Alf hadn’t appreciated that players in the wine industry are struggling to make ends meet and have been hollering for state welfare.
Perhaps not all of them. But some of them.
And surprise, surprise. The Government has sprung a million bucks or so from taxpayers for them.
The money presumably has been diverted from something not so important in the grand scheme of things, such as adult education for poor people.
Instead the Government is backing a push for the billion-dollar wine export industry into the US market.
The aim is to build a super premium wine category.
Hmm. Let’s see if Alf understands this correctly.
We have a billion-dollar export industry.
But it needs taxpayers’ handouts for a sales push.
The Herald says Government will contribute $1.2 million over two years matched by a similar amount from the 21 wineries involved in the initiative, which included 58 selected wines.
An outfit called New Zealand Winegrowers USA has been established to lead the programme.
A campaign manager will be appointed to work with wineries’ distributors and undertake a programme of collaborative brand and market building.
The project (according to the projections reported in the Herald) will lead to additional direct sales for those taking part of $50 million by 2015.
So what’s up?
Over-production, in a nutshell.
Economic Development Minister Gerry Brownlee said the wine industry was at a turning point as it was starting to produce quite large volumes although small compared with world consumption.
Wine exports have soared in value from $125.3 million in 1999 to more than $1 billion.
However, a 39 per cent jump in the 2008 grape harvest to 285,000 tonnes created about 27 million litres of oversupply after years of shortage, helping drive some erosion of wine, grape and land prices.
Alf draws on his ECON 101 lectures at this point.
When supply goes up, prices come down.
So if bloody Brownlee didn’t step in to distort the market signals, Alf would be able to buy cheaper wine.
Brownlee didn’t do ECON 101, apparently, which makes him an odd choice to be Minister of Economic Development.
He seems to have learned his economics from interventionist do-gooder socialists.
The difference is that he is taking money from taxpayers to give it to a $1 billion export industry, which is a very perverse form of socialism.
And his aim is to produce more wine without bringing down the price.
A bit like turning water into wine, when you think of it.
“It’s almost the catch-22 point where can the increased volume you’re producing maintain the higher price in the markets that are prepared to pay it,” Brownlee said.
“Or do you simply find that too difficult and end up with bargain-basement prices on exceptional quality wine.”
Alf would have opted for bargain-basement prices on exceptional quality wine, actually.
Brownlee has bought into the line of argument about maintaining New Zealand’s reputation internationally for producing a prestige line of plonk, and shares concerns about the effect of exporting cheap bulk wine.
Those who have pocketed a share of the $1 billion export revenue, presumably.
“What we’ve got to try and do is get into markets where that top quality is appreciated so the bottle price is upwards of the $50 mark and that’s what the attempt is all about with regards to the US initiative,” Brownlee said.
New Zealand Winegrowers USA chairman Steve Smith talked to the Herald about the state-supported initiative.
“We produce fine wines in New Zealand, we believe it’s a sector of the market in the USA that remains undeveloped for New Zealand wine, we believe it’s a sector of the market that has significant long-term sustainability in terms of creating prestige and all the benefits that come from that,” Smith said.
“And we think the time is absolutely right to do it.”
The project would not use traditional marketing routes such as advertising campaigns and massive consumer events, Smith said
Oh. So what will it be using?
It seems to Alf we taxpayers will be pumping money into something experimental, from a marketing perspective.
Much more obviously, we taxpayers are coughing up money to help prop up wine prices and deprive ourselves of the opportunity to enjoy cheaper wine.
It sounds suspiciously like the booze-hostile do-gooders at ALAC came up with this scheme.