Aussies drawing a blanc

 
Cheap NZ wines are swamping us, writes Jeni Port.

UNTIL now it's all been a bit of a laugh. Poking fun at the Kiwis is a national sport and good-natured jibes at their bottles of "cat's pee" — aka sauvignon blanc — have been keeping Aussie winemakers in stitches for years.

The joke is now wearing thin and in its place there's real concern and, from some sections of the industry, anger.

The dumping of cheap New Zealand sauvignon blanc on our wine market this year has alarmed makers of Australian-made sauvignon blanc. Unable to compete against Kiwi savvies as low as $5 a bottle, sauvignon blanc sales for some Australian companies are drying up.

One producer, Karina Vineyard, on the Mornington Peninsula, says its sales have dropped to a trickle. Owner and winemaker Gerard Terpstra says the wine that was once his most popular is now filling warehouses rather than retailer shelves.

"It's a free market," Terpstra shrugs. "New Zealand sauvignon blanc is entitled to a share of the market but the problem is, it seems to be taking it all."

Terpstra is now leading a call for sauvignon blanc drinkers to buy Australian.

Kiwi sauvignon blanc is indeed a powerful phenomenon. Never has one country dominated our drinking habits quite so comprehensively. New Zealand table wine — predominantly sauvignon blanc — accounts for 11 per cent, or $198 million, of our bottle-shop sales.

The top 10 best-selling sauvignon blancs in the country, according to Nielsen, are all from New Zealand. The best rating for an Australian sauvignon blanc is Lindemans Bin 95, which comes in at number 14.

Australian winemakers might be inclined to be more philosophical about the invasion if it wasn't underscored by a generous tax allowance to the New Zealanders courtesy of the Australian Government.

New Zealand wine producers can claim Australia's 29 per cent WET — Wine Equalisation Tax — on their sales of wine here, a tax rebate that means some companies receive as much as $500,000 a year.

The WET concession is part of Closer Economic Relations, a 1983 trade agreement between the two countries. Australian companies (not just wine companies) cannot be offered a tax rebate unless that rebate is also offered to New Zealand companies.

Until now, it has barely raised an eyebrow. But with Australian sauvignon blanc sales under threat, it is becoming — as leading sauvignon blanc maker Michael Hill Smith puts it — "the elephant in the room".

Hill Smith, of Shaw and Smith, says the arrangement is "extraordinary". "I don't really understand it," he says. "I know it's got to do with a trade agreement. It does just strike me as absolutely extraordinary that they are getting the WET."

Sales of his Shaw and Smith sauvignon blanc aren't endangered yet. The wine sells for $24 a bottle and after 20 vintages, has a loyal following.

John Edwards, at The Lane Vineyard, also in the Adelaide Hills, says he would like to see the WET given to cellar-door sales only.

"If they've got a presence in Australia — a cellar door — then that's OK. But just to be sitting on the other side and sending containers of pee into this country and getting $600,000 a year is just crap."

Terpstra argues price and quality no longer seem to register with Australian wine drinkers.

Karina sauvignon blanc was the first sauvignon blanc planted on the Mornington Peninsula in 1984, and until 18 months ago, Terpstra says the wine was his biggest seller.

The 2008, about $20 a bottle, is a charming wine

and deserves a home but Terpstra says the only way it might move out of the warehouse is by lowering the price or selling it in bulk. Neither is tempting.

The alternative is to create a Buy Australian Sauvignon Blanc campaign. His call is seconded by Hill Smith, who says drinkers often don't realise Australia produces sauvignon blanc.

How much longer the New Zealand sauvignon blanc juggernaut rolls on is anyone's guess.

New Zealand growers, unsurprisingly, don't see a problem.

New Zealand Winegrowers chief executive Philip Gregan says:

"For many years some New Zealand winemakers have expressed concerns about the low price of Australian wine in the New Zealand market, as Australian wine has completely dominated the low-price sector in New Zealand. That, however, is the reality of competition and of open and free markets, which we strongly support from a philosophical perspective. The same applies to the current success of New Zealand wine in the Australian market."

He said that under the Closer Economic Relations agreement, New Zealand wineries were just as entitled to the WET rebate as Australian wineries.