Top local wine sold cheaply

Two million litres of premium Marlborough sauvignon blanc from an unknown winemaker have been sold to an Australian supermarket chain at the fire sale price of $3.50 a litre.

The buyer is rumoured to be Coles Myer and it is understood the wine will be branded from the region of origin and will retail for about $A10 a litre, cheaper than Kiwis can buy it because of the different structure of excise tax on wine.

Australians pay the tax as a percentage of the total price whereas it is a fixed price in New Zealand.

Commentators have long said Marlborough's success is grounded in its premium branding, but New Zealand Winegrowers chief executive Philip Gregan said he wasn't too concerned by what some of the industry perceived as desperation dumping.

Marlborough had a record harvest of 194,639 tonnes, while overall New Zealand had harvested an estimated 285,000 tonnes.

"There's a lot of potential for bulk wine because of the bulk harvest."

He said after a good vintage a winery might have excess wine so it will go into the bulk wholesale market.

Forrest Estate owner John Forrest said on the positive side it exposed a whole new group of wine drinkers to Marlborough sauvignon blanc and would create a mass awareness of this region.

He said Marlborough sauvignon blanc was the top white wine in the above $10 market in Australia and would now quite possibly, become the top in the below $10 market.

On the negative side, he said, people were losing control of Marlborough sauvignon blanc and bulk exports. Quality was all important, he said.

Johanneshof Cellars owner Warwick Foley said he hoped everyone was maintaining the quality of Marlborough sauvignon blanc. He said the international brand reputation of Marlborough had to be upheld if the brand was to remain successful.

"We are a small producer of sauvignon blanc and our growers grow quality grapes. We just hope that other people will make quality sauvignon blanc as well."

New Zealand Winegrowers chairman Stuart Smith said he did not know who the winery was but said they obviously had surplus wine which they had to deal with. He had no fear the wine would be of low quality, saying the buyer would not have bought it otherwise.

"There is some branding opportunities in it for Marlborough as a region if the wine is branded as a Marlborough label."

Wine Marlborough marketing manager Marcus Pickens said selling wine in bulk was part of modern-day business.

"It happens all over the world. In places like Champagne and other famous wine regions they have been selling wines on the bulk market for generations and it hasn't hurt their reputation."

He said wine sold in bulk was usually not premium wine and was not going to be labelled as premium, therefore wine labelled as premium was exactly that.

Mr Gregan said bulk exports had made up four to five percent of total exports in recent years. Bulk white has come down quite sharply in recent years, he said. It was mostly sauvignon blanc and last year, averaged between $6 and $7 a litre.

"There was a lot of debate in the early 1990s that bulk would be bad for the industry, but evidence to date is sales of those products has not damaged the reputation of the industry."

He said bulk wine sales had exposed Marlborough sauvignon blanc to a different market.