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Thursday, May 17, 2012

Tbilvino: Sales Doubled since Russian Embargo

17.05.2012. Tbilvino, the largest Georgian wine exporter, reported 40% increase in sales in 2011.
Export amounted to 95% of total sales. In 2012 the company plans to realize 3 million bottles of Georgian wine, twice bigger sales than in the period before the Russian embargo on Georgian products. The majority of Tbilvino wine products are sold in post Soviet countries, meanwhile Asian markets are giving new perspectives for expansion. In March 2012 Tbilvino won the Golden Brand 2011 award in the category of Favourite Georgian Wine Brand.

In 2012 the company signed a partnership agreement with International Finance Corporation (IFC). Company will build the largest grape processing factory and increase sales. “We plan to sell 3 million bottles this year. As for new markets we are negotiating with several new companies in China, Korea and the USA. We will add new markets and try to enhance our share on traditional markets,” said Giorgi Margvelashvili, President of Tbilvino.

“The Georgian wine sector has not managed to replace the Russian market, even though we are still being excluded. Presently we sell twice more than we did before 2006 when the Russian market was still open to Georgian products. In 2005, the final year that the Russian market was still totally open to us, Tbilvino sold about 1,300,000 bottles. Last year

we sold 2,700,000 bottles. If Georgian wine producers focus on Asian markets they have the capacity to totally replace the Russian market,” Margvelashvili said.

Margvelashvili said that if the Russian market were entirely open to Georgian wine companies, they would not miss the opportunity. However, the political problem remains a reality. “Interest and demand for Georgian wine in Russia remains as high as ever. We have contact with Russian importers who we share information with. At present we are in a process of waiting. Georgian wine cannot be exported to Russia in the same way as it was ten years ago. Exporters need to pass numerous procedures,” Margvelashvili said.

According to Margvelashvili, if Georgian wine were to totally return to the Russian market it would take companies a long time to reach the same volume in sales as they had previously. “As I know Azeri wine has become very popular in Russia. As well as this, many European producers have started making semi-sweet, mid-priced wines. Georgian wine has therefore been partially replaced in that market”. “2011 was very successful for us compared to the previous year. Total volume of realization increased by 40%, reaching 2,700,000 bottles. Total share of export was 95%. We enhanced our shares on traditional markets and added new ones at the same time. At present we count 28 export markets.

Q. What are the main problems that Georgian companies face on foreign markets?

A. Tbilvino has been the best selling wine on the export market for the past three years. Our product has successfully entered every market which has a tradition of drinking Georgian wine. The main obstacle for us when entering a new market is a lack of information about Georgian wine-making and absence of culture of drinking Georgian wine. So our main goal is to spread information about Georgian traditions of wine-making. Every new market has several steps for each new enterer. The first is collecting information about wine consumption, production, and statistics of import and the best selling wines. Gathering information about competitors is the next step in any of our target market.

Q. In which European countries are you increasing export to the quickest?

A. Tbilvino is present in almost every European country. In the Baltic States our wines are most popular. We are operating in Eastern and central Europe. The popularity of our product is increasing annually in Poland. Out of Western European countries we are present in the markets of France, Belgium, Ireland, the UK, Austria, Germany, Netherland, Cyprus and also Scandinavian countries: Sweden and Finland. We are having stable growth year by year in all of these markets.

As previous members of the Soviet Union the Baltic States have sufficient information about Georgian wine-making. This is the main reason for our popularity in these countries.

Q. We frequently talk about the great culture and history of Georgian wine. Despite this however, in Europe and the USA Georgian wine is still not very popular. What is your standpoint on this subject?

A. Today in the professional wine community you will hardly find one person who doesn’t know that Georgia has a huge tradition of wine-making. This fact is recognized by everyone. Almost every literature about wine-making starts with the preface that Georgia is the homeland of wine. There is no need to prove it anymore. That said, it is not well known to the masses around the world. Popularization of Georgian wine among the masses is another step that needs to be undertaken. One that requires great financial and human resources; it will take a lot of time and effort.

Q. Quality is very important but not the sole thing needed for the commercialisation of products. How is it possible to boost the popularization of Georgian wine abroad?

A. Financial resources are most necessary for the popularization of Georgian wine. The pure quality of our wine is not enough to become widely presented on world markets. Georgian wine-making has a long history, but more important is what we offer today. Our traditions cannot encourage consumers to become loyal. We should find the right way to present our wine which already meets high standards and occupies a respected place because of its quality.

Individual companies cannot easily increase the popularization of Georgian wine abroad. It is a complex work. All the companies involved in this business and also the Government should participate in it. Inviting foreign reporters to info tours and introducing ourselves is an approbated method for us.

Q. What are the best selling wines in Georgia and abroad?

A. The most popular white wine in Georgia is Tsinandali and the most popular red wine - Saperavi. In Western Europe the most popular wines are dry, red wines like Saperavi and Mukuzani. In post Soviet countries such as Ukraine, Belorussia, Kazakhstan and Baltic States, the best selling wines are semi-sweet wines like Alaznis Veli. Semi-sweet wines make up 50-60% of total realization.

Q. What distinguishes Georgian wine and Tbilvino in particular?

A. The historical traditions of Georgian wine-making are important. However, its main advantages are the unique sorts of grape. The variety of our soil and landscape gives us the possibility to have 18 different types of appellation controlled wine. All of them are so distinctive in their geographical micro zones that they should be separated. The same sort of grape can vary according to the soil it grows in. The sorts of grape and climate are the main things that distinguish the uniqueness of Georgian wine.

Quality is important but more significant is maintaining it. This is the key factor in increasing sales. When a person tries a wine once, it is vital that from then on they are always offered the same quality. The stability of quality is very important. In wine-making it is not easy, though we successfully handle this task. Adequate prices are also an advantage of ours. We have adequate, meted and competitive prices.

In the markets we export to we occupy the middle and high price segment. Most Georgian wines are generally in this segment. Georgian wines are not the sort for mass consumption. And at the same time they do not occupy the super premium price segment.

Global wine-making is divided into old and new world countries. France, Italy and Spain are representatives of the old world and Australia, Chile and South Africa - the new world. The dominant country from the old world is France. Leaders from the new world vary year by year. So we have to compete with the wine-making of the whole world which is in the same price segment as us. Modern consumers, including people of the Baltic States, are cosseted with various assortments.

Q. What is your share on the local market?

A. I do not have exact figures but Tbilvino is one of the best selling brands in Georgia. We are among the three best selling Georgian wines. 5% from our total realization is made up by the local market. In Georgia the market of bottled wines is limited.

The culture of drinking wine varies in Georgia and Europe. House wines are also popular in Europe but in Georgia they are dominating. Consumption of bottle wine is increasing in Georgia year by year however. In Europe wine is a lifestyle, a hobby. In Georgia it has a different meaning, including religious.

Q. Which Asian markets are you increasing export to? What is the position of Tbilvino in Turkey?

A. Asia is very interesting for us. We are succeeding in China. We are entering the Indian market at present. Japan is in the list of our target countries and Korea too. We have experience of working on the Turkish market, however I cannot see any basis for sharp expansion there. Turkey itself is a large producer. China, Japan, Hong Kong, Korea, Singapore and India are the most attractive markets for Georgian wine-makers. Georgian wine has huge potential in these markets. If an industry will focus on them, it will easily replace the Russian market in the nearest future.

Q. What is your share on the Ukrainian market?

A. Ukraine is one of the most prioritized markets for us. In general it is the number one market for Georgian wine. The popularity of Georgian wine in Ukraine is high and customers are loyal not just towards the wine but towards Georgia as a whole. However the Ukrainian market is replete and therefore it is unrealistic to have expectations of doubling or tripling sales. Almost every Georgian wine company is presented there. The level of competition is high. Besides this the Ukrainian market is sensitive towards prices. Economical turmoil has had its effect on it. Whereas in other countries we are consistent regarding prices, in Ukraine we have to be more flexible. Ukraine is our second largest exporting country after Kazakhstan.

Q. Foreign experts consider BRIC member states to be some of the fastest-growing markets. What is your opinion in regards to these markets?

A. We have not been considering Brazil. Although during a recent business forum of the two countries that was held we did host some Brazilians. They adored our wine and expressed willingness to start exporting wine to Brazil. They see this as an opportunity. We do not have sufficient information about Brazil’s market however. Although then again five years ago no one thought about the Chinese market as a possible export market. First we loaded three containers to export to there, the next year six and then last year - ten. It is increasing with geometric progression. The Chinese market has other nuances. It is important to find an honest partner. There is risk in protecting trademarks. Protecting intellectual property is important there. Still, this market offers huge opportunities.

Q. Please tell us what your favourite wine is and how frequently you drink it?

A. I drink wine from our assortment on a frequent basis. Out of the white wines I drink most often are Tsinandali, Rkatsiteli and Qvevri wine, which we first produced last year. And out of our red wines: Saperavi, Mukuzani and Kindzmarauli. I like showing off our wines and toasting with them in front of guests and friends. I have to taste and drink wine several times per week.

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