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Kiwi wines conquer key US market, beating Australian exports for the first time

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Americans are falling in love with pricey New Zealand wines at the expense of cheaper drops from Australia.

The value of New Zealand wine shipped to the US jumped 11 per cent last year to $US400 million ($530 million), beating Australia’s earnings there for the first time, according to figures from Gomberg, Fredrikson & Associates.

Australia could maybe take a leaf out of New Zealand's book, wine experts say. Australia could maybe take a leaf out of New Zealand’s book, wine experts say. 

Aussie shipments dropped 8 per cent and Argentina’s fell 4 per cent.

New Zealand is reaping dividends from pushing quality wines at higher prices to the lucrative American market, where drinkers are becoming increasingly discerning. Exports to the US have doubled in the past five years, making it the largest market for producers like Constellation Brands, whose Kim Crawford sauvignon blanc is the biggest seller in the US.

“We are seeing newer generations who have grown up around wine, and are more comfortable around wine, graduating to more expensive wine earlier in their drinking lives than the baby boomers ever did,” said Marc Soccio, a Melbourne-based analyst at Rabobank, who helps produce a quarterly report on the wine industry. “These trends have naturally played into the hands of a country like New Zealand.”

The volume of New Zealand wine imported into the US last year rose 14 per cent to 7.3 million cases, while Australian deliveries fell 11 per cent to 16.7 million.

For New Zealand, the growing demand is a welcome diversification for a country whose exports are dominated by dairy and meat products. The Kiwi economy grew less than economists forecast in the fourth quarter of 2016 and at the slowest pace since mid-2015 as farm production and food manufacturing contracted.

New Zealand’s limited production capacity prevents it from sending huge volumes of wine overseas, prompting the industry to target quality over quantity in key markets.

While the country is now the third-biggest importer by value into the US after Italy and France, it is seventh-largest in volume terms with just 5.5 per cent of the 132 million cases imported last year.

“Not only do people want to drink more expensive wines, but they enjoy the style of wines that New Zealand produces — fresher, fruitier, more delicate, a little lighter,” said Soccio.

The US became New Zealand’s biggest wine market in 2015. Last year, its shipments to the US rose to 29 per cent of total exports from 21 per cent in 2011.

New Zealand’s total wine exports jumped 10 per cent to NZ$1.57 billion ($1.46 billion) in the year ended June 30, 2016, putting the industry on track to its target of NZ$2 billion of overseas sales by 2020 and cementing its place as the nation’s sixth biggest export.

Australia could perhaps take a leaf out of New Zealand’s book.

“The challenge is for places like Australia.to change their perception with consumers who know Australia for one thing, which tends to be your higher volume, lower value commercial wines,” said Soccio. “They are not looking for those wines anymore.”

Bloomberg

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