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Jim Sutton Speech - Romeo Bragato Conference

Office of Hon Jim Sutton

Romeo Bragato Conference

Rutherford Hotel, Nelson

Ladies and Gentlemen, thank you for inviting me to speak with you today.

New Zealand's grape growing industry - and the products that flow from it - are world class and high quality. The reputation that New Zealand has built up has been founded over time by hard work and dedication by many skilled and enthusiastic people in your industry.

The wine industry in New Zealand is one of our great success stories in recent years.

It serves as an excellent example of the course other industries can follow if we are to maximise returns and ensure continuing growth in our economy.

Almost 100 years ago, the then-Department of Agriculture ? the forerunner to my Ministry of Agriculture and Forestry ? employed a Yugoslavian man, Romeo Bragato to advise the Government on viticulture.

Mr Bragato seems to have been dedicated to his task, visiting many parts of the country, although not apparently the South Island. Hard to imagine the New Zealand wine industry without Nelson and Marlborough, isn't it? Let alone Canterbury and Otago!

However, in his North Island sorties and after trying out a few varieties of vines, Mr Bragato said he was "gratified at being able to state that I made from the riesling a wine which could, without exaggeration, compete favourably with the best wine of that type produced in the Australian colonies.

"The three red wines ? that is, shiraz, cabernet, and pinot ? each turned out an excellent article, and no doubt, with the necessary age and skilful handling, these would make a great name for New Zealand wines as time will show."

How true that turned out to be. As an avid consumer, I can attest to the quality of New Zealand wines.

Unfortunately, Mr Bragato later lost heart seven years later and departed New Zealand after the Agriculture Department seemed to become obssessed by sheep and beef farming to the exclusion of all other sorts of agriculture. I can say this would not have happened had I been the minister then!

Between 1909 and the 1970s, nothing spectacular really happened with the New Zealand wine industry.

Sure, 30 years ago, we made significant quantities of wine here in New Zealand. But our wine was largely produced for the local market, and within that market we tended to focus on the low price end.

Consequently, we exported very little product, and the rest of the world hardly knew that the New Zealand wine industry existed.

Today our industry commands the highest per bottle return in the world?s most lucrative market, and our Sauvignon Blanc and Pinot Noir wines are among the world's finest. The focus of our industry is on the quality end of the market.

Thirty years ago our industry was heavily protected by high tariffs, augmented with specific minimum collection amounts. That meant that it was virtually impossible for foreign wines to compete at the lower end of the market.

It?s little wonder then, that this was where our industry chose to target its production.

The vines that were planted were those that would produce the highest possible yields at the lowest possible cost were the order of the day. Quality was hardly a focus for the industry.

Virtually all our industries enjoyed similar levels of protection. But by the late 1970s and early 1980s, our economy became stagnant, and it became clear that positioning Government protection at the bottom end of the price field was untenable.

There had to be a change of direction, and New Zealand slowly opened its markets, exposing its producers to competition from Australia, and eventually, the rest of the world.

For producers, the signal was clear - to remain viable, they?d have to be able to foot it against international competition, and produce a higher quality product.

Old high-yielding varieties such as Muller Thurgau had to be replaced.

There needed to be experimentation to determine the best vines for particular areas, research into the possibility of planting of grapes in new areas, the adoption of new wine making technologies, and the attraction of new sources of capital into the industry.

The Government, which had caused the industry?s problems in the first place, provided some one-off assistance to help producers to replace poor quality vines with new varieties.

Successive New Zealand Governments have also encouraged foreign investment in the wine sector.

But the rest of the transformation has been a direct response to market forces.

To assist this the Government has avoided the introduction of proscriptive regulations, instead opting for regulations which have allowed for innovation.

Laws relating to the consumption and sale of alcohol have been progressively liberalised as well.

Unfortunately, we've now ended up with an unwieldy web of acts governing different parts of the wine industry. To resolve this, I have initiated a review of wine law.

We hope to have a discussion paper ready to circulate by the end of next month. That paper will set out options and those of you who are winemakers as well as grapegrowers should be able to have copies in your hands in mid October. It will be publicly available so anyone who is interested can get copies.

After proper consultion, to which you and your organisation will be invited to participate, I hope to have legislation next year. I'll be pushing my Cabinet colleagues to make sure it doesn't slip off the Government's priorities.

Perhaps I'll have to have a word to Mr Speaker, Jonathan Hunt, who is well-known for his fondness and great knowledge of wine for a bit of help.

The Government wants to help your industry. But ultimately, it?s you producers that deserve the credit for your success. You have taken the initiative and lifted your game to meet the international competition. And the results have been remarkable.

When considered across our economy, the results have been stunning.

From a low point of less than 100 wineries in the 1980s, New Zealand now has 365 recognised wineries.

The value of our wine exports have increased from around $100,000 in the 1970s to $147 million dollars to the year ended December 1999.

Longer term, exports are projected to reach $336 million by 2005.

Imagine the impact on New Zealand?s living standards if we could emulate this success, in a range of different industries, right across our economy.

There is no sign of the growth slowing either.

New plantings are happening rapidly, particularly in Marlborough. I flew into Blenheim the other week to attend a MAF seminar and looking down from the plane, all I could see in every direction was grape vines.

Marlborough has 39 per cent of the national area now, and that's predicted to rise to 41 per cent by 2002.

Slower increases in plantings and production from Hawke's Bay and Gisborne mean that by 2002, it is forecast that these two areas combined will only equal Marlborough on its own.

Other areas are growing too ? Nelson by 50 per cent in the next two years, Otago by 42 per cent, and Canterbury by 34 per cent.

Your industry is continuing to improve itself, and I commend you on the Integrated Wine Management system which underpins your industry's brand claim that New Zealand wine is "the riches of a clean green land".

A voluntary system which growers buy into, the IWP provides guidelines for growers to adopt management practices that are sustainable and protect the vineyard environment, people who live and work within and around the vineyard, and the people who drink the wine produced.

I want to take this opportunity today to assure the New Zealand grape growing and wine industry of my strong personal interest in your future.

Our wine prophet, Romeo Bragato, said in his 1902 report: "I may say that in my opinion, there is in this country a great future for the wine-producing industry if it is properly managed, and carried on with the resquisite technical knowledge and skill."

That holds true as much today as it did then.

Thank you and I look forward to answering your questions.

Office of Hon Jim Sutton

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