Collaborating onshore to compete offshore
Date Added: 14th December 2011 from ExportNZ
By Catherine Beard, ExportNZ
One of the major challenges for New Zealand exporters is that they lack scale in global markets.
Research undertaken by Victoria University (they interviewed around 70 of our successful exporters tackling the challenging markets of China and India) found that having your own people in the market you are exporting to is one of the keys to success. That is a big challenge for smaller emerging exporters without the balance sheet to support overseas based staff.
One way to get some scale in your marketing efforts is to collaborate with other exporters. We see that this has worked very successfully for some of our largest exporters such as Fonterra and Zespri, but there are also other ways for exporters to collaborate while maintaining their individual brands.
I recently met with the team from Pacific Prime Wines, which looks to be a good model of collaboration that others could emulate.
It is a joint venture of five New Zealand wineries that have established their own US importing business and secured distribution into 14 states from New York to California in nine months. They say it is a business model that is unique in this country’s F&B exporting sector.
Established by Maimai Vineyards, Lake Chalice, Forrest Wines, Seifried Estate and Carrick Wines, the business has set up a subsidiary company in Oregon which drives marketing and sales activities across the continent through a team of US staff. Local knowledge and strong networks have enabled rapid progress in this highly regulated and ultra-competitive market. Pacific Prime Wines expects to grow sales of its wine brands to $10 million within five years.
Pacific Prime Wines has been able to leverage off the resources of five medium sized businesses to create an enterprise with sufficient scale to tackle a major market directly. Most importantly, it has bypassed the importer tier, allowing direct access to trade customers and greater control of its brands in the market. By operating with professional managers who are highly experienced in the market it has been able to move much faster and more effectively than the typical owner-operated exporter.
Chairman Chris Seifried comments: “Pacific Prime Wines has achieved far more than we expected, in a very short space of time. The US market is worth $40 billion and it’s immensely important to New Zealand wine exporters. Having our people on the ground there enables us to create genuine local relationships with our customers – relationships that we own. We’re building a position for our brands that has real strength and longevity. That wouldn’t be the case if our wines were sold to a standard third party US importer.”
The United States market: New Zealand has been exporting wine to the USA since the late 1970s, with sales now worth over $230 million in 2011. Shipments of New Zealand wine to the U.S. surged by nearly 40% to 3.5 million nine-litre cases in 2010, according to Impact Databank, and have more than doubled since 2005. New Zealand premium wine is the top performing import category in the US at a growth rate of 21%, compared to the total market at 8%. 87% of exports are Sauvignon Blanc, 7% Pinot Noir and 3% Chardonnay. Wine exports to the US earn 30% more than those to the United Kingdom. Americans spent more than US$30 billion on wine in 2010 and consumed over 4 billion bottles of wine. 40% of consumption is imported from foreign producers like New Zealand and imported wine growth is currently over 5%.
For further information
Dave Nicholas – Director
Pacific Prime Wines Ltd
Phone: (09) 520-5444
Mobile: (021) 647-547
Email: dave@ppw.co.nz
www.pacificprimewines.co.nz
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