What is the ‘right’ thing to do?

A lot has been written lately about the wine glut.  2008 saw the largest yield ever and Tessa Nicholson makes the comment in this month’s Winepress that: “The days of growing as many tonnes per hectare as you can, and expecting to get top dollar are well and truly over.”    At present wine companies are negotiating prices per tonne of grapes for next year’s vintage and the prices are well down on last year.  Whats-more, many wine companies are stipulating a maximum tonnage per hectare and are demanding that growers go through their vines now and strip out excess fruit. 

The plan is to get quality fruit and not excess fruit.   In past years some folk have grown grapes without having the fruit contracted to anyone and they have then played the spot market, selling to the highest bidder once vintage is over.  This worked when wine companies couldn’t get enough fruit to meet markets… in today’s climate it would be a very risky approach!  In the past some folk relied on high tonnages and assumed large and growing payouts would meet the hefty mortgage costs involved in borrowing heavily to buy or establish a vineyard… in today’s climate this too would obviously be very risky and I’m guessing we may see some more vineyards back on the market in the near future.   

Although there have understandably been moans of discontent from growers as they try to negotiate with wine companies, the changes were inevitable and should ensure that the industry as a whole stays healthy.  The large fruit volumes harvested this year were the result of an unpredicted natural increase in yield and an increase in grape plantings that were speculative as opposed to being contracted to wine companies.  In 2009 there is again more plantings coming into production and again the forecast is that the vines look heavy with fruit.  Add to this the problems of the recession’s uncertain export markets and the high likelihood that a lot of 2008 wine will still be unsold.  What then is the right thing to do? 

I agree that it makes sense to focus on quality not quantity and that growers need to negotiate solid, fair deals with wine companies and that wine companies in turn need to be putting every effort into effective marketing of the end product.    But what I’m unsure about is what is the right thing to do with the excess wine from 2008?  What should be done with the fruit from those growers who chose to get it made into wine with no contract to sell it to a wine company.  This bulk wine sits in the tanks with a cheap price tag and will have to sell soon to empty tanks for next vintage.

There are two main schools of thought:

1.  Do not buy it cheap, bottle it and sell it at rock bottom prices.  If a brand drops its prices, it will find it hard to ever get them back up again.  People perceive cheap = poor quality.  It is better to tip the wine out than sell it cheap.  A short term gain is not worth destroying the reputation of New Zealand’s fine wine.  It would be selfish to risk ruining that reputation for everyone.  Heck, even if it were given away free to poor countries that had no chance of ever being potential export markets, cheap or free alcohol would then be drunk to excess and lets face it – that never did anyone much good.

2.  Sell it cheap under another label name.  This is better than letting it go down the drain in a time when we are supposed to be more aware than ever of wastage.  Many New Zealand wines are white varieties with a short perceived shelf life so lets just move this lot cheap as a ‘one off’ under different names to our big quality brands and with industry changes it shouldn’t happen again.  But even a different brand name must still be labelled as being from Marlborough, New Zealand.  Would this still risk damaging the reputation of New Zealand wine.  Is this dishonest to the public – selling them the same stuff at two different price levels? 

What do you reckon?


4 Responses to “What is the ‘right’ thing to do?”

  1. December 26, 2008 at 8:59 pm

    I do believe that if you drop prices you can kill a brand, or at least wound it. Look what happened to Allan Scott a few years ago. They still have a good brand image but most customers would not pay more than $15ish for their SB and so far their attempt to get into the premium market with premium labels haven’t amounted to much. That said they have managed to find a way out of it and were lucky to maintain a premium image in their export market.

    I don’t think that cheap has to equal poor but it can be the case. I once had 07 Marlborough Savvy wine on a wine list by the glass – I managed to renegotiate the price and made the decision to pass this on to our customer (a drop of about 50c a glass). We went from selling a case every two days to less than one a week but increased the sales of our next most expensive wine considerably. Apparently an $8 wine was good value and of high enough quality to drink by the bucket load but a $7.50 glass was just too cheap and sent the wrong message. EVEN THOUGH IT WAS THE SAME WINE!

    As for selling it off under a different name – at this time this too is difficult. As so many people are struggling to sell what they have one can already get amazing prices on pretty good wine (Allan Scott, The Ned or Whither Hills all around the $15 mark). If the quality is there its not going to hurt the Marlborough or New Zealand brand but customers might start expecting to continue buying kiwi wine at this price. The other side of that is in our export markets it may incite people who usually wouldn’t pay kiwi wine prices to buy kiwi wine – if we can impress them we may well be able to keep them as customers even when the prices (across the market) return to normal.

    As for the final not I don’t believe it’s not dishonest to sell them the same stuff at two price levels provided the quality is there to maintain the top level.

    I do hope the glut (or perceived glut) is going to improve quality or at least encourage growers (of SB and PN especially) to get their shit together in the vineyard. It’s the stuff at the bottom end (and not necessarily with bottom end prices) that is going to hurt our rep.


  2. December 26, 2008 at 10:52 pm

    Great comments Jules!! I’ve decided to delete the blurb I wrote here earlier. It was late and have decided I was going down a path I didn’t want to go. Jules, you are right with everything you’ve said in that post. One thing I’d like to say though is that for a long time here in Marlborough it was common thought that over cropping did not adversley affect the flavour of Marlborough Sauvignon Blanc!! Obviously this school of thought has / had been different for Pinot Noir though. Concerted efforts have been made. At the moment there is a hell of a lot of work going in to reducing SB crop levels here. The sole reason being that there is simply not enough room to process all the fruit in Marlborough. If there was the room, well, I suspect it would be business as usual. Eight -ten tonnes per acre in some cases.

  3. January 7, 2009 at 7:20 pm

    Maybe (and I don’t believe this to be the case but regardless) high cropping doesn’t affect the flavour of SB – but it certainly affects (to me the much more important) texture and mouthfeel elements. And just think what low cropping can do – think Didier Dagueneau’s Poully Fume or even Seresin’s Reserve Sauvignon Blanc.

    Producing a shed load of wine is fine if it can be sold. But why not try and do things better than we are already dooing. At the moment the popularity of Marlbrough Sauvignon is waning both domestically and (if critical interest is anything to go by) internationally. We need to do something different and if we good soil we can make ground breaking wines. I think there is a similar case to be made for Riesling and Pinot Gris and even Pinot Noir to some extent. I look at what Mike Weersing at Pyramid Valley with his Marlbrough wines by reducing yeilds (he leases vineyards so the growers don’t loose out) and by using long indigenous ferments. The results are breathtaking and while not cheap are by no means excessively expensive.

  4. January 11, 2009 at 9:45 am

    Hey Jules,

    Agree! Mike Weersing is is one of the most relaxed dudes I know when it comes to winemaking. Speaking to the guy almost puts you into a trance. If I attempted to be as laid-back with my winemaking in the cellar…….it would be a disaster! Mike has got this…ummm…knack with his wine. Unbelievable.


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