The New Zealand wine industry is “standing on one – albeit strong – leg” and needs to look to diversify to ensure continuing future growth, according to a global industry specialist.

Speaking on a recent visit to New Zealand, Rabobank International’s Global Industry Specialist in Wines and Spirits Arend Heijbroek said that while Marlborough Sauvignon Blanc is New Zealand wine’s greatest selling point, the wider NZ wine industry would benefit from the creation of a “second leg” to allow for future growth.

“There is still unfulfilled demand for Marlborough Sauvignon Blanc. And while that is good for Marlborough producers, for other regions it is much more complicated to bring the message across and sell their wines at the required prices,” Mr Heijbroek said.

Leading wine companies around the world need to have a Marlborough “Savvie” on their books to be able to offer a complete range of attractive wines to their customers, he added.

“The United States was keen on importing the unique style of fresh and aromatic Marlborough Sauvignon Blanc, because it didn’t compete against its own wines. However, they will be more defensive against importing other New World high quality wines which are similar to their own style,” he said.

New Zealand Winegrowers are projecting export sales of $1 billion by 2010 – up from $700 million today – and working towards $2 billion in exports by 2015. Since 2000, 75 percent of New Zealand’s production growth has come from Marlborough. Mr Heijbroek believes this region can increase its production from a current estimated 12,800 ha to 18,000 to 20.000 ha by 2010, before reaching the boundaries of its growth opportunities.

“However, as Marlborough reaches these boundaries it will be up to other regions to pick up the expansion, to fulfil NZWGs predictions. But can other regions create the same status as Marlborough? To do so, they will have to increase not only in production, but also status,” Mr Heijbroek said.

One variety Mr Heijbroek thinks the country should be concentrating on for the future is Pinot Noir.

“A wine writer in Europe recently commented that Pinot Noir will be the second variety in New Zealand, because New Zealand can make a high quality Pinot Noir, year in, year out. Whereas in Burgundy, the region where Pinot Noir has its strongest base, a high quality wine can only be produced once every three or four years. You need to capitalise on that as a country,” he said.

Mr Heijbroek said that Pinot Noir does not necessarily have to come from Marlborough, so this should allow other regions to step up, provided the terroir can do the same for Pinot as Marlborough has done for Sauvignon Blanc.

Meanwhile, Mr Heijbroek says prices being paid for New Zealand wines are still outstanding.

For the US, the average export price is NZ$9.52 per litre, with sales of 20 million litres in the past year. On the other side of the Atlantic, the UK has imported 36 per cent more New Zealand wine in the past year.

“What is even more important is that New Zealand’s leading brands are in the top 30 in the UK and are growing faster than average, despite of the relative high prices,” he said.

Montana is ranked as number 13 among the leading brands, while Oyster Bay is ranked 17 and Villa Maria is 30. All three companies’ price point is higher than any of the top 10 leading brands, with an average off trade price of £5.92.

New Zealand is viewed as one of the wine world’s great success stories, according to Mr Heijbroek, having tripled production in the last 10 years. That expansion appears to be accelerating, at higher export price points than any other new world producer.

“All New World producers increased exports, with Australia by far the most successful. New Zealand is a small player, with by far the highest export prices. The price premium is US$2.83 / litre above the average Australian export price.”

The only country in the world with a higher price point is France, Mr Heijbroek commented, attributing this partly to the prices paid for Champagne. Champagne is a region that Mr Heijbroek suggested Marlborough could look to now that it is reaching the physical limitations of expansion.

Both regions have limitations in terms of expansion, and they both produce a unique product, for which consumers are prepared to pay a considerable premium over competing products.

“In Champagne, the wineries and growers established a system with the emphasis on quality, which is then rewarded. Marlborough should be doing that as well,” he said, adding that creating a unique product that is highly sought after can help producers raise grape prices paid to the growers.

”It takes time to create an iconic wine, but once you have done that, you can charge high prices, ” Mr Heijbroek said, cautioning that high prices are inextricably linked to a high quality product, something he suggested the New Zealand wine industry as a whole should focus on going forward.

Source: www.scoop.co.nz

News today is that Bruce Jack’s Flagstone winery has been acquired by the world’s largest wine company, Constellation.

Jack will stay on, and will oversee viticulture and winemaking with all of Constellation’s South African interests, primarily the Kumala brand (which last year they acquired from Western Wines, and which accounts for almost a quarter of South African wine sold in the UK).

The press release includes the following corporate-speak:

Troy Christensen, President of Constellation Europe, said: “We are delighted to have reached agreement leading to the proposed purchase such a renowned wine company and to secure the wine making skills and expertise of Bruce Jack and his team.
“I believe that the South African wine industry offers a huge opportunity for Constellation Europe to drive sales, generate profit and enhance its corporate image.
“A major challenge for the UK industry is to build the value of the wine category through a greater focus on developing premium brands and delivering high quality for consumers.
“The proposed purchase of such a high-profile South African wine-making company and its dynamic portfolio of wines will mean that we have a credible premium-orientated portfolio to spearhead the development of South African wine in the UK and across Europe.
“Flagstone will help to take the South African category to another level of success by providing an incentive for the wine trade to ‘premiumise’ their wine business and by
encouraging more shoppers to trade up to better quality more often.”

Source: jamie goode’s wine blog

The life of a vintner: planting your vineyards, harvesting the grapes, tasting the new vintage as it ages in your elegant wine cave, seeing your name on a bottle sought after around the world. It’s an alluring prospect has enchanted many, but there’s another side to this gilded image: The tremendous amount of work it entails, especially if you follow the dream the way Arlene and Gerry Phelan did. The couple touched on both sides as they discussed their decision to sell Phelan Vineyards, their boutique winery on the slopes of Mt. George in eastern Napa. “Most people say to us, ‘When did you buy it?’” Arlene said. “But everything you see, we created.”

The roots of Phelan Vineyards, which produces 600-700 cases of premium, estate-grown cabernet sauvignon a year, go back to 1969 when Arlene, a single mom and teacher in Napa, bought an undeveloped 18-acre parcel of land on Mt. George. “I knew what I wanted,” she said — this was to some day build a dream house on the property. Her subsequent marriage to Gerry Phelan, however, took her to Ohio for the next 14 years. Slowly they also began to develop the Napa land; the first task was to put in a road that winds up the mountain. They began to build their home amid the oaks and olive trees on a perch looking out over the valley. Finally, Gerry, who owns a copper sales company called G.W. Phelan and Associates, told her, “Since we’re spending most of our money (in Napa), we might as well move there.”

Arlene, who’d grew up in Oakland in an Italian immigrant family where homemade wine and gardens were a way of life, instinctively loved growing things. She began making olive oil from the extensive grove of old trees growing on the property, but the idea of planting a vineyard was irresistible. “It’s Napa, after all,” Gerry explained. In addition to teaching bilingual kindergarten, Arlene wanted to take an active part in planting her grapes. Consultants advised her to plant cabernet sauvignon. She took classes at Napa Valley College with Steve Krebs, director of the college’s enology and viticulture program, “so I knew what I was talking about. I learned so much from him.”

Under Krebs’ tutelage, Arlene undertook every job in the vineyard. She described how she would take a chair into the vineyards and move it from vine to vine to remove the milk cartons that protected the fledgling plants. She learned about spraying, watering, leafing, pruning and thinning. Five years ago she retired from teaching after 39 years, but she continues to manage the vineyards. “You have to have grown with it, so you sense what has to be done,” she said. “You put your heart into work like this. Great wine really starts here.”

The Phelans sold their first grapes to Silver Oak and Clos du Val wineries, but, she explained, “once you grow grapes, you want to see how they taste.” Drawing on what she learned at Napa College, she tried making her own wine. “One year I made port, and one year vinegar and one year I made a really great wine,” she laughed.

The Phelans hired winemaker Bob Egelhoff, and waded into the daunting process of getting permits to crush their grapes and build a wine cave. “It took four years and three lawyers to get all the permits,” Gerry said, chuckling as he noted the truism that says to make a small fortune in the wine industry you have to start with a large one. “They told me it too late,” he laughed.

They designed the Phelan label, which gives a nod to Gerry’s copper business with its elegant copper foil edging, as well as Arlene’s favorite color, red. The shape, she explained, is the side of Mt. George, the terroir of which gives its unmistakable character to the wine. On top of the foil is an image of an Eskimo sculpture the couple bought in Gerry’s native Canada — a fisherman whose determination, they said, mirrors their own as they took on the challenges of launching a small winery in the late ’90s in the Napa Valley.

The first release of the their Napa cab was in 2000, and then began a whole new task: selling the wine.
“Growing grapes, making the wine, that’s the fun part,” Arlene said. Marketing the wines is “the whole different side of winemaking.” With Gerry occupied with running his copper company, which supports the winery project, Arlene found herself in charge of marketing. “Initially, we knew nothing,” she said. “We’d never done this before.”

They worked with a consultant, and she learned she’d have to be on the road “at least once a month” — traveling to tastings, introducing her wines to restaurants and shops and putting in long hours at events, like one nine-hour tasting where she encountered, among others, a man who insisted her prized cabs were pinot noir. She’s encountered great successes, like securing orders to ship cases of Phelan cab to China, and smaller ones, like selling three bottles to a pizza restaurant in Michigan. “You have to tell people about your wines,” she said. “They want to see you.”

Nonetheless, she said, she found that life on the road quickly loses its appeal. “If I were younger, maybe 40 or 50 or 60, I might enjoy it,” said Arlene, “You get to an age where this work is hard.
“I’m too old for this,” she said, with a self-effacing twinkle in her eyes as she described waiting to pitch her wines to a restaurant while “sitting next to a 20-something wine rep with great legs. You know who will get called in first.”

As for pitching their wines, she said, she realizes restaurants and shops make decisions based on their own needs, “but still you’re talking about something that’s dear to your heart. “After a couple of years I found I could hardly face another night alone in a hotel room. I’m really kind of a homebody,” she said. To succeed in marketing wines from a boutique winery, she said, “you need a list of about 200 very supportive people who buy your wine.”

Another ordeal, she said, is waiting on the rankings from powerhouses like Wine Spectator. “There’s a large contingent of people who rely on ratings,” Gerry said. Nonetheless Arlene added, it’s hard to have so much hinge on a single number. “You’ve put so much into it,” she said. “You feel personal about it.” They considered hiring a marketing person, but decided it was time “to slow down.”

The Phelans decided to keep their house, but sell off the vineyards, winery, cave, and a second four-bedroom house, part of a second adjoining parcel they purchased in 1996. The asking price is $7.9 million, according to Realtor Agi Smith, who called it “a rare find.”

“We did it the hard way,” Arlene said, leading a tour into the three-year old wine cave to taste the ’06 vintage aging in French oak barrels. She and Gerry also poured tasting of their ’04 cab, a smooth, lush wine. “2004, 2005, 2006 are going to be our great years,” she said. There is, after all, no price you can put on years of work and devotion to a dream. I take a lot of pride in it,” Arlene said, surveying the vineyards where the grapes are nearly ready to harvest. “The pride of growing it, knowing I helped plant these vines.”

By Sasha Paulsen www.napavalleyregister.com