Australian Prosecco faces trans-Tasman market hurdle after NZ’s GI recognition

Australian Prosecco faces transTasman market hurdle after NZ’s GI recognition

Australia’s Prosecco producers have in recent years experienced something of a boom in sales. The country is home to the most extensive plantings of the winegrape variety outside of Italy, even if these rank a distant second place. But there’s been ongoing contention over the use of the varietal name by local winemakers. Now, a provision within a new New Zealand-EU trade agreement has added further complications for Australian producers and exporters, as Harrison Davies reports.

Browns Family Wine Group (BFWG) CEO Dean Carroll said while decisions would need to be made on how they market the brand in New Zealand in the future, it may also open up new opportunities.

In 2009, a region in Italy was created around a small village that bore the same name as a famous grape variety: Prosecco.

Italian producers claimed that the name of the grape used for the varietal wine was in fact ‘Glera’, and that ‘Prosecco’ was actually the name of the Geographical Indication (GI) it came from rather than a grape variety. Their proclaimed GI was soon officially recognised by the European Union and representatives of the Italian wine industry got to work to enforce rules related to this GI status globally. This proved challenging, however, as the grape had been grown in many other regions, including in Australia, for decades under the name Prosecco.

Australian producers, having developed a strong reputation and market recognition of their own locally- made Prosecco, pushed back against the European move to deny them use of the name that had long been associated with the variety. Now, a decision by the New Zealand government to recognise Prosecco as a GI as part of a broader trade agreement with the EU has left Australian producers shocked and incensed. It’s a move that has the real potential to negatively affect sales of Australian Prosecco given that New Zealand is the largest international market for this product.

Australian Prosecco overseas

The lion’s share of Australian Prosecco stays in its homeland with domestic sales accounting for around two thirds of sales.

New Zealand is the largest export market both by volume and by value; around 15 per cent of Australian-produced Prosecco is shipped to New Zealand. The decision by the New Zealand government to recognise Prosecco as a protected GI came as something as a surprise on the other side of the Tasman as industry body Australian

No one knows what Glera is, Italians have always used Prosecco to identify the grape so its hard to market. A cynical person would suggest that Glera is not as sexy and that is why they have decided on calling it that.

Tony Battaglene

Grape & Wine (AGW) had negotiated an assurance with the Kiwis that such an agreement would not be entered into with the Europeans. While New Zealand’s free trade agreement (FTA) with the EU will open doors for Kiwi exporters, there are concerns that it could result in closed doors for Australian exporters Damien Griffante, Director of Strategy and International Affairs at AGW, said the announcement was a blow to Australian producers. “We are disappointed in the decision as reported and are seeking clarification of the impacts from the New Zealand government,” he said. “The New Zealand government FTA decision on Prosecco does not alter Australia’s position in our own negotiations, to continue to strongly protect the legitimate rights of Australian producers to grow, produce and sell wines made from the Prosecco grape variety. “Prosecco to New Zealand in the year ended June 2022, is valued at roughly $3.5 million.”

In a statement made following the FTA, New Zealand Winegrowers CEO Philip Gregan acknowledged the agreement’s benefits for New Zealand producers but did not mention the recognition of the Prosecco GI.

“Our understanding is that the agreement is positive for winegrowers exporting to the EU. It will help remove technical barriers to trade, and reduce burdens from certification and labelling requirements in a dedicated Wine Annex. It will also support future growth in the market, and encourage exporters to focus on the EU,” he said. AGW Chief Executive Tony Battaglene said part of the shock was that his organisation had voiced objections to the recognition based on the implications that this would have for Australian producers, and that those concerns have gone unanswered. “They provided a service where feedback and objections could be given and we never heard back from them,” Battaglene said.

Figure 1. Australian Prosecco production by year. Source: Wine Australia

While discussions continue over the name of the grape, local producers struggle to keep up with demand for Prosecco in the domestic market. Photo: Marc Bongers

[Prosecco] has been a substantial builder of our business in that market; a lead category for us and the consumer demand is really in that market every bit as much as it is in Australia.

Dean Carrol

Implications of recognition

Recognition of Prosecco in New Zealand won’t come into effect until five years after the ratification of the agreement, which is expected to happen early next year. But the implications for Australian producers are already somewhat dire. The fear among some is that Australia might now make a similar agreement with the EU in search of its own FTA.

“The Italian government has been very aggressive about protecting the use of the term and there’s always the threat in Australia as well so we are definitely concerned about a domino effect,” Battaglene said.

Prosecco vines in the King Valley. Photo: Sam Miranda King Valley

Prosecco in Australia

Prosecco was first cultivated in Australia in 1999 by Dal Zotto Wines in North East Victoria’s King Valley, with the first vintage being released in 2004. The Dal Zotto family originated from north eastern Italy prior to emigrating to Australia and founder Otto Dal Zotto quickly found that the King Valley provided very similar conditions to the foothills of the Italian Alps. “For him, it was an ambition for us to grow it up in the King Valley,” said Otto’s son and current winemaker Michael Dal Zotto.

“We spoke about it quite a bit and then we just came to the point where we had to stop talking about it and actually do something, and that’s what started us off on it.”

The variety soon took off amongst other growing, especially in the King Valley, which accounts for roughly half of Australia’s Prosecco production. Dal Zotto said part of the reason for the variety’s success in the region was that conditions were so similar to its home in Italy. “It doesn’t really grow differently [than in Italy]. It’s quite similar and we get all the same characteristics,” Dal Zotto said.

“We’ve actually taken our Prosecco over to Italy for winemaker tastings with the Prosecco producers in Italy “Our Prosecco was set in the lineup and it wasn’t picked in as an Australian Prosecco, it was picked as one of the Italian Proseccos.”

The domestic market for Australian Prosecco has exploded in recent years, making an initial jump in production in 2009 and making further leaps in the years that followed.

Prosecco production in Australia has more than doubled since 2015 according to a 2019 study by Wine Australia (see Figure 1). “Like everything you get a foothold in the market and we had been growing our brand in New Zealand for a few years and now producers have to find a new market.

“We are never going to be a huge Prosecco industry and now we will be Investing a lot of money in marketing to gain a new foothold or to become more established under a new name.

“The disadvantage we have is the strength of the brand, and bigger brands will be able to transition; but it will be harder because Glera will be really hard for consumers to understand.

“No one knows what Glera is. Italians have always used Prosecco to identify the grape, so it’s hard to market. A cynical person would suggest that Glera is not as sexy and that is why they have decided on calling it that.” Australian Prosecco’s success in the domestic market has been advantaged by its low cost barrier for consumers.

However, major producers are now concerned about any potential knock-on effects that may occur as a result of a hit to exports. King Valley-based Brown Brothers is the largest producer of Prosecco in the country and CEO Dean Carrol voiced his concerns following the decision. “Well, it’s significant in New Zealand where we are either the number one or number two Prosecco,” he said. “It’s been a substantial builder of our business in that market; a lead category for us and the consumer demand in that market is every bit as much as it is in Australia.

“The key thing is that’s how consumers and shoppers see the category - it’s ‘Prosecco’. They don’t think about it as Italian, they don’t think about it as Australian, they just see it as Prosecco, the category. “As this ruling is stated, if we’re restricted from using [the name Prosecco] it really does send us back to the drawing board and we would have to substantially repackage, reinvest and re-educate consumers in that market to understand that the same great product they had is now needing to be under a different name.”