Wednesday, March 5, 2014

Georgian wine gains in Russia

05.03.2014. The Georgian wine’s return to the Russian market has exceeded all expectations: within six months it has reached fourth position among the top ten wine importers in the country. In spite of the pessimism of the former sanitary head of the Russian Federation, Gennadiy Onishchenko, that Georgian wine would not be able to take more than 1% of Russia’s wine market – though it had dominated before the embargo - Georgian wine now covers 2.42%.

According to Levan Davitashvili, head of the National Wine Agency of Georgia, Georgian wine that returned to the Russian market in June 2013 follows imports from France, Italy and Spain. Previously the wine was in a lower price category, but now sells for 8 to 40 USD per bottle.

Davitashvili has been optimistic from the very outset, believing in the high competitive power of Georgian wine and predicting that no less than 10 million bottles would be exported by the end of 2013 to Russia. But the result exceeded all expectations: 23 million bottles.

Bearing in mind that this figure was achieved in 6 months alone, Davitashvili thinks it is slightly behind the pre-embargo statistics of around 52 million bottles yearly before 2006. He believes the so-called “black” PR campaign against Georgian wine before its return to in fact have had a positive impact and boosted expectations, though Onishchenko banned Georgian wine in 2006 on the grounds that it was unhealthy, and continued to criticize it subsequently.

It was an open secret that Georgian wines on sale in both local and export markets were really of much lower quality before 2006. The volume of sales was enhanced at the expense of quality and taste. But loss of the Russian market that deprived the Georgian wine industry of 70% of its total export market forced Georgian wine producers to come to their senses and improve quality to reach other more reliable markets.

The change of strategy secured the respectful return of Georgian wine to a Russia that already was nostalgic, and met the improved wine with an increasing demand. “Besides, the Russian consumer, having already tasted plenty of other wines, understood that Georgian wine is not worse, and may be better,” Davitashvili said. 

By statistics for 2013, Russian exports made up around 40% of the total Georgian wine export. And although the market is still believed to be risky for political reasons, Davitashvili encourages producers to increase the export but hedge risks through commercial tools: for example, to secure advance payment for the exported product from distribution companies.

However, with the increasing Russian demand there are authenticity concerns again. As Georgian Journal’s source confided, from Russia there are already instances where the content does not correspond with the bottle’s label – some producers are mixing the branded wine with non-branded wine. These cases are not large in number as of yet but if the state does not establish strong control over the imported wine it will undermine the image of all Georgian wines eventually, wine experts warn.

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