It’s full steam ahead across the Tasman. Dozens of wine producers, many of whom are recent entrants to the industry, are staking their futures on their ability to create and nurture markets in the UK, Australia, the USA, Japan and Europe. New Zealand’s undisputed edge with sauvignon blanc and pinot noir has justifiably captured significant international attention, especially here and in the UK, while its potential with riesling, gewurztraminer, pinot gris and possibly with merlot has hardly been realised. But while the numbers are stacking up just fine for the time being, New Zealand’s wine industry should be gearing itself up to face a raft of challenges in the next three to five years. Its ability to deal simultaneously on several major fronts will determine what sort of New Zealand wine industry faces up to the next millennium. Either way, very significant changes are little short of inevitable. Too Many Players At last count New Zealand had 307 wineries. That’s simply a staggering number given that Australia crushes more than twelve times the annual Kiwi harvest, yet its present tally of around 1,000 wineries is only about three times more than that of New Zealand. Only 21 New Zealand wineries make more than 200,000 litres of wine (around 22,000 dozen), while just four make more than 2 million litres. And of these only Montana, with an annual crush of around 24,500 tonnes, would be regarded as a medium to large player in the Australian industry. The other three ‘medium-sized’ Kiwi wine companies are Corbans, Villa Maria and Nobilo/Selaks. New Zealand’s 1998 crop of 78,300 tonnes represents only 0.2% of global wine production, but by the end of June 1998 the country had become a net wine exporter. Its exports, valued at NZ$96.7 million annually, represent 28% of total production by volume. The NZ Wine Institute claims that sales to the UK, which account for 52% of all Kiwi wine exports, are valued at NZ$1.30 more per litre than that of any other country. Its other major customers are presently Australia (15%), USA (9%) and Japan (4%). By 2002 New Zealand’s wine industry aims to generate exports worth $150 million, representing more than a third of all production, and its makers ultimately have their sights set on exporting two-thirds of total production. Sounds familiar? Kiwis planted around 600 ha of vines in 1998, taking their total area under vine to around 9,700 ha, of which 7,410 ha are presently in production. By comparison, in the same year around 10,000 ha were planted in Australia, taking our planted area to about 100,000 ha. Like Australia, a shortage of fruit is presently retarding New Zealand’s export development. If the Australian experience is anything to go by, New Zealand’s wine industry will soon require a very significant injection of capital. Two of the major costs involved in wine production hit right at the heart of a growing industry – the initial set-up costs of vineyards prior to their return of income and the capital costs associated with maturing stock prior to release. New Zealand’s disproportionate number of small vineyards and wineries will find it hardest to expand. Furthermore, economies of scale dictate that it is substantially more difficult for small wine companies to become large wine companies than for large companies to become even larger. It’s when small companies over-extend themselves to fund growth that they become vulnerable to take-overs, so look out for a welter of mergers and take-overs a la Nobilos and Selaks as the Kiwi industry integrates vertically to sort out exactly how it will fund its growth. New Zealand growers constantly bemoan their government’s lack of tax concessions for developing vineyards, one of the very few areas in which the Australian Government actually makes some form of assistance towards its own wine industry. Over-Exposed to International Trade? The small size of New Zealand’s home wine market and its relatively low rate of domestic wine consumption per capita (10.2 litres per head vs. around 18.2 litres per head in Australia) doesn’t provide much of a security blanket for its wine industry to fall back on should export markets dry up, for whatever reason. This vulnerability is made more acute if you take into account that any likely reduction in NZ wine exports is likely to be mirrored by the Australian wine industry. A likely outcome would see the major Australian wine companies dumping large volumes of Australian wine into the New Zealand market, where Australian brands are already very well established, at prices which even the most cost-efficient New Zealand wineries would have difficulty competing against. The imminent self-sufficiency of the Californian wine industry, the unreliability of Asian markets and economies, the perennial likelihood of geopolitical change in central Europe, the quality and competitiveness of wines from emerging countries like South Africa and Chile, and the historical reluctance of European trade organisations to allow Australasian goods too much of a commercial foothold could each impact dramatically and negatively on the wine industries of Australia and New Zealand. If one wine bottle in every two made by New Zealanders were to be exported, that would represent a very significant exposure to forces far beyond their own control. Getting the Grapes Right Although the first New Zealand wines to win international acclaim in recent years were made with gewurztraminer, it’s patently obvious that sauvignon blanc not only established the country’s reputation, but remains at the sharp edge of its quality and identity. Strangely enough, it’s only 25 years since the first sauvignon blanc vines were planted in Marlborough, the region most closely associated with the variety’s success. And it nearly didn’t happen that way. Montana, the first company to plant large areas of sauvignon blanc in New Zealand, initially intended to develop the flats at Hawkes Bay, but was rejected by the area’s strong pastoral lobby. Instead, Montana went to Marlborough and New Zealand’s wine industry has never looked back. Had they got their way and planted where they initially wanted to, where would New Zealand wine be today? Although New Zealanders are already treating their sauvignon blanc fruit differently to tailor-make wines for different markets, statistics provided by the Winegrowers of New Zealand indicate that new plantings of chardonnay are far outstripping those of the country’s signature variety. NZ’s producing area of chardonnay is expected to increase from 2006 ha in 1998 to 2800 in 2001, while sauvignon blanc is only expected to increase from its 1998 level of 1678 ha to 1923 ha in 2001. On a positive note, Montana’s chief winemaker Jeff Clarke says that chardonnay plantings have since slowed to a dribble and that his company would certainly take in more for sparkling base and for cheaper labels provided the grape price was favourable. Although most of the new chardonnay plantings are taking place in the quality regions of Hawkes Bay, Marlborough and Gisborne, I can’t help wondering if the typically tight, lean and citrusy New Zealand mid-market chardonnay, whose acidity is often quite assertive, will successfully compete against the more generous and approachable chardonnays of other ‘New World’ makers at similar prices. And at the top end of the pricing scale, too many ‘premium’ or ‘reserve’ Kiwi chardonnays are syrupy, over-made and excessively cluttered with oak and malolactic influences. There are of course notable exceptions, like the excellent chardonnays of Kumeu River, Martinborough Vineyards, Ata Rangi, Fromms, Villa Maria, Matua Valley and Giesen, but would not most of New Zealand’s wineries do better by focusing on what they do best and where they have virtually no competition outside sauvignon blanc’s relatively limited plantings in France? I share with the English market a preference towards the flinty, lean and racy, lightly herbal expressions of sauvignon blanc, made without much interference from oak casks and best expressed by the vibrant, zesty wines of Vavasour, Cloudy Bay, Hunter’s, Wairau River, Lawson’s Dry Hills, Grove Mill and Shingle Peak. On the other hand, a few makers like Villa Maria and Sacred Hill are proving rather adept at making the softer, more restrained and winemaker-influenced styles barrel fermentation, lees contact and malolactic influences which the US market prefers. However too many wines made in this style present a disharmony of winemaking artefacts which interfere with otherwise excellent fruit. If there’s a secret weapon in New Zealand’s white wine armoury it’s the Alsatian trio of riesling, pinot gris and gewurztraminer. Although its domestic market strongly prefers a style of riesling which Australians would find excessively sweet, there’s a rare intensity and purity about the pear, apple and lime flavours in riesling from Marlborough, Martinborough, Central Otago and Canterbury. You could hardly imagine a more different expression from mainstream quality Australian styles. Wineries like Pegasus Bay and Giesen typically add back proportions of botrytis-affected wines to enhance complexity and character – an unthinkable process in Australia – but one that produces startling results. Other vineyards like Framingham, Coopers Creek, Esk Valley, Collards, Palliser, Corbans Marlborough and Stoneleigh capture some of the finest musky, limey riesling flavour you ever could hope to bottle. Gewurztraminer has been joined by pinot gris as an interesting niche variety, so if the world ever gets bored with chardonnay for breakfast, lunch and dinner, New Zealand can deliver wines of pristine varietal intensity and purity from these varieties. Traminers from Dry River, Huia, Kemblefield, Montana’s Patutahi Vineyard, Lawson’s Dry Hills and Stonecroft, and pinot gris from Martinborough Vineyard, St Helena and Dry River already set a cracking pace. Several of these better makers are deftly using reductive on-lees maturation techniques to enhance complexity and mouthfeel. It’s both exciting and encouraging to see that New Zealand’s production of pinot noir will virtually double by 2001, but given the fickle nature of this variety and the expensive hands-on techniques required to make it well, it will need to be planted in the right places. To date most of the best wines have come from Martinborough, but there’s only a limited and finite area of unplanted land in this region and in adjacent valleys that might be capable of comparable quality. Some exciting pinot noirs are being made in Marlborough and Central Otago, but it’s too early to see whether wines like Isabel Estate, Vavasour, Collards, Rippon and Fromms will be consistent enough to capture the world’s imagination in quite the same way as the wines of Ata Rangi, Martinborough Vineyards, Dry River et al. Latent within New Zealand’s wine industry is an overpowering desire to grow and make large volumes of quality red wine from the Bordeaux varieties. Inspired by some stellar wines, like those of Stonyridge at Waiheke Island, Te Mata Estate, Brookfields, Church Road at Hawkes Bay and Fromm’s at Marlborough, growers are bravely planting merlot and cabernet sauvignon despite the country’s poor track record with both. From what I have seen, merlot appears more likely to contribute more ripeness and flavour to the NZ reds of the future than cabernet sauvignon, even if it is still particularly rare to find some without the inherent thread of greenness seen so often in Kiwi cabernet. Goldwater Estate’s Esselin Merlot 1997 is the wine of the moment, even though an all-too-familiar streak of green lurks beneath some superbly flavoured, fleshy fruit. Villa Maria’s 1996 Reserve Merlot is fine, ripe and already quite complex. The ripest New Zealand cabernet sauvignon wines I have seen were sampled from casks at the Hawkes Bay wineries of Trinity Hill and CJ Pask. These wines had the dual advantage of coming from the unusually warm 1998 vintage and were also sourced from the recently developed Gimblett Road environs of Hawkes Bay, whose stony riverbed soils and unusually high heat summation enable it to ripen cabernet and merlot two weeks earlier than the rest of the region. Deep, dark and constructed around an ample frame of ripe fruit, they justify the enthusiasm shown by many companies for this rapidly filling new area and its land prices of around $15,000 per acre for virtually unproven soils. Only time will tell if Gimblett Road’s sought-after sites will alter our perception of New Zealand’s cabernet blends. Whatever way you look at it, there’s little chance that the New Zealand wine industry of 2009 is going to much resemble that of 1999. But most importantly for those who participate in it, its destiny is entirely in its own hands.
