Wine Institute continued to say that Trade NZ surveys all wineries in an attempt to gauge how its contributions are being used, although its funding actually goes to the Wine Institute to use in generic offshore promotional activities.

It said that the smaller wineries surveyed would often not see the funding as having an impact on them.

"Perhaps it is a problem of communication. Perhaps we should brief wineries before the survey and explain they should acknowledge Trade NZ as a funder of these activities," said The Wine Institute export marketing manager Anne-Marie McKenzie.

McKenzie went on to say that the loss of money was of particular disappointment in their attempts to break the US market.

"In the US we are starting to build a presence, there is so much work to be done. We can't afford to scale back our promotional activities, especially with the bumper vintage we are expecting next year."

The Institute is to spend NZ$35,000 of its NZ$75,000 on the US next year.

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