Smith & Sheth Wines 

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Seeking the exceptional 

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A winery without grapes, and a tasting experience without a vineyard: How an urban winery is transforming the traditional to share New Zealand fine wines with the world. 

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Steve Smith is something of an enigma. At first glance, this passionate Master of Wine is a wine aficionado, making and selling premium quality wines under a unique business model.  

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But scratch the surface, and one quickly discovers that beyond the agriculture and viticulture roots of this man lurks a passion for academia, a lifetime of service to the food and fibre sector, and a powerful story.  

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Steve’s insatiable thirst for lifelong learning, coupled with his inability to sit still for long, motivated him to ponder whether he could disrupt the conventional winery experience for consumers.

 

New Zealand is a long way from the old world of European wines, and nearly as far from the new world and substantial wine markets of North America.  

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More than a decade ago, Steve met his business partner Brian Sheth in Hawke’s Bay over a glass of chardonnay. The two shared a dream of crafting impeccable wines and designing experiences to share those wines with like-minded people.

 

At the time, wine was all about a sense of place. Steve says this created a challenge for wine businesses in distant markets such as New Zealand, and presented a compelling puzzle: How might consumers enjoy the essence of New Zealand wineries without physically being at the winery?  

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“So much of the storytelling happens on the property. People go to the winery; they go to the cellar door. However, you must visit to do that, and most of our customers won’t have that opportunity. “

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“We wanted to discover whether we could tell a fine New Zealand wine story that supplies a fantastic customer experience without having to visit the winery. When you look at the business from this consumer perspective, it totally frames up the way you go about designing your business,” he says.  

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Creating the perfect experience Acknowledging the critical importance of consumer engagement for the success of his concept, Steve participated in the inaugural Te Hono bootcamp at Stanford University in 2012, returning in 2016 and 2019. 

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“The Te Hono programme helped me to refine our business idea, identifying our niche in the world. New Zealand is a small market, known only for our Sauvignon Blanc in a big world dominated by major players. Our purpose was developed at Stanford, to share the pleasure, culture and craft of fine wine. When we paired this with our mission of enriching customers’ experience of our fine wines, we knew we were going to need to lean into our point of difference – the idea of natural luxury.”  

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Steve says that he and Brian wanted to test concepts new to New Zealand winemaking.  

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“We wanted to create great wines without the investment in growing and production, and market them in a way that eliminates customer pain points and tells the story of those wines anywhere in the world.”  

Steve explains that the duo decided to test their concepts in the middle of Havelock North.  

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“At Stanford, Professor Baba Shiv taught us that people’s brains respond to stimuli without them really knowing it. You’ve got to get rid of the stress hormones before you can embrace the hormones that give you pleasure. We know that wine tasting can actually be stressful for people, and the language of wine can be a bit intimidating.  

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“We set about designing an experience which reduces the stress-inducing cortisol chemical, and increases levels of dopamine, sparking a desire for new opportunities. It’s about giving people the opportunity to relax and feel comfortable. When they arrive, they sit down and enjoy a little glass of champagne first, and they get to know the person who is going to be hosting them.” 

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Nothing about this is accidental, and it has developed over time. The Stanford programme taught Steve the value of iterating through a process.  

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“As we enter the wine studio, no one knows what is behind the dark entrance, and the growing anticipation provides a sense of pleasure. Within thirty seconds, we’ve connected all five senses, and the brain rapidly responds to these stimuli. There’s a beautiful waiata, welcoming guests to the space in our language, the language of local iwi Ngāti Kahungunu, there’s suddenly a stunning video playing on an 11-metre-long screen, and every aspect of the tasting is designed to stimulate the mind.” 

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“Going through a deliberate process means having the confidence to challenge ideas all the time. If we start from a place of trying to solve a consumer problem, then we need to constantly iterate and try new things.  

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“The beauty of locating our tasting room here in the heart of Havelock North, right next door to our offices, is that we can regularly check in with how things are going.”  

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Wanting to design an experience that could be replicated in the exceptional wine markets of the world, Steve and his team tested every detail from a consumer perspective.  

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“It needed to feel genuine. It was no good to have empty barrels in the space, for instance, they needed to contain aging wine – and then we realised how much customers loved it when they were able to taste wine directly from the barrel. Of course, then we needed to have a temperature-controlled room, and ensure it was comfortable at the same time.  

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“We sought out the finest of glassware, the most beautiful and natural furnishings. All these deeply authentic experiences developed because we were right there through the design process, testing and iterating to make sure everything piqued the senses perfectly,” says Steve.  

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The resulting multi-dimensional tasting room is a cool, dark, luxurious space in which to escape for a few hours on a journey through Aotearoa New Zealand Fine Wine Estate’s three fine wine brands, Smith & Sheth, Pyramid Valley and Lowburn Ferry.  

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Creation of a unique wine business 

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As well as being an accredited Master of Wine, Steve has an extensive background in various roles related to the future of New Zealand agriculture. Having chaired the Sustainable Food and Fibre Futures fund, served on the Primary Sector Council, contributed for eight years to the board of New Zealand Story, and held the position of Chancellor at Lincoln University, he has developed a deep comprehension of the interplay between the land and the New Zealand brand.  

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Steve and Brian saw an opportunity in the market for exceptional New Zealand wines. 

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“As the best French Burgundy wines, for example, rapidly increased in price, driven by erratic yields and demand growth, we recognised a growing gap in the market, one that we could match with New Zealand’s distinctive, genuinely cool climate Chardonnay and Pinot Noir.  

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“One of the great models of the wine world is the British wine merchant operation. It has amazing relationships with growers and winemakers from the great wine regions of France, Italy and Spain, and we wanted to look at whether we could succeed with a similar model here,” says Steve.  

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With 35 years in New Zealand’s wine industry, Steve has firm relationships with the great wineries and the people here making these exceptional wines. Smith & Sheth set about creating a wine business that owns no vineyard or no winery, instead focusing on sharing the story of fine New Zealand wines with the world.  

“At Te Hono’s Stanford bootcamp, we discussed the idea: Could we tell this story in Napa? Could we go to the heart of wine country, and give them an incredible experience? We hand-select the best grapes from the finest vineyards, develop powerful relationships with the land and growers, and it’s all about tūrangawaewae - our place to stand in the world. How could we better share this magical New Zealand wine story?  

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“We knew we had to be tenacious and brave. You also need to have great support networks to do this sort of change. You need to have the people you can confide in, you need to have confidence in your team, and you need to be on the same page as your shareholders. When any of that has cracks in it, it becomes much harder,” Steve says. 

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The power of a network  

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The connections Steve developed through Te Hono provided that necessary network of leaders to bounce ideas off.  

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“Connections make all the difference when you are starting up. That trust relationship means that you can pick up the phone, and somebody will know someone else who can help. Our 11-metre tasting room screen, for instance, was an idea that came out of a Te Hono conversation. I was on that bootcamp with someone who knew the owner of Fingermark, a tech company which just happened to be a few hundred metres down the road from our office, and which leapt at the challenge,” he says.  

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As well as the Smith & Sheth CRU label (signifying vineyards of exceptional quality), Steve oversees Pyramid Valley Vineyards based in North Canterbury and Lowburn Ferry in Central Otago. Aotearoa New Zealand Fine Wine Estates own three unique, finely tuned vineyards, Omahu in the Gimblett Gravels, Waikari in North Canterbury and Manata in Central Otago. Together, the brands tell a New Zealand fine wine story that Steve believes the world is ready to hear.  

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He acknowledges that in transforming a business, there’s not much distance between being brave and being scared.  

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“This idea is new in the world of wine, and that could be scary. And the way that we’ve designed our business requires bravery and a willingness to stay the course.  

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“We’ve learnt enough to know that through this idea of the unique, private tasting studio, we can tell our story without people being in our vineyard or in our winery, and we can tell it in an authentic way that is pleasurable for our customers.” says Steve.