Georgia in good spirits as wine embargo eases

by Tree Elven

30.05.2013. Dugladze Wine Company is celebrating its imminent return to the lucrative Russian market after a seven-year lockout. Russia imposed an embargo on Georgian wines in 2006 on the grounds that they were  contaminated with heavy metal and pesticides.

Dugladze, which exports mainly Saperavi and Khvanchkara wine brands, will be the first Georgian company to return to the Russian market, the clearly elated head of the Georgian National Wine Agency, Levan Davitashvili, announced.

Gradual easing

“The Russian Federal Customs Service has accepted the application of that company” which means exports may begin this week or next.

Dozens of Georgian wine producers have applied to be accepted as wine exporters to Russia, with the first two being accepted in March.

“Dugladze Wine Company was set up in 2004, and was quite actively supplying wines to the Russian market before the embargo was imposed - almost 200,000 bottles a year,” Davitashvili said.

Exports to US, Europe

The company currently exports seven wine brands - Saperavi, Khvanchkara, Kindzmarauli, Tsinandali and others - to the US and Europe. An average export price is four to five dollars a bottle.

“In time we expect to export our sparkling wines and cognacs to Russia,” Dugladze’s manager Manana Akhvlediani told the Izvestia daily.

Supermarket mark-up

However, the price of a bottle of wine shoots up almost threefold when the wine gets to supermarkets, the head of Prodexpo’s international wine-tasting commission, Alexei Zaitsev, says.

“Original Georgian wines will cost 600 to 700 roubles,” he forecasts. “The prices are a bit too high. However, they will be in demand, although it won’t be stunning, mainly for nostalgic reasons. These are the wines that our people know, especially semi-sweet wines,” he added.

Traditionally valued

Georgia is believed to be one of the oldest wine-producing regions in the world, dating back thousands of years.

Prior to its declaration of independence from the Soviet Union in 1991, it supplied a large part of the USSR's wine, and Russia picked up as the major export market in post-Soviet years.

“Original Georgian wines are very expensive, as during Gorbachev’s time almost all vineyards were cut down, that is why Georgian grapes are rare. And it is rather labor-intensive to cultivate grape vines on rocks, it is difficult to supply water there. That is why wines will be costly, but they are still popular,” Zaitsev said.

Competitive market

Expert from Georgian Business & Political Insight Irakly Lekvinadze believes that the Georgian companies intending to win back the Russian market must be aware of risks.

There is a very big competition on the Russian market, he said.

Source