A freelancer reporter Giorgi Lomsadze from Tbilisi with the collaboration of Moldovan journalist Victoria Puiu are presenting two great wine producing countries, Georgia and Moldova. Article was originally published on eurasianet.org. Read the whole article below:
They don’t face quotas and they don’t face tariffs. But for the ancient winemaking countries of Georgia and Moldova, easier access to the European Union, one of the world’s largest wine-markets, is proving a mixed experience.
Although wine does not dominate either country’s economy, the beverage is so intertwined with both nations’ identities, that the June-2014 signing of association agreements with the EU led to the expectation that closer economic ties would mean bigger sales for Georgian and Moldovan wines.
But that has not proven entirely to be the case. While Moldova, the survivor of two Russian wine-embargos, already had re-focused much of its wine-exports on the EU, the South-Caucasus country of Georgia, over 1,400 kilometers to the east, has its wine and foreign policy going in opposite directions
Russia may be Georgia’s number-one enemy, but it is also, after a seven-year embargo ended in 2013, again Georgian wine’s number-one foreign customer.
In 2014, Russia gulped down well over 37.6 million bottles of Georgian wine, a whopping 63 percent of Georgia’s wine-exports. The European Union sips well under ten percent, according to the National Wine Agency.
“Russia is an easy market for Georgian wine,” explained Irakli Cholobargia, the agency’s director of marketing. “The Russians know Georgian wine, they like it and buy it in large quantities. No wine producer, no businessperson will pass up such an opportunity.”
Amidst sanctions and geopolitical skittishness, that opportunity, though, could have dwindling attractions. Russia’s hold on Georgian wine-exports slipped by eight percentage points compared with the start of 2014, and could decrease further. The International Monetary Fund predicts the Russian economy will contract by 3.8 percent in 2015 and face inflation of 17.9 percent.
Russia was once an easy sell for Moldova, too. Russian tsars in the 19th century had their own Moldovan vineyard and promoted training in viticulture. But, today, with an embargo in place, Russia claims a mere 12 percent of the country’s wine-exports; the number represents an embargo-exclusion for the Moscow-friendly autonomous region of Gagauzia
By contrast, the EU accounts for 39 percent of Moldova’s wine-exports, according to the country’s National Office for Vine and Wine.
Up-scale Moldovan wine-group Purcari & Bostavan, which plans to market its wines via the United Kingdom’s oldest wine-merchant, Berry Bros. & Rudd, in 2014 got 60 percent of its sales from European countries. It has no regrets.
“After the first embargo [in 2006], we reoriented our export policy. Our ambition is to conquer the West,” declared Chief Executive Officer Victor Bostan.
The question is whether either Moldovan or Georgian wine can conquer the European Union as part of that territory.
With more than 505 million inhabitants, the EU is a highly competitive market, where a good wine generally is seen as dry, rather than sweet, as in the post-Soviet region.
Knowledge of Moldova and Georgia as two of the world’s oldest wine-cultures (estimated at over 5,000 and 10,000 years old, respectively) is only emerging, and neither country produces commercial wine in the volumes needed to compete on price with more familiar brands.
“Everyone thinks that Georgia is a huge producer of wine, but that is not quite true,” Juan Echanove, the EU attaché in Georgia for agriculture and rural development, commented in an interview withEurasiaNet.org late last year.
In 2013, Georgia, which imports all of its wine-bottles, produced 65.5 million liters of commercial wine – just 1.4 percent of the 4.62 billion liters from France, the world’s largest wine-producer. (Georgian figures for 2014 were not available.)
Georgian vineyards take up four times the proportion of agricultural acreage as do vineyards in France, yet yield far fewer grapes.
The situation is similar in Moldova, where vineyards account for five percent of overall agricultural lands. In 2014, Moldova produced seven-tenths of a percent of France’s volume of 4.66 billion liters of commercial wine. Nearly a quarter of Moldovan wine comes from companies that produce less than 100 tons per year, according to the Bucharest-based Romanian Center for European Policies.
The impact on prices is clear. A bottle of a mid-market French Cabernet Sauvignon can be found on British wine-sites for just £6.00 ($9.07), while a comparable Saperavi, a leader for Georgia’s EU-sales, costs £ 9.95 ($15.03).
A similar price-difference exists between a Pinot Grigio from Moldova and Italy.
While the majority of Georgia’s estimated 118 wine-producers are exporters, Tea Kikvadze, commercial director for Teliani Valley, one of Georgia’s largest wine-companies, conceded that higher prices for relatively unknown wines do not encourage EU importers and distributors to try Georgian wine.
Georgian and Moldovan wines both tend to fare best in EU countries with strong ties to the Soviet past – Poland ranks as the top EU-market for both.
Latvia, Lithuania, the Czech Republic and Romania are other key markets.
Yet with the Russian market now souring, expanding into additional EU-countries has become critical. Some progress is being made; Georgian exports to Poland, Germany and Latvia boomed by 23, 22 and 18 percent, respectively, the National Wine Agency calculates.
The EU, though, has its own products to promote. It has, however, provided assistance
In Moldova, a 12-year, 75-million euro ($99.8 million) loan from the EU’s European Investment Bank has financed quality-control mechanisms, a national brand-name campaign, and an agency for wine-marketing.
In Georgia, the EU says it is helping improve agricultural productivity, expand information about geographic origins (a nod to what Echanove calls “very sophisticated” European consumers’ desire for details), and set up suitable food-safety standards.
Ultimately, niche-markets are seen as the best bet for both countries.
Citing Australia’s experience, Marco Tiggelman, a US Agency for International Development expert working with Moldova’s National Office for Wine and Vine, advised in an interview with the news agency Infotag that Moldova focus more on quality and diversity than on price.
European media-reviews of Moldovan and Georgian wines alike tend to focus on their novelty, and on the blend of any local grapes with European varieties.
That could particularly play to Georgia’s advantage. The country, which claims 45 grape varieties in commercial production, saw most of its varietal wines overlooked for decades as the Soviet Union focused on wines for the masses.
Wines made in kvevris — giant, terra-cotta vessels buried neck-deep in the earth – already have gained a European following, often via kvevris exported abroad.
But aggressive promotion appears to be a weak point.
Moldova’s official label sees its customers as “consumers who are looking for adventure,” but only one government-financed travel video promotes such adventures. Georgian companies tend to look to the government and EU to take the lead.
Nonetheless, that does not dim EU-hopes for Moldovan wine.
“We are more than sure that Moldovan business will be able to get its share [of] the EU market . . . “ the EU delegation to Chișinău wrote to EurasiaNet.org.
Similar optimism came from the EU in Georgia. But, for now, only one of these countries has the exports to justify it.