Oct 22, 2009
New Zealand sauvignon blanc wine is squeezing the juice out of Australian chardonnay, but the market is preparing to fight back.
Sales of chardonnay have fallen sharply, giving ground to the more trendy sauvignon blanc, making some in the Australian varietal wine sector shake instead of swirl and sniff.
Global beverages firm Foster's Group Ltd last week convened a chardonnay summit, bringing together about 40 wine makers, wine writers, retailers and marketers to discuss how to revive interest in chardonnay.
According to industry figures from marketing research firm AC Nielsen, annual sales of bottled chardonnay - excluding sales in restaurants - in Australia are worth about $A270 million and represent about 25.5% of the value of bottled white wine in Australia.
Bottles of chardonnay priced under $A19 account for 92% of sales.
But sales of chardonnay began to fall in August 2004 and are declining at a rate of 7.1%, whereas sales of all bottled white wine are growing by 6.9%.
Sauvignon blanc overtook chardonnay as the largest selling white wine variety in Australia by value in March 2009.
Sauvignon blanc from New Zealand represents 70% of total bottled sauvignon blanc in Australia and is growing at a rate of 35.9%.
But despite its decline, chardonnay still is more valuable than either shiraz, cabernet sauvignon or merlot in the red wine sector.
Sandy Mayo, global brand director of the iconic Penfolds wine label at Foster's, and who is leading the company's efforts to fill more glasses with chardonnay, says the rise of sauvignon blanc, especially from New Zealand, is a product of several factors.
The New Zealand wine industry has made a concerted, unified push to promote sauvignon blanc worldwide.
Consumers also have shifted their tastes towards lighter styles of both white and red wines.
The Kath and Kim effect
Chardonnay also has an image problem, which is not helped by references on the popular comedy television program Kath and Kim to chardonnay as "kardonnay".
Mayo says New Zealand sauvignon blanc not only is outselling Australian chardonnay in the under $A19-a-bottle category, it is also about to overtake chardonnay in the $19-to-$35 fine wine category.
Just three years ago, she says, the chardonnay market was three times the size of sauvignon blanc in Australia.
"So there are some big issues, and the landscape is changing very fast," she says.
Mayo says Foster's research has shown that the impact on the wine's image due to the Kath and Kim "kardonnay" references is "very real for consumers".
"Chardonnay has no social currency," she says.
"We heard a lot of consumers say they would never take a chardonnay to a dinner party because everybody would laugh at them.
"They don't want to risk taking chardonnay and being considered out of fashion or taking something that no-one else wants to drink."
Mayo also says that consumers perceived chardonnay as tasting very heavy and "oaky" (oak chips and planks or oak barrels are used in the wine's production to affect colour, flavour, tannin profile and texture).
Winemakers have made changes to chardonnay to make it lighter, fresher and unoaked in the most popular under-$19-a-bottle category, but no-one has told consumers.
Consumers even rejected chardonnay without having tried it recently.
"You get a lot of 'Ooh, yuck, I'm never drinking that', and cat's bum faces," Mayo says.
The conservative packaging of chardonnay in dark green glass also reinforced taste perceptions, whereas New Zealand sauvignon blanc is packaged in appealing clear glass and labels used "refreshing" colours such as silver, light blue and light green.
"This is also underpinned by the image of New Zealand which is all about 'crisp and fresh'.
"That's what we're up against," Mayo says.
The fact that sauvignon blanc also is more visible than chardonnay in retail outlets also means that consumers will not buy chardonnay because they cannot see it.
"It's a fairly bleak picture, but it's not all bad news," Mayo says.
She saysthe very popularity of sauvignon blanc could actually be hurting it and create opportunities for chardonnay. Given the high growth and ongoing over-supply of sauvignon blanc, prices for the variety are dropping.
If the wine becomes cheaper, it will become more mainstream and no longer considered sophisticated or exclusive.
Mayo says the chardonnay sector has to address packaging, increase retail visibility, and make more lighter, fresher, unoaked wines in the under-$19-a-bottle category.
A marketing failure?
Paul Henry, the general manager of industry umbrella group Wine Australia, says chardonnay is a well established wine variety not only in Australia but also in major wine markets such as the United States and Europe.
"At a time when all wine-producing countries and wine-producing brands are looking for a way to grow the total market opportunity, then chardonnay has to be part of their solution," he says.
Henry says that, like many other things that enjoy their moment in the sun, wine varieties can become "debased currency" as a result of their previous success.
"I think what chardonnay suffers from is purely and simply, but profoundly, an image problem," he says.
"It's largely a marketing failure."
Henry says the wine sector has expanded enormously and rapidly over the last 10 to 15 years, and more and more products have been coming to market.
"So it's not at all unsurprising that, within that, you see cyclical peaks and troughs in varietals."
Foster's recently-appointed managing director of Australasian wine, David Dearie, has urged the wine sector to rediscover its passion for chardonnay, after it had let "less elegant" white wines take its place on the national palate.
"Don't fall into the trap of turning chardonnay into sauvignon blanc," he says.
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