Monday, July 9, 2012

Georgian wine in wait of Russian palates to cleanse

07.07.2012. Georgia was synonymous with wine during the Soviet period. When the empire collapsed, wine producers were hit hard, and they didn’t really begin to make a serious recovery until now. Wine producers have high hopes for the reopening of the Russian market after Russia has become a member of the World Trade Organisation (WTO).

The blue grape known as Saperavi only exists in Georgia and is considered to be the progenitor of several modern varieties of blue grapes. Teliani Valley, a wine producer, is included in the Bering Central Asia fund, which is also partially owned by East Capital's investment company, East Capital Explorer. "Russia was in a class of its own as the largest market, so its potential is really high," said David Östby, Investment Manager at East Capital and member of the Board of Directors of Georgia's largest wine producer, Teliani Valley.

Ironically enough, the Russian boycott of Georgian wine had a positive effect in forcing the country to orientate itself toward other markets for its exports. Wine is one of the country's top ten export products.

"When the Russian export market was closed, wine producers were forced to make more high-quality wines to be able to export, and thus Teliani Valley's exports began to grow exponentially, and grew bigger than domestic sales."

Teliani Valley is the market leader, with a market share of around 40% of the somewhat small market that exists in Georgia for bottled wine. The majority of the wine produced is currently exported to Ukraine and about fifteen other countries.

During the Soviet period, the vast majority of the wine produced was sold within the Eastern bloc. Wines from Georgia were so popular that producers in other parts of the Soviet Union tampered with the country of origin marking and called their wines Georgian.

"That is the reason why the majority of our exports go to former Soviet republics today. The wines exported back then were primarily sweet and medium-sweet wines. Today on the other hand, the bulk of our exports consist of quality dry wines."

Georgia is quite possibly the oldest wine-producing country in the world. Wine production had already begun here 8,000 years ago. Even the Georgian alphabet is said to have got its shape from the grapevine, which is very believable considering its curved shape.

The absolute most common wine that Georgians themselves drink is homemade from their own grapevines. Less than 5% of the wine that the population drinks is sold bottled in shops.

"I still haven't been in a Georgian home where grapevines don't grow. They make a couple of hundred litres per year for personal consumption."

Wine is not only important as a drink; it is also a large source of income in the wine-producing regions.

"A significant portion of the Georgian population works in the wine industry. Up to 25% percent of the population works in the wine industry in the eastern wine-growing districts," said David Östby.

Karl Lans


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