Examination of Witnesses (Questions 700
- 719)
WEDNESDAY 16 MAY 2007
MR PHILIP GREGAN
Q700 Viscount Brookeborough:
So you would not over-encourage those GIs to increase in number
by reducing the size of the area indicated by each of them?
Mr Gregan: Correct. We are going through this
at the moment in New Zealand. The policy that we are telling our
wine makers is that regional geographic indicators, such as Marlborough
or Burgundy in the New Zealand instance are valuable. You will
confuse the market place if there are a hundred different Geographic
Indications under the Marlborough name. We cannot tell you not
to do that but our view is that you had better concentrate on
the higher level ones.
Q701 Viscount Brookeborough:
Your comments on the artificial distinction between quality and
table wines are well taken by us. Would you agree that it is this
tendency in the EU wine sector to divide wine into "sheep"
and "goats" that has allowed the New World producers
to gain such a foothold?
Mr Gregan: I think it is one reason, yes, but
it is a totally artificial division. In the market it is meaningless.
It has been an attempt to control the market through regulation
and the market finds out, it sees through regulation.
Q702 Viscount Brookeborough:
What more do you think should or might be on bottles? What more
does the consumer like to see? Suggestions from you as to what
particular foods your particular wines go with? How much effect
does that have?
Mr Gregan: We find consumers, particularly in
new markets around the world—Asia in particular—are
very thirsty for knowledge about wine and how it should be consumed.
Whether putting all that information on a label is the best way
to go about educating people is another matter. Associated materials
and promotional literature are probably a far better way to do
it, but from our perspective producers should be able to put on
labels whatever they want to put on them so long as they are not
putting anything on them which is misleading.
Q703 Viscount Brookeborough:
Are you adapting your labels to the different markets for the
same wine? What is your opinion of the British consumer? Is that
opinion of what they would like to have different from, for instance,
what you might export to France or America or indeed Asia?
Mr Gregan: We think the British consumers are
very intelligent people because they buy so much of our wine!
In general terms our labels are the same wherever we sell the
wine. What differs is the promotional material and promotional
events that we run. That is what varies, it is not the labels.
Q704 Viscount Brookeborough:
With most drinks that we have—maybe not with household water
but bottled water, orange juice or whatever—there is a complete
analysis on that bottle of everything from calcium, to bubbles,
to everything else. Why is it that wine is one of the very few
drinks that does not have a comprehensive analysis? And does that
matter to the consumer?
Mr Gregan: The reason why wine, beer and spirits
do not is because of the process of fermentation. Fermentation
effectively destroys the ingredients that go into the product.
Q705 Viscount Brookeborough:
You have enrichment.
Mr Gregan: Yes, but effectively it is converting
those products into something else and that is the historical
argument as to why beer and wine do not have ingredient labelling.
Having said that, we have degrees of ingredient labelling in New
Zealand, so we have to label the alcohol, we have to label allergen
declarations (egg whites or fish products or milk products that
have been used to fine the wine); we have to label sulphur dioxide,
which is an allergen. So we have a measure of ingredient labelling.
Personally I think a lot of that labelling is a complete and utter
waste of time because nobody ever reads it and I think it is enormously
confusing. I have a daughter who had a mild allergy to peanuts.
We could not give her any biscuits because every packet of biscuits
said they may contain peanuts. That was because they were produced
in the same plant as biscuits that did contain peanuts. I have
grave doubts about the labelling requirements that we are seeing.
Q706 Viscount Brookeborough:
Do you think the consumers who are now beginning to understand
such things as food miles and so on are interested in wine miles
from New Zealand? Do you think this may affect the market in the
future?
Mr Gregan: My personal take on food miles is
that it is a little bit like Y2K, so I have my doubts about it,
severe doubts. Having said that, the wider issue of sustainability
and the environment effect we think is very, very important. Consumers
want to believe, if they are drinking a glass of New Zealand wine,
that by doing so they are not destroying the environment and that
the people who have produced that wine have been treated in a
socially responsible manner. Food miles I put in one little box,
but the wider issue of social and environment of responsibility
we see as critically important.
Q707 Chairman:
When I go home at the weekend, I get to the airport, get in the
car, drive to my local supermarket and buy my modest number of
New Zealand Sauvignon Blanc Marlborough bottles. I do that because
I know exactly what I am getting. I am getting it week in, week
out, month in, month out. It tastes the same today as it did three
years ago. That is why I buy it. When you mention that sort of
thing to European wine producers they throw up their hands in
horror because you have to know exactly where it was made, and
the taste differs depending upon which year and the slope and
goodness knows what. Because we have been a non-wine producing
country what we want is predictability and certainty of a product,
whereas the more traditional producers basically have a theology
about wine, do they not? What you have done is to seize the opportunity
of going in for a mass produced product at a medium range price
and you have scooped the market.
Mr Gregan: If you look at most consumers—it
does not matter whether they are in France or in Italy or in Spain
or Korea—they do not care one inch about whether it was
produced on the northern side of the hill or the southern side
of the hill. What they want is an enjoyable product. At the very
top end of the market—the top 3 or 5%—yes, they are
vitally interested in that but the rest of the market is not.
Europe has deluded itself into thinking that the rest of the market
is interested in all that flawed theology. The whole regulatory
system is based on the fact that it is interested in it and it
has perpetuated the production of wines on that basis. The problem
is that the market does not see it that way. The market here does
not, the market in Denmark does not, the market in the United
States does not, nor in New Zealand. The top of the market, a
very small part, does, but not the bulk. Why would they be?
Q708 Baroness Jones of Whitechurch:
Can I ask you about the World Wine Trading Group? Whose initiative
was that?
Mr Gregan: I was there at the beginning. It
is a grouping of New World countries who came together; our first
meeting was in Geneva in June 1998 in the YMCA. We sat down to
see if we had any issues of common interest apart from a great
dislike of the European model of wine regulation; we all took
that for granted. We sat down and said, "Yes, we do; we want
to facilitate trade". The first thing the group did, which
was industry and government together, was to share information
about their rules regarding governing wine production in each
country. That led to the grandly—titled Mutual Acceptance
Agreement on Oenological Practices, signed by the World Wine Trading
Group. What that says from a New Zealand government perspective
is that we, the New Zealand government, accept that the United
States government will not let its wine makers poison or commit
fraud on its public and therefore we will accept wine made into
the New Zealand market place on the basis of the rules governing
wine production in the United States. Obviously that applies between
all the parties. That is exactly what was done within Europe at
the time of the formation of the European Union because there
were all these different systems governing wine production and
they said they recognised they were not going to poison each other
but there are differences. We think it is a great model and we
think the European Union should sign an agreement with the World
Wine Trading Group countries because then it would solve a lot
of the technical issues about wine making. It would be good for
everybody.
Q709 Baroness Jones of Whitechurch:
It is a bit of misnomer really; it should be the New World Wine
Trading Group?
Mr Gregan: That is what it was, it was the New
World Wine Producers, but we decided we had grandiose ambitions
and we needed to market ourselves and we wanted Europe to join.
We thought it would be a great idea so we changed the name.
Q710 Baroness Jones of Whitechurch:
Could an individual country in Europe join in theory?
Mr Gregan: Yes, absolutely; we welcome all comers.
Q711 Baroness Jones of Whitechurch:
The rules that you have just described, who polices them? Is it
policed? You say you do not want America to poison us, how do
you guarantee that?
Mr Gregan: In the United States the government
has a system of control of inspection of wineries. It requires
a slight change in thinking. In New Zealand every winery is audited
each year to make sure that what is on the label is in the bottle.
The premises are inspected for compliance with health rules each
year. Each country has a system in place and what the governments
in other countries are saying is, "We accept your system".
It is not up to New Zealand to police United States' wines coming
into our market; it is up to the United States to make sure that
they are compliant with the US rules. You only sign an agreement
like this with the countries you actually think are going to enforce
their own rules.
Q712 Baroness Jones of Whitechurch:
This memorandum, or whatever it is, it has quite detailed rules
in, does it?
Mr Gregan: It is a formal treaty registered
with the WTO. It has disputes provisions and all sorts of things
as you would expect to see in a normal government-to-government
treaty.
Q713 Baroness Jones of Whitechurch:
Do you use it to give preference to New World wines coming into
New Zealand? In other words, would you be able to say that you
have an agreement with Argentina because they have signed up to
the same set of rules as us; the EU operates on different rules
so we will give preference on imports to Argentina because you
like their rules?
Mr Gregan: If I were the United States and we
were a very powerful country, I may be able to do that, but we
are not and so the answer is no. We accept into New Zealand wines
from the European Union basically on the same basis, because our
government does not believe the European Union is going to poison
its consumers. In fact we allow wines into New Zealand that, if
we tried to sell into Europe, would be banned from sale in Europe,
so the European Union operates on a slightly different system.
What we want is a vibrant, vital, exciting wine market and that
comes through competition. If you believe in your product, you
can carve out your niche and succeed in that. If you do not, then
go ask a regulator for help, but we believe in our product.
Q714 Lord Plumb:
Why would they be banned?
Mr Gregan: Typical wine-making rules in Europe.
There are technical issues. For example, we cannot sell sweet
wines in Europe because of technical wine-making rules. To give
another example, in Europe the potential alcohol is limited to
15% unless you have a derogation from European Commission. We
do not have such a derogation, although we have tried to get it.
They say they want to have a bi-lateral wine trade agreement with
us. We are happy to negotiate that, but they are busy with wine
reform and other things at the moment, so we have not quite got
round to doing it.
Q715 Viscount Brookeborough:
You brought up the alcoholic content. It would appear that wines
have generally become stronger over the years?
Mr Gregan: Yes.
Q716 Viscount Brookeborough:
Where do you think that is going? And do you think that there
are some people who, if they were going to lunch or something,
might beware of 15 or 16% and might want eight or 9% or even less?
Do you think there is a useful market that the consumer wants?
Mr Gregan: High alcohols are a major problem.
That has arisen because viticulture has improved and we are getting
the grapes riper. There is a market backlash against high alcohols
and New World wine makers in particular are looking at ways, particularly
in the vineyard, to get the sugar levels down while still achieving
ripeness. I think a lot of German Rieslings, for example, are
about nine or 10%. They have a fantastic opportunity in the market
place, given the high alcohols that apply to many wines. It is
a major issue but the market is addressing it.
Q717 Viscount Brookeborough:
Is this to do with weather conditions and perhaps over-ripening?
Mr Gregan: It is not over-ripening and it is
not weather conditions; it is in the vineyard issues around management
of the vine, exposing the grapes more to the sun to get the grapes
fully ripe. This is leading to higher alcohols. There is also
better management of viruses in the vines. It is a viticultural
issue.
Q718 Viscount Brookeborough:
Are you really saying that the consumer would rather have the
taste that they like but that comes with the consequences of it
being higher alcohol, that it is difficult to balance the two?
Mr Gregan: Consumers have not actively sought
higher alcohols. Wine makers, in their quest to produce quality
wine, a by-product of that has been higher alcohols. The wine
makers and the viticulturists are now aware there is a market
backlash against the higher alcohols and are looking to still
produce the same quality but seeing if they can do it with lower
alcohol.
Q719 Viscount Brookeborough:
The quality is the taste?
Mr Gregan: Yes, the quality is the taste.
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