Export Joint Venture Unlocks United States Wine Market

Wednesday 30 November 2011, 9:47PM
By Pacific Prime Wines Ltd

A joint venture of five New Zealand wineries has established its own US importing business and secured distribution into 14 states from New York to California in nine months. Its business model is unique in this country’s F&B exporting sector.

Pacific Prime Wines was formed by five successful family owned wineries, each representing a major wine region, in order to succeed in the rapidly growing, but highly challenging United States wine market. It has gone from a standing start since its inception in February of this year to distribution in fourteen states and exports of over half a million dollars. With the USA now the largest wine market in the world, the company’s growth prospects are outstanding.

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.

While collaborative and joint venture exporting are being promoted as essential to New Zealand’s international trading success, Pacific Prime Wines is the only business of its type in the billion dollar New Zealand wine sector. In fact it’s essentially unique in this country’s F&B export sector according to NZ Trade & Enterprise.

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%.