new zealand wine

New Zealand wine: Covid's highs and lows

29 March, 2021

“We do have some great retail partners, and markets like NZ and Australia have been relatively strong across all channels, so while we were not at 2019 levels, we were OK,” he adds. “We are extremely fortunate that our business is in a 1,000-year family trust, so we can continue to focus on brand and quality, and ride the bumps without having to take short-term decisions that could be detrimental. This meant that we kept 100% of our staff employed, and were able to rebound quickly when markets reopened.

“Talking to a lot of friends in the NZ wine industry, the smaller producers have struggled, as they rely on the on-trade and tourism, while the big players who are primarily selling volume into supermarkets have been the main beneficiaries of lockdown and retail spending. So, while the industry as a whole looks pretty rosy due to huge li in the volume of Marlborough Sauvignon Blanc selling into supermarkets, the pandemic hasn’t been great for New Zealand’s fine wine aspirations, especially Pinot Noir, which are largely on-trade products. I imagine this is the same the world over though. 

“Our focus has always been on the top four export markets for NZ wine, being the US, UK, Australia and Canada. We have high expectations that these markets, and the on-trade specifically, will bounce back well post vaccination, so really focusing on supporting our distributors in this rebound.”

One company that could not care less about achieving growth is Felton Road. In fact, the Central Otago producer has actively pursued a zero-growth policy for the past 15 years. Its Pinot Noir is sometimes described as the best in the world outside Burgundy. Production is capped at 150,000 bottles per year, and it is sold purely on allocation.

That could help to explain its strong showing in this year’s list of The World’s Most Admired Wine Brands. Felton Road finished 14th in the world, the top New Zealand producer.

Owner Nigel Greening has temporarily abandoned Wanaka for Devon, so he has spent lockdown in the UK while watching his friends enjoy themselves on the other side of the world. “We have been in very good shape,” he says.

“We have had what we saw as a slightly unhealthy lean to private customer and retail over on-trade for a few years now. That was a natural consequence of high private customer demand globally for us; there is more money in a distributor supplying direct to consumer or retail, when demand is such that annual allocation sells in hours or days, so the on-trade gets neglected.

“As it happened this was our good fortune. We moved a bit of wine scheduled for on-trade heavy markets to direct to consumer domestically and, of course, quite a bit of our cellar door stock to direct-to-consumer mail order. That worked well and sold out quickly. We were also lucky that most of our more on-trade markets were in Asia, where lockdowns have been brief. Our larger export markets – Australia, the UK, Hong Kong and the US – have all stayed very strong. Certainly in the UK quite a few of our fine wine merchants sold their annual allocation in hours. So we have sold through in the markets, not just out of the winery.”

Greening has been following the situation in New Zealand keenly over the past year, and says it has been a mixed bag for the industry. “Those with broad export strategies and a solid strength in retail and direct to consumer internationally as well as domestically are doing great. Those who focused on on-trade, whether internationally or domestically, can be in a lot of pain. Of course that focus may not be a strategy – often it is just a consequence of a distributor that you appoint in a market and where their priorities lie.”

He hopes to see more excitement from New Zealand in the years ahead. “I have been feeling for some time that the New Zealand wine grower is somewhat boring to the enthusiast. The consumer probably doesn’t see it that way, there is fantastic reliability and quality across the board. But not a lot of excitement.

“Partly this is because it is a mature wine production country now, where the cost of establishing oneself is very high, so tricky for new younger players. But we are definitely seeing more interesting and new ideas emerging, maybe the result of boredom over lockdown. I have been reading Rebecca Gibb’s reviews on Vinous and been struck by quite a selection of orange wines, Albariño, Chenin, Muscat, Grüner Veltliner, Viognier, Marsanne and a steady growth of good Chardonnay. I applaud this. We need more.”

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