Making the premium market pay

It’s a recurring theme for New Zealand’s land-based industries, which don’t seem capable of producing brands that escape the commodity trap, says Canning, who suggests many “avoid the premium end of the market so no-one will think we are too full of ourselves”.

Spratt, North American by birth and a former senior partner in PricewaterhouseCoopers’ global mergers and acquisitions consultancy, has a PhD in psychology, which may give him an insight into group behaviour.

He reckons the desire to blend in with the crowd is cultural.

We should be emulating Icebreaker and 42 Below in building strong brands out of New Zealand, he suggests, not panicking at the first sign of a global monetary upheaval and discounting like mad.

It’s hard to argue with the overall thrust of his argument.

New Zealand makes good wine but globally we make little, so why not build a New Zealand brand that sits at the premium end of the market?

And he marshalls compelling statistics to back up his case.

Price is one of the most powerful ways to push a product, Spratt says, so why sell yourself short and undercut the market when a longterm marketing strategy would be intent on pushing the price up to reflect the true value of New Zealand wine.

“The New Zealand wine industry is not over-producing,” Spratt says. “We are undermarketing.”

But there has to be a caveat in there. Destiny Bay produces 2400 cases in a good year, admittedly at prices which resemble the true value of that wine.

What about a producer such as Palliser in Martinborough, a byword for quality, producing 50,000 cases a year at prices much lower than those charged by Destiny? What if you are a wine producer with 2008 stock still in the warehouse, debts to service and a need for cashflow?

It can be a tricky meeting pressing short-term needs that are at odds with a long-term marketing strategy.

Most New Zealand winemakers, I know, would agree it is better to build a New Zealand brand that aims high. I don’t think they are afraid of heights as Mike Spratt and Chris Canning claim, but the pressure to retain a good cashflow often leads companies into making short-sighted decisions that aren’t always good for their brand.

The New Zealand wine industry faces some interesting conundrums in setting its direction for the next decade.