Leading New Zealand wine brand Montana has shifted its focus away from the UK to focus on other, less competitive markets.
Pernod Ricard UK chief executive Jean-Manuel Spriet said: "The UK market is known to be competitive, and our partner in Pernod Ricard Pacific has decided to prioritise other markets that demonstrate
more profitability than what we had in the UK. We were able to make the tough decision to reposition the price of Montana here at the level of our competitor Oyster Bay." Montana Classic Sauvignon Blanc's price was hiked from £7.49 to £7.99 in January.
Montana's sales slumped 13% in the year to June 14 according to OLNīs Wine Report, while competitors Oyster Bay and Nobilo grew sales by 16% and 34% respectively.
New Zealand wine's overall grew sales 18.9% to £153 million, making it the fastest-growing wine-producing country in the UK off-trade. It also has the highest average bottle price at £6.44.
New Zealand Winegrowers' director Warren Adamson told OLN the UK is still the biggest export market for Kiwi wine - but it is seeing strong competition from countries such as the US, Canada and Australia.
"Australia is on fire for us and that has altered our export mix a lot," he said. "At the moment Australia is challenging us on MAT and has seen amazing growth - 31% in the year to June.
"The UK is a hard market but once a week I still get
companies asking how they can
capture it. They see it as part of the export mix, but the general global understanding is you can't just have one area of strength as an export strategy. People are looking for more diversity."
Pernod Ricard was satisfied with the results of its move, which
aimed to add value to the brand. And he added that the UK will be going back to its earlier allocation of volumes for the 2008 vintage. "There is high demand for New Zealand Sauvignon Blanc, and we have to be competitive in the UK to get our share of allocations. That is the way the group operates," he said.
New Zealand's export markets
Country Export Market Growth
2 Australia 24.2
Source: New Zealand Winegrowers June 2008