Heard on the grapevine: How Pacific trade pact primes New Zealand wine for Japan buzz

TOKYO/WELLINGTON: From sleepy New Zealand hillsides to sleek Tokyo dining scenes, a bottle of Hawke’s Bay wine shipped to Japan traces an arc that exporters like Nigel Avery see as an avenue for multi-million dollar growth built on a free trade pact.

Avery’s Sileni Estates hopes to gain as the two countries are among a group of 11 ringing the Pacific Ocean that have carved out a tariffbusting deal, just as the United States and China remain enmeshed in trade disputes and business in Europe is racked by Brexit.

Even without the United States, pulled out of the accord by President Donald Trump, the Comprehensive and Progressive Agreement for Trans- Pacific Partnership (CPTPP) covers an area that houses more than a tenth of the world economy.

That opens tantalising prospects for niche industries like Malaysian rubber, Australian beef and New Zealand’s wine trade, now coveting affluent drinkers in Japan.

Tokyo begins cutting its 15 per cent import tariff on New Zealand wine on Dec 30, with full elimination set for 2025.

But to boost growing if tiny sales in what the US Department of Agriculture estimates is a US$1.6 billion import business, New Zealand producers may have to invest heavily in promotions to beat dominant European players, importers in Japan say.

At Sileni, which says it’s among the top 10 New Zealand producers by volume, Avery is convinced of the potential to boost sales.

“As the ( Japanese) market matures – because they are heavily ‘Old World’ consumption – they start to become a bit more explorative, they’ll stumble across New Zealand for sure and once people stumble across our wines they really like them,” said Avery, chief executive of his family’s business since 2016.

Still, European vintners are in no mood to sit back and will soon have a trade deal of their own - a sweeping accord to reduce tariffs between the European Union and Japan set to kick in as soon as February 2019.

“The trade agreement will boost our exports to Japan and will enhance our position as export leaders”, said Jean-Marie Barillere, President of E.U. wine lobby CEEV, in a statement after the deal won European Parliament backing on Dec 12.

Japan’s love affair with wine blossomed with its rise as an economic power in the 1980s and has endured: In a University of Adelaide study, Japan ranked 5th in the world by share of global spending on wine in 2015. Exports of New Zealand wine to Japan are small – but steadily increasing amid growing demand in the restaurant trade.

Sales of what wine writer Curtis Marsh has called “honest wines that over-deliver in price-quality rapport” have almost doubled in Japan in the last nine years, to NZ$14 million (US$9.61 million), according to industry body New Zealand Winegrowers, compared with US shipments of more that NZ$500 million.

Starting from scratch around 2003, Sileni has made Japan its second- biggest overseas market after the United States, where Avery, a former Olympic weightlifter, headed up business before taking over from his father. — Reuters