What will the New Zealand Wine Industry look like in 40 years time?

That was the question asked of me by Tessa Nicholson of NZ Winegrower magazine.

If clients look to put together business plans that extend past 3 years, I usually suggest that they not to waste their time. Years 4 and 5 onwards typically descend into extrapolation and pure guess work as the mountain of things that can alter anticipated outcomes renders insight and expectation useless.

In the wine industry, however, a 40 year planning horizon is entirely reasonable as it can take that long for an idea to turn into perfectly aged wine from a vineyard producing optimally.

Given those two seemingly incongruous statements, what can we rely upon to underpin change regardless of the global economy, wine fashions, weather patterns etc.?

The biggest constant I have witnessed in the last 30 years and one I expect to continue for at least the next 40, is the evolution towards a more sophisticated wine, food and travel experience. The winners will be those that know how enhancing people’s enjoyment thereof.

So how is this playing out now? What key changes are this broader momentum precipitating? How should winemaking evolve to better take advantage?

Change One – People Power and the Globalisation of Tastes

Wine Business Solutions publishes the only generally available research into what is on wine lists in Australia, the UK and Canada. When we look at this data (and we see the same thing on the off-premise) there is remarkable similarity between the three countries when we look at those styles that are growing fastest in terms of their listings On-Premise.

White aromatic fruity wines, Pinot Gris and Sauvignon Blanc in particular, are still growing in all markets. These and more neutral styles, like Pinot Grigio and Chenin Blanc, clearly please the palates of Aspirational drinkers.

For more sophisticated drinkers, textural white wines like those achieved through quality wine blends are rapidly growing in popularity.

Better versions of Chardonnay are also enjoying good support. What is clearly not working is hard tasting / hard to understand wine ideas like warm climate Riesling, Semillon, Verdelho etc.

Similarly, juicy red styles like Barbera, Montepulciano along with Ripasso styles like Valpolicella as well as some Malbec are winning the hearts of Aspirational customers whilst savory reds like Sangoivese, Nebbiolo, Tempranillo and Rhone style reds are the fastest growing styles where Wine Appreciators are concerned.

Meanwhile Cabernet, Merlot and blends thereof struggle.

What does this tell us?

  • Tastes are globalising.  Wine critics have less influence. Where once a few very powerful people would tell us that we must drink Cabernet and Riesling, people are now voting with their glasses. New media allowing instant opinion sharing is having an impact.
  • Aspirational consumers want to taste fruit.
  • Wine Appreciators want to taste layered complexity and to get a sense of where wine comes from.
  • Fashion plays a part but an evolution towards more sophisticated / eclectic tastes is the longer term underlying reality.

Change Two – The Arrival of Food

When over half a million viewers tune into New Zealand Masterchef each week, you know that there is a fundamental cultural shift taking place.

People’s preparedness to learn about wine / food and the rate at which this is accelerating means that the winners in wine will be those that can move fastest to embrace this change.

Those that start with the end in mind (i.e. the moment when your wine and you restaurant customer’s food collide on consumer’s pallet) will succeed.

Change Three – Experiences driving Customer Acquisition

Relationships were always best managed directly. Brands are often best built concentrically. Direct experience of your brand as part of integrated wine, food and travel entertainment is the best means through which to secure engaged customers.

In practical terms however, where once New Zealand producers could wait for customers to come to them, in the future, winemakers will need to work direct to customer in markets like the US in order to compete with local wineries.

First though, direct to customer strategy needs to be honed domestically and most have yet to fully realise the potential. Our direct to customer benchmarking in Australia, New Zealand and South Africa shows us that small to medium wineries now derive 18% of revenue from direct to customer business on average. Very few NZ wineries are at that level yet.

Change Four – The split between the “Artisanal” and the “Industrial”

There is nothing more boring, I feel, than hearing that “wineries equivalent to 80% of NZ production are owned by foreign companies” or whatever.

There are few things less believable, having worked both sides, than that all family companies are “good” and corporates, “bad”.

There have always been these sort of divisive arguments used when all the consumer cares about is that the wine is good, that it was made with respect for the environment and has complete integrity.

The argument that the hero / farmer / artisan is a more likely producer of quality wine than a factory, however, is gaining some real traction. I predict that this will be critical going forward. Those who were at the fringe were organics and biodynamics were concerned are now front and centre.

What does this mean for NZ winemaking ?

The simple clean flavours of cool climate NZ fruit are what have won the hearts and minds of wine drinkers across the globe. This is precisely what the next wave of fashionistas will use to crush the New Zealand industry with, if it does not adapt and evolve.

The question, therefore, is – What wines do New Zealand need to make that will work better with sophisticated cuisine?

For Sauvignon Blanc, it means finding sights that will deliver more defined minerality and less explosively fruity wines that still deliver awesome flavour.

For Pinot Noir, this means better clonal / site selection along with yield management so as to produce wines that are more savoury and complex thus avoiding the ‘high alcohol fruit bomb’ tag that Australian critics in particular are so keen to throw at Central Otago Pinot.

For Chardonnay it means let’s start taking this seriously and let’s show the world that world class wines can be produced from this varietal in NZ. Chardonnay, I expect, to be NZ’s most important varietal in 40 years’ time.

Steve Smith and others in Hawkes Bay have always had the 40 year vision for making world class red wine. Developing agreement as to focus styles is critical. Getting the message out and getting better distribution remains a challenge for most.

Serious Rose and aromatic whites such as Gruner Veltliner / Albarino all hold promise. Textural blended white wine and Spanish / Italian red varietals along with innovative winemaking techniques may be useful in the context of making more interesting and complex wines that work with ever more sophisticated food.

Above all it means getting back to farming, working the vineyard and making it the centerpiece. That’s where it all starts.

In 40 years’ time, I expect that the combination of enhanced communication and cheaper travel leading to better connectedness of the winemaking community to the world along with New Zealand’s geographic isolation and uniqueness will mean that New Zealand is producing some of the best wine and food in the world, in the best environment.

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