Kiwi Wine in America

New Zealand Wine Exports

The majority of New Zealand wine exports are beamed back to the Mother Ship, also known as Great Britain. Given New Zealand's history of maritime discovery and settlement by both the Pacific Islanders and, later by the British, the Mother Ship reference is apropos. So with the close relationship between the two countries culturally and commercially, along with Great Britain's need for quality wine at reasonable prices, the English Isles are the primary destination for Kiwi Wine.

Two trends in the Nineties have created a significant shift in exports to the United States. First, the New Zealand wines caught the public attention with Marlborough Sauvignon Blanc and, second, the demand for California wine in America has driven up prices to the point where the phrase "moderately-price California wine" is almost an oxymoron, at least for established brands. In 1989, exports to the United States were almost nonexistent; by 2000, the US moved past Australia into second place as an export destination with 2.5 million liters, roughly one fourth of what goes to Great Britain.

Curious side note: The domestic consumption of New Zealand wine has dropped significantly, due to pricing and/or changes in Government policy on vineyard plantings. During the same time, New Zealand imports of Australia wine have risen tremendously and not just in the traditional reds. The bulk of the imports are in the bulk wine category; meaning that New Zealand is starting to look elsewhere for its box wines. One drawback for New Zealand vineyards is the lack of access to low-cost labor.

Exporting to America

The challenge for New Zealand producers is to establish a distribution system in America so that their bottles wind up on the shelves of your neighborhood wine store. This can be a daunting task for a number of reasons, particularly for the mid-sized producers. The biggest obstacle is the lack of name recognition amongst the American consumers. If the demand was preexistent, the marketers would find a way to make it happen. Unfortunately, there isn't a great clamor by the consumers (except for myself) to get their local store to stock Mud House/LeGrys Sauvignon Blanc, let alone the Pinot Noir.

Step one in the process for the wineries is to line up an importer in America. The importers have to be convinced they can move the product. Do they need a New Zealand wine in the portfolio? How many? What are the distributors looking for? The producers must give away a fair amount of wine at tastings to establish that foothold.

Selling Wine in America - Historical Perspective

The Constitution of the United States, at Section 8, Paragraph 3, grants Congress the power to regulate commerce with foreign nations and among the several States. Congress exercises that power on importation of goods through its regulations and tariffs. Unfortunately, the Federal government defers its authority to the States when it comes to the interstate commerce of alcoholic beverages.

In 1919, the 18th Amendment to the Constitution was ratified to prohibit the manufacture, importation, and sale of alcoholic beverages (the Prohibition). The 21st Amendment, passed in 1933, repealed the Prohibition. However, the deal that was cut to pass the amendment was Section 2 therein, which abandoned Federal power to regulate the commerce of alcohol to the States. Prohibitionist states were allowed to continue on their path.

That was the 1930's and the situation is not so extreme today (although there are still "dry" locales). However, the American wine consumer is still coping with certain aftereffects of that era. In the wake of the repeal of Prohibition, the States passed their respective laws on sale of alcohol. These usually involved the licensing of distributors and, of course, taxation of the commodity. Licensing of the distributors was a win-win situation; it gave the distributors controlled competition and exclusivity and the States had a licensed tollgate service for its revenue. Consumers were not disadvantaged since there was no other mechanism to buy wines from faraway places. Over time, some States have modified this approach but, in most, this is still the model.

Selling Wine in America - 21st Century

The wine market in America at this time is a patchwork quilt of State law. In addition, modern technology and commerce are creating issues for those locations that are still mired in the 1930's. The basic structure from the 30's is a three-tier marketing structure of importer/producer selling to a state-licensed distributor selling to a retailer. In some locations, the States assume the role of distributor or retailer.

In recent decades, some States, by virtue of either being progressive to the times or by having wine product to sell, have adopted so-called reciprocity laws. Producers or large retailers in one state can sell directly to consumers in another participating state. This is not a development that is viewed fondly by the distributors who want to protect their exclusivity, by some State legislatures who want the revenue, or by the prohibitionists who can no longer impose their will on others.

In the 90's, the Internet took off and suddenly the producers and national-level retailers had another means to reach the consumer. This development furthers strain the traditional three-tier model. Interstate and Internet sales are the current battleground of the Prohibitionists who seek strict enforcement of laws prohibiting Interstate sales.

Consumer's Corner

OK, OK. This has been a long-winded discussion to say that how New Zealand wine gets into the hands of the consumer will vary widely by where you live. The average consumer who wants a good bottle of wine for dinner is served adequately by the system. For the informed consumer who wants to buy a particular bottle of wine, the task is more challenging. It all starts with research. Where direct sales are an option, explore the Internet or get on mailing lists for national-level retailers. If direct sales are not allowed in your location, visit the wine stores in your area and keep a record of who carries which brands.

Wherever you live, if there is a wine you are truly interested in, find out whether it is imported and who the importer is. You or your favorite retailer can contact the importer to see if there is a distributor in your state. You may have to buy a case on special order or maybe you can convince your retailer to award you a finder's fee in identifying a wine that they should stock.