Relationships with Customers

Relationships with Customers

Branding of wines is not as widespread as with other products in Old World markets. There are numerous wine choices for the consumer. Government and industry efforts to classify wines have not been entirely successful because these classifications are not meant to be marketing information for the consumer, but cultural wine designations internal to countries like France. Consumers do not feel comfortable with their lack of knowledge about the fragmented Old World selections available.

The 2011 vintage featured markedly different experiences for the North and South Islands. "The vintage growth was driven by larger harvests in most South Island regions, including Marlborough, Nelson, Waipara and Central Otago. This growth was fuelled by generally very good weather which produced larger crops of Sauvignon Blanc, Pinot Noir and Pinot Gris. The expectations for the Sauvignon Blanc vintage are very positive given the ideal weather that prevailed during autumn."

"By comparison the vintage was smaller in most North Island regions, including Gisborne and Hawkes Bay, as production of leading varieties such as Chardonnay, Cabernet Sauvignon and Syrah fell compared to 2010. Nevertheless we expect some excellent wines to be produced, albeit in slightly smaller volumes than last year."

"With the vintage now over, we believe the wineries and growers can look to the year ahead with cautious optimism. The vintage should support sales growth of up to seven per cent for June year end 2012, which will be another step forward in the recovery of the sector."

However, Mr Gregan accepts challenges still remain for the industry. "Profitability levels remain an on-going concern and recovery of winery and grower incomes should be a focus for all industry participants in the year ahead."

The increase in excise tax, July 1st, will also place additional burden and expense on an industry already struggling. More wine to sell only increases the pressure on wineries to sell at lower costs and put wine onto the bulk market, growers will be forced to lower prices and the trickle down effect will damage the whole infrastructure of New Zealand wine.

Obviously there will be a select few wineries that will increase their profits and be able to absorb the increased costs and vintage. The industry will also see more amalgamation and contraction over the next 2-3 years before coming out of recession.