Wine export is decreasing, while the areal of sales is broadening

Maka Ghaniashvili

According to the data of the Ministry of Agriculture of Georgia, 218 companies are registered in Georgian wine industry.

However, only 70% of them are actually operating. 35 companies out of this 70% are export oriented. Biggest suppliers of wine on international market are France -18.2%, Italy – 17.6%, Spain – 12.6% and USA – 10.6%. Georgia holds only 0.3% of global market. In 2005, 78% of Georgian wines were exported in Russia, only 15% in other former Soviet countries and 3% in Europe and USA. After Russian embargo in 2006, Georgian wine export has significantly fall. According to official statistics, volume of exported wines in 2007 made up only 36% of the volume in 2005.
In the first quarter of 2009, wine export has decreased by 28.31% compared with the same period of previous year. 2.28 million bottles were exported in I quarter of 2009, while this number in the same period of 2008 was 3.18 million bottles.
Reduction of wine export was mainly caused by financial crisis in Ukraine. After Russian embargo, almost half of wine export was made in Ukraine. However, financial crisis did a serious harm to Ukraine that decreased demand on exported production. Ukraine’s share in exported Georgian wines was 41% in 2009, despite the fact that wine export to Ukraine is reduced by 51.89% in comparison with I quarter of 2008. In January-April of 2008, 1956 million bottles of wine were exported in Ukraine, while the number decreased to 941.129 bottles within the first four months of 2009.
Belorussia and Kazakhstan are holding second and third places in export basket of wines. Wine export has been increased in both countries in the first quarter of 2009. In the mentioned period, 261.168 bottles were exported in Belorussia and 1838.588 bottles in the first quarter of 2008. Export volume has increased in Kazakhstan direction either. In January-April of the current year, 229.366 bottles were exported, while only 78.96 bottles in I quarter of 2008. Export volume is increased in Poland direction also. This country is holding fourth place in the list of export countries with 196.116 bottles of wine. Exports increased in Lithuania, but decreased in Estonia, Latvia and USA.
In I quarter of 2009, Georgian wines entered new markets: China – 50.208 bottles, Sweden – 40.327 bottles and Kirgizia – 38.982 bottles. Total number of bottles exported in new markets made up 129.517 bottles. According to the data of the Ministry of Agriculture, Georgian wines entered 33 countries in I quarter of 2009. As a result Georgia entered markets of 7 new countries. (
Despite global financial crisis, export volume reduction was less scaled after I quarter of 2009. Export of Georgian wine in January-August of 2009 is decreased by 12.55% or by 881193 bottles in comparison with the same period of 2008. The reduction made up 28% in the first quarter. (
The president of the company Tbilgvino, Mr. Giorgi Margvelashvili talked about export potential of Georgian wine and opportunities at local market: there are lots of wine companies at Georgian market and there is a healthy competition among them. However, only 4-5 companies are dominating at the market. Consumption is rather reduced this year, due to economic crisis. Sales are decreased by 20-25% at local market.
E.G. – What might be said about exports of Georgian wines?
G.M. – Statistics on export is rather encouraging. However, I cannot say this by the name of whole wine industry, but only by the name of our company. It might be said that we do not drop behind with the results of this year. Moreover, current year might be completed with better results than previous year; meanwhile last year was quite successful for us as we almost fully managed to compensate loss of Russian market. I want to note that we reached the volume of exports that we had in the times of exports to Russian market. Our company’s annual exports amount 1 300 000 bottles. Last year, we restored this volume of export that was lost after Russian embargo.
E.G. – In which countries is your company exporting production?
G.M. – Our company is exporting wines in more than 20 countries. We export wine in former Soviet countries such as Kazakhstan, Ukraine, Belorussia, Azerbaijan, Lithuania, Latvia and Estonia. At the same time we cooperate with EU countries, Great Britain, France, Poland, Germany and Holland. We won a bid this year and entered Swedish market, together with Ireland and Finland.
As regards remote markets, we are exporting wines in two provinces of Canada, in United Emirates of Arabia, China and Hong Kong. We also entered Uzbek market this year.
E.G. – You noted that your company actually managed to compensate Russian market. What can you say about the situation in whole wine industry after Russian embargo?
G.M. – Georgian wines possess huge potential, but it is not fully utilized yet. It is not an easy task to replace such a large market as Russian one. Despite single examples of this as our company, this does not mean that it would be easy for entire sector. Georgian wine industry has not yet managed to fully replace Russian market. However, sales have increased on other traditional markets for Georgian wines. However, I admit once again that Russian market has not been and would not have been replaced so soon. It is as hard task to enter new markets for Georgian wines.
E.G. – What is the level of recognition of Georgian wines at international markets?
G.M. – Georgian wines market is divided in two parts: first, traditional consumer markets of Georgian wine such as former Soviet Republics. Georgian wine industry is trying to fortify positions and broaden sales at these markets. Second, non-traditional markets where Georgian companies are just starting to enter. Naturally recognition of Georgian wines is low here. However, degree of recognition is increased year by year. Especially, after Russian embargo in 2006, when whole world learned about existing of Georgian wines that were prohibited by Russia. Of course, separate companies are trying to present own brands or Georgia as wine producer country. There are several good examples of cooperation with state for popularization of Georgian wine. For instance, participation in international exhibitions. State is partially subsidizing such exhibition.
E.G. – How far quality of wine is controlled in Georgia?
G.M. – Quality is controlled by regulating institutions that issues quality certificate. The certificate is issued by the wines and spirits department coexisting with the Ministry of Agriculture of Georgia. In order to enter European market, one should have quality certificate, so-called “VI-1″ that is issued by the mentioned department. In order to receive the above mentioned certificate, one should have a conclusion issued by certified laboratory on quality of wine.
E.G. – Are there such laboratories in Georgia?
G.M. – Such problem existed in the past, but now are such laboratories in Georgia. There are several laboratories that have necessary equipment in order to test quality of a product. On their part, these laboratories are certified either.
E.G. – In other words, it is possible to have a quality certificate in Georgia that allows a company to enter any market in the world?
E.G. – Yes, this is possible and there are no problems in this direction.
What is the strategy of other wine producer companies in the fight against financial crisis? Part of the companies started to produce low-price wines. Kindzmarauli Marani is offering medium class and draught wines to consumers. The price of draught wines is GEL 2, while medium class wines cost GEL 1.5. Company representatives declare that this novelty was followed by positive results and the sales are stable. At the same time, Kindzmarauli Marani broadened export geographically and exported 100 thousand bottles of wine in America and Turkey. Company is already selling production at Polish and Singapore markets. The prices of Kindzmarauli Marani wines are in the range of GEL 1.5-10.
Telavi Gvinis Marani increased production of low-price wines. Company is declaring that under the conditions of crisis consumers attention is mainly paid to low prices and thus sales of expensive wines is rather reduced. Telavi Gvinis Marani is offering four sorts of wines and the prices are from GEL 4 to 140.
Sales of the company Georgian Wines is decreased. Company is producing tens of various wines that are mainly exported in Ukraine, Belorussia and Kazakhstan; the prices vary from 2 to 4 Euros.
Wine company Tiflisi Gvinis Marani that is fully oriented on exports sold 400 thousand bottles of wine and took a fourth place by this data. Company is working on six markets, and 70% of sales are made in Ukraine. Management of the company anticipates increase of sales up to million bottles in the end of this year.
Tiflisi Gvinis Marani is operating already 15 years. At this time, company is interested in China market. Company’s wines were presented at Shanghai exhibition. Management is awaiting a response from Chinese party and is working at the same time with two Chinese companies” – declared commercial director of the company Mr. Zurab Zarnadze in an interview with
However, this is only a drop in a bucket and it is a fact that Georgian agriculture is in need of support and encouragement, especially in a field of strategic importance such as viticulture. Some steps were made in this direction last year. State assigned GEL 12 million for financing of vintage. However, the situation has not changed to good and harvest of many peasants was left unused. This year, government has assigned GEL 30 million for financing of vintage of 2009.
Officially Vintage 2009 has been opened on 5 September. Vintage of 140 thousand tones is anticipated this year. Supervisors of every region and village are given a directive to provide peasant with information about locations of the factories, the prices and subsidies assigned by the state. Government’s subsidies will help those peasants who sell harvest to factories. State is adding 15 Tetris to the price that will be given to peasant for Rkatsiteli sort of grape and 25 Tetris for Saperavi sort of grapes. Corresponding document will be given to wine-growers by the Ministry of Agriculture at the moment of delivery. Whether these measures are enough for the development of the field will become clearer after the end of vintage. Vintage-2009 is going to active phase on 15 September.