AUSTRALIAN wineries have resorted to bottling New Zealand wine as Kiwi whites continue to pound our chardonnay on the domestic market.
The Kiwis have put a massive dent in sales of Australian chardonnay over the past five years as a result of a dramatic shift in tastes towards sauvignon blanc from across the Tasman.
Great marketing by the Kiwis, combined with a distinctive taste and a lack of aggressive marketing of new white varieties in Australia, saw NZ wines dominate the market.
Sales of Australian white wine on the domestic market have barely grown since 2000, while the value of white wine imported from NZ rocketed from $61 million in 2004-05 to $228 million in 2008-09, largely due to the increased popularity of its sauvignon blanc.
Three of the top five selling white wines in Australia are from NZ, with the highest-selling - Oyster Bay sauvignon blanc - raking in $40 million in retail sales last year.
In the 12 months to May, sauvignon blanc was the biggest-selling bottled varietal by value in the Australian off-trade market with a 17 per cent share.
Chardonnay's share dropped to 15 per cent.
And to rub salt into the wounds of local producers, Kiwi wineries - Australia's biggest competitors - qualify for a tax break which was intended to benefit Aussie growers.
The Federal Government agreed to provide the wine equalisation tax rebate to Kiwi producers as well as Australians after loud protests from across the Tasman.
The rebate means the first $500,000 in sales are effectively tax free.
Scotchmans Hill co-owner Andrew Brown said the Australian wine industry failed to recognise NZ sauvignon blanc would be "a big issue" and failed to market properly to address it.
He said his winery had cultivated a close relationship with NZ wineries in order to sell two NZ sauvignon blancs at different price points.
"It's a major category, it's taking off and we had to be part of it," Mr Brown said.
"It's better wine than Australian sauvignon blanc ... Australian chardonnay is amazing now because it's been challenged. It was time."
Winegrape Growers of Australia executive director Mark McKenzie said the boom in NZ sauvignon blanc was "largely to blame for $5 million of lost sales for Australian producers".
"The Australian industry was slow to react to it; some thought it was a flash in the pan," Mr McKenzie said.
"Nobody expected the deep affect on consumer tastes or the attractiveness to consumers it had in the Australian marketplace."
Mr McKenzie said in hindsight Australian consumers had become tired of heavily oaked chardonnays after a decade-long run of strong sales.
Representatives from UK supermarket Tesco had for years warned the UK market had moved toward lighter, fresher, lower-alcohol wines, he said.
"The problem is 40 per cent of the Australian white wine vineyard is chardonnay - we committed very heavily to chardonnay going forward," Mr McKenzie said.
"There was some attempt to release un-oaked chardonnay but the damage was done ... the fact NZ can get the WET rebate is bizarre but it's not a significant contributor to how competitive NZ sauvignon blancs are.
"The reality is it touched a nerve in the Australia consumer. It's disappointing we haven't been able to react quickly enough to make other offerings to offset that impact."
Mr McKenzie scoffed at suggestions Australia could not grow a sauvignon blanc as good as the NZ ones, saying the Margaret River and Adelaide Hills regions produced great sauvignon blancs.
