New Zealand expects to weather economic storm

25 January, 2008

New Zealand Winegrowers' chief executive Philip Gregan has predicted continued strong sales for his country's wines despite a tightening of consumer spending in 2008.

New Zealand has enjoyed the highest increase in value share in the UK wine market over the past year (Nielsen Nov

2007) and has seen the average bottle price rise from £5.94 to £6.19.

However, a dampening of the UK economy , rising fuel costs

and a squeeze in lending have led some in the industry to fear that consumers might turn their interest to less expensive wines from other countries.

Martinborough producer Alastair Scott of Matahiwi Estate said some of his fellow wine producers needed to make their wines more affordable to be able to compete with their Chilean and French counterparts.

He said: "I think some New Zealand wines are too expensive and it's important that we make them affordable for the consumer to stay competitive."

But at the annual London New Zealand tasting, Gregan said the change in the economy could have a positive effect on sales.

He said: "Everyone's all doom and gloom at the moment, but there are opportunities. Some have suffered at the top end, but we are in a nice straight spot in the middle in terms of price. In similar times in the past we have benefited from the people normally buying £25 wines trading down a bit, so we don't seem to have suffered."

Gregan said the biggest challenge for the industry in the next few years would be trying to maintain sustainability while meeting consumer demand.

He said: "It's a balancing act and we need to take a very long-term strategic view. We are in a cool-climate viticulture which has its ups and downs. We can't say we are consistently going to produce the same amount each year, but we have consistently seen demand increase, so managing that is very difficult.

"What's important is quality first, but we have also got to get this issue of sustainability right. People who buy them also expect them to be produced in an environmentally

friendly way."

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