‘New Zealand’ must be seen as a brand which distinguishes its quality export products from those of its overseas competitors.
A brand must not be compromised by poor quality controls – the owner of the brand must ensure proper quality control over the production and manufacture of its products.
In the case of brand ‘New Zealand’ the brand owners are collectively the producers, the producer bodies and the government.
To allow a situation where that control is lost, and for the end-product to claim on its packaging or labels that it is a “New Zealand product” can give rise to dangerous consequences to the reputation and goodwill in brand ‘New Zealand’.
A situation with potentially serious implications to New Zealand’s wine industry exports has arisen in terms of exporting bulk New Zealand wine to China.
It is a situation that New Zealand Winegrowers Association (NZWA) is well aware of, but as it is an industry representative body, as opposed to a regulatory body, they can at best only advocate positions to the government on behalf of the industry.
The NZWA certifies New Zealand wines by issuing Wine Export Certificates for both bottled and bulk wine exports.
NZWA has facilitated the export to China of bulk wine (in 24,000 litre containers). The wine is then bottled in China by Chinese companies and sold on the domestic market.
However, blind tastings in New Zealand of a particular brand of sauvignon blanc dry white New Zealand wine bottled in China have shown that the wine is heavily oxidised, and has a number of other peripheral faults as well.
The wine, which is labelled as 2009 vintage, claims to have won a gold medal in 2008 in a Chinese wine competition.
The same company advertises a Hawke’s Bay Chardonnay, bottled in China, when in fact there have never been any Chardonnay exports as bulk wine to China.
Certifying bulk wine and shipping it for offshore bottling increases the opportunity for mishandling or adulteration of wine before bottling. Without the proper systems put in place in China to ensure quality control, the reputation of New Zealand wines is incredibly vulnerable.
NZWA is well aware of the risks in the Chinese market of a melamine-type scandal which would be catastrophic to the wine industry.
However, as all NZWA can do is to represent the New Zealand wine industry, it cannot tell the government what it should do. It contends that banning bulk wine exports to China is complex and difficult as it has the possibility of evoking a negative reaction from the Chinese market (not just limited to wine). There are also World Trade Organisation and Free Trade Agreement considerations.
No other wine exporting country has implemented such measures as banning bulk exports. Nor have any other New Zealand products exported to China in unpackaged form been subject to bans.
So, what does the New Zealand wine industry do to protect its position?
Stories coming out of China report the Chinese-bottled “New Zealand Sauvignon Blanc” to be “undrinkable”.
Other information from Australia contends that 61 percent of Australian wine bottled in China has been adulterated.
Alwyn Corban, of Ngatarawa Wines, says it would be more credible and less confusing for the New Zealand wine industry to ensure that New Zealand wine is bottled in New Zealand and then mandatorily certified by the Wine Export Certification Service.
This practice would mean that any wine in China that was not certified by the Wine Export Certification Service but claiming to have New Zealand as its origin, could only be counterfeit.
The public would be protected, and the reputation and goodwill of the New Zealand wine industry would be confirmed as being of the usual high quality expected of such wines.
The New Zealand Ministry of Foreign Affairs and Trade has confirmed that the Free Trade Agreement in China would not in itself prevent New Zealand from prohibiting bulk wine export to China.
Bans on food for safety or other health protection grounds exist.
However, for such a ban to be made there would need to be demonstrated unanimous industry support for it.
New Zealand Trade and Enterprise confirms that the current practice of exporting New Zealand bulk wines to China has significant potential to downgrade the value of New Zealand wine in China as a result of poor blending, presentation, storage, price-cutting, and on occasion, misrepresentation.
A workable solution
There is no doubt that a workable solution needs to be found by all stakeholders in brand ‘New Zealand’. Banning bulk wine exports to a single country will not solve the problem, as bulk wine can be easily trans-shipped from one destination to another.
The eventual solution may involve setting up New Zealand-operated bottling plants in China with New Zealand wine industry people overseeing the quality assurance and quality control aspects of the bottling.
Unless a satisfactory working solution is found, damage to the ‘New Zealand’ brand will take place. We have an image worth protecting, and these are still early days for the wine market in China.
If we get it right by putting proper quality provisions in place from the start, we stand to protect the reputation that our wines, and other products, have obtained over years of hard work and endeavour.
It is in the interest of all owners of brand ‘New Zealand’ to adopt regulations that support the wine industry’s premium position. In time, maturing markets such as China will understand New Zealand’s insistence for high quality standards.
John Hackett is a partner at AJ Park.
