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Monday, December 3, 2012

Schuchmann Wines to enter Russia and continue investing in Georgia

 Photo: Financial
03.12.2012.  “I love Georgia. As I have my business here I am also a believer in thinking that international business activities and foreign capital inflow is a positive challenge for the Georgian economy,” said Burkhard Schuchmann, German investor in Georgia.

Burkhard Schuchmann, a German investor in Georgia, who signed his contract on 11 August, 2008, is intensively promoting Georgian wine as well as wine tourism locally and abroad. “I’m a Vice Chairman of the board of Patentes Talgo SA, Madrid, and Chief Executive Officer of Alternative Rail Investment AG, Frankfurt. I have quite extensive experience in the railway sector. But I decided to start a totally different business and in another country when I retired,” Schuchmann said.

Schuchmann Wines is a medium size company producing highly sophisticated wines by using both modern and ancient Georgian wine-making technology. As well as that they are working in the tourism sector offering exclusive service in wine and gastronomic tourism to visitors.

The company, which is working in wine production and wine tourism, is preparing to enter the Russian market soon.

“At our winery one can discover an excellent place to wine and dine,” Burkhard Schuchmann, owner of Schuchmann Wines, told The Financial. “We are building a French style château with ancient Georgian elements. We offer authentic wine tours. In our Vinoterra restaurant visitors can try delicious courses made with organic food by our internationally experienced cooks. In our restaurant it is possible to have Georgian traditional food as well as a European menu. Our small hotel, with its views of the Caucasus mountains and Alazani Valley, is the perfect place to relax and appreciate the good things in life.”

The initial investment project which started in 2008 included total reconstruction and expansion of the existing small winery by using details of modern and traditional East Georgian architecture, installing new winemaking machinery and bottling line, building a new Qvevri cellar for Kakhetian-style wines and erecting an integrated hotel and restaurant of high international, sophisticated standards.

The company owns 120 ha of vineyards. Two thirds of the portfolio is represented by Saperavi, the leading red grape variety in Georgia. 12 ha are of the Rkatsiteli variety which represents our main white wine. The portfolio is completed by Mtsvane, Kisi and a small portion by the European grapes Malbec, Merlot, Cabernet Sauvignon and Chardonnay. The company produces over 500,000 bottles per year and we have more than 10 wine assortments in our portfolio.

“In terms of prices we are a premium and high segment wine producer. We are concentrating on producing more Qvevri wines. Nowadays our distribution of Qvevri wines is about 30 percent, and stainless steel wines - 70. In the nearest future we plan to have it the other way round. Schuchman strongly believes in the future of Qvevri wines,” he claims.

Q. Following the government changes, the Russian market may soon be opened for Georgian products. From your point of view, how will this influence your business and the wine market in general?

A. There are some talks and discussions at the moment about the probable opening of the Russian market and cancellation of the current wine embargo. I view it in a very positive way, not only for the Georgian wine industry but in general for Georgian trade policy. But we have to analyze the fact that the Russian market will not be as it used to be in past decades. We also have to compete with other foreign wines there. Schuchmann wines will be oriented on quality and definitely on quantity, because of the size of the Russian market.

Q. You signed the contract on 11 August, 2008. How did you reach such a decision? Weren’t you afraid given the strained situation at the time and the war?

A. Yes indeed, my decision was made when Georgia was in conflict with Russia and at the time when the financial crisis was happening across the globe. But I made the decision to invest in this wonderful country and the wonderful area in Kakheti without any hesitation or fear. I believed in this country and the Georgian people, that everything would be resolved very soon and that Georgia would become the most attractive country in the region. And now, with hindsight, I am very proud to have made that decision.

Q. What were the main difficulties and obstacles that you had to face at the time?

A. Starting a business is usually not easy, but in Georgia everything runs quite smoothly. The country’s ‘Ease of Doing Business’ status was one of the main incentives of my decision. Getting licenses, dealing with government bodies, working with Georgian people and many other factors meant I was able to run the business without any problems. We have managed to build up such a wonderful factory - Schuchmann Wines Georgia, a synergy of modern and ancient technologies and knowledge. We are developing rapidly and hope that we will positively influence the general development of the Georgian wine industry.

Q. Four years have passed since you first entered the market. Please can you compare these two periods - 2008 and 2012?

A. Schuchmann Wines entered the market in the post-Russian embargo period. Georgia had already by that time started offering its wine to the global wine market. If it were not for that then Georgia would not have been able to sell its wines and compete with other foreign wine producers especially.

Indeed, business operation was not easy, but I don’t like things to be easy, so I appreciated that that was more of a challenge for me.

From the beginning we had a clear idea and vision that our wines had to be high quality wines. So we concentrated on boutique wines. We have achieved this with the support of our fantastic winemaker Mr Dakishvili and excellent team who were working very hard to maintain the top brand name of Schuchmann and Vinoterra Wines.

Q. How have political changes and instability influenced your business?

A. We are a business entity and Georgia is a liberal country. No political changes have influenced our business so far. And we hope that the new government will maintain its solid position among international partners and will create an effective policy for business-economic and social development.

Q. Starting a business in Georgia is quite easy. But is operating a business easy as well? What are the main challenges for foreign investors in Georgia?

A. I will evaluate the advantages of Georgia from an investor’s point of view. It is obvious that Georgia is a leading reformer in the world. The country has achieved many successes which have positively influenced the Georgian economy. I would list the main incentives that make the investment climate attractive as: Strategic geographic location; Stable macroeconomic environment; Liberal trade regimes; Low taxes; Simplified licensing and permitting procedures; Developing infrastructure; Choice of law for contracts; Georgian jurisdiction corresponding to European law standards; Strong banking policy including high interest rate of deposits. But any investor needs to have a good partner in Georgia.

Q. Schuchmann Invest is the sister company of Schuchmann Wines Georgia. What kind of activities does the company operate?

A. It operates in the field of agriculture and tourism. The main target is wine promotion, investor relations, marketing and sales. Also the company implements know-how projects and promotes internationally in order to attract investors and add value to the Georgian economy. Schuchmann Invest is open to cooperating with any interested parties and building up solid business relations.

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