НА РУССКОМ ЯЗЫКЕ

       

Tamada

Tuesday, June 16, 2015

Georgian wine export to decline by 50% in 2015

by  Madona Gasanova

16.06.2015. Due to the Ukrainian crisis and devaluation of the Russian ruble, Georgian export of wine is predicted to decrease by over 50% in 2015, in comparison with the previous year. Leading Georgian companies are expecting over 20% of an export drop with the help of a market diversification policy. Meanwhile there still remain companies that were strongly dependent on the Russian market. The U.S., UK, Poland and China will be the target countries for promoting Georgian wine in 2015.

Export of Georgian wine was reduced by 54% during the first five months of 2015, in comparison with the same period of the previous year. The reduction is linked to the slump of export to Russia and Ukraine, the largest export markets for Georgian wine.

Georgian wine export to Russia has dropped by 70% this year, and to Ukraine - by 57%. Georgia exported 10,455,407 bottles of wine worth USD 30,151,039 to 31 countries. Wine is the eighth most exported product from Georgia.

More than 120 companies are exporting wine from Georgia. “The number of companies that are mostly dependent on the Russian market is small, about six. The 2006 Russian embargo was quite a good lesson and you cannot find a company that will think to succeed by just depending on the Russian market. Everyone has a desire to diversify their export portfolio. How they manage it though, is another issue,” said Giorgi Samanishvili, head of the National Wine Agency.

“We expect to have over 50% of a reduction of export in 2015, in comparison with 2014,” Samanishvili predicted.

In Samanishvili’s words, despite the expected reduction of wine, the industry will not have a big loss. “If we consider the data of the past decade we will see that in 2004 Georgian wine export sharply increased and reached over 20 million bottles. The industry made a giant leap in 2005, reaching 60 million bottles. 87% was made up by the Russian market at the time. Since the Russian embargo in 2006, export started slumping, reaching 10 million bottles. After the lifting of the Russian embargo, in 2014 export reached another peak - 60 million bottles. So, in 2015 we will not reach the same figure as we did in 2014, however during the first 5 months of the current year we have already reached the number that was exported during the whole of 2008 and 2009. So, we cannot say that the industry will have big losses or experience a huge impact. When the Russian market re-opened in 2013, we all realized that this market was unstable and was connected to risks.”

Tbilvino, the leading Georgian winemaker, exported 5 million bottles in 2014. This year the company expects a 5 to 10% decrease due to the Russian and Ukrainian crisis. Tbilvino expects to sell more than 4.5 million bottles in 2015. The company forecasts growth on each of the 30 markets in which it is present, excluding Russia and Ukraine. Significant growth is predicted in the Baltic States, Poland and China.

“From the very beginning we were not dependent on the Russian and Ukrainian markets on the same scale as the rest of the industry was. The Russian market made up about 25% of our export portfolio. As for Ukraine, it made up 5%. Their total share was around 30%. By comparison, the dependence of the whole industry on these two markets exceeded 70%. We have always been devoted to the strategy of not depending on the Russian market, due to the political and economic risks that characterize this market. Accordingly we managed to easily avoid the current problems caused by this country. The remaining 28 countries help us balance the loss that we are seeing in Russia and Ukraine now,” said Giorgi Margvelashvili, president of JSC Tbilvino.

Teliani Valley, one of the leading Georgian wine companies, exported 900,000 bottles worth USD 5 million during the first five months of the current year. The number was 658,646, worth USD 4.804 million, in the same period of the previous year.

“Ukraine is one of the most important markets. Accordingly its crisis had a negative impact on our company. The company has its trading. Hence we manage to better control the situation on the market. In accordance, the Ukrainian crisis had less of an impact on our company in comparison with others,” said Shota Khobelia, Director General at Teliani Valley.

Russia made up 15% of Teliani Valley’s export basket in 2014 and the figure is the same this year. As for Ukraine, currently its share is 20% down from 33% from the previous year’s figure.

Schuchmann Wines exported 500,000 bottles during the first five months of 2015. During the same period of the prior year the figure was 20% more. The reduction was caused by devaluation of the Russian Rouble and the unfortunate military situation in Ukraine. “However, we are positively estimating this reduction. As we have growth in other more stable markets. Accordingly, we are quite satisfied with the diversification policy of our company,” said Nutsa Abramishvili, Director General at Schuchmann Wines Georgia.

Abramishvili is optimistic that the second part of the year will be more active and the company will achieve its annual plan for sales.

In her words, devaluation of the Russian ruble and Ukrainian crisis contributed to export reduction not only on these two markets. It caused financial instability also in other post-Soviet states, including Kazakhstan and Belarus.

“The Russian market has been a pilot project for us. We have not re-entered it, like other winemakers did after the lifting of the embargo. As the new entrants our approach was cautious and experimental. We insured our risks on the maximum level and started working on diversification from 2013. So, we reduced the share of the Russian market by 20%, and the Ukrainian - by 15%. And we are maintaining this strategy,” said Abramishvili.

The share of the Russian market was 60% at Schuchmann Wines. In 2014 the company reduced it to 20%. With 15%, Schuchmann Wines has the largest share of sales in Ukraine in 2015.

“The Russian market has been a big challenge, as well as important for the Georgian wine sector. As a result the economy and agro sector received huge benefits. Numerous local investments have been issued. Lots of people have been employed. Investments were issued in vineyards, which is very important for Georgian viticulture. Together with the benefits, the Georgian economy remembers well the risks from the Russian market. Accordingly, it was important to have a cautious policy. Active market diversification was the only guarantor of it. Meanwhile it is quite difficult, however in a long-term perspective - effective and achievable, especially considering the huge potential of Georgian wine,” said Abramishvili.

In her words, 2015 will be less active in terms of sales than it was 2014. However, she considers the current year to be quite interesting and crucial for positioning on rather stable and large markets.

Schuchmann Wines expects to have over 34% of a reduction of export in 2015, compared with the previous year. The company is exporting wine to more than 15 countries. “However, we are continuing with further development. Strengthening positions on the Asian market, sales enlargement of the USA, Europe and Baltic States is our priority in 2015,” said Abramishvili.

“We have very ambitious plans, we managed to establish our company on very difficult and competitive markets. So, we will balance the Russian and Ukrainian markets with more stable markets,” Abramishvili said.

The devaluation of the Russian ruble was not the only factor that contributed to an export reduction in this country. The record high cost of grapes resulted in price enlargement of Georgian wine, and decreased its competitive advantages.

“From December 2014 Russians became quite sensitive towards prices as well, due to the dramatic devaluation of the Russian Ruble, therefore consumer solvency has declined. In addition, another issue was the increase in the cost of Georgian wines. Last year we had a boom in demand for Georgian wine from Russia. Accordingly, during harvest time, red grapes were traded at inappropriately high prices,” said Margvelashvili, Tbilvino.

In his words, the cost per kilo of the Saperavi grape reached its historic maximum. So, the prime-cost of wine was boosted. “None of our partners appreciated it. From the second part of December 2014, export to Russia equaled zero, even though it was a period when sales should have been reaching their record maximum. The Russian side were demanding a decrease in prices. Currently the cost of Georgian wine in Russia is much cheaper than it was during the whole of 2014. So, currently wine exporters are facing quite a difficult challenge. The profit margin has been significantly reduced, especially considering the high cost of raw materials. Even with a reduced margin their sales volume is fairly small. The overall situation is quite difficult. However, I think that it will have a kind of refreshing effect on the industry. In the past we have not learned from our mistakes. We did not manage to learn from the first mistake. Hopefully this second mistake will be a useful lesson for us,” he said.

“Price is important for any market,” said Khobelia, Teliani Valley. “We maintain our positions on the Russian market with stable prices. Having one’s own vineyards contributes to maintaining stable prices.”

In Abramishvili’s words, despite the increase in grape price, companies conceded and reduced their margin to maintain competitiveness. “Our company did this. The vintage “panic” of 2014 will not be repeated this year. There will be real prices. And the government will have to purchase more grapes in order to avoid excess supply and bring relief to farmers.”

Total export of Georgian wine in 2014 amounted to 45.9 million litres, worth USD 180.7 million. With 28 million litres Russia was the top destination for Georgian winemakers, followed by Ukraine - 6 million litres, Kazakhstan - 4 million litres, Belarus - 1.8 million litres, and Poland - 1.2 million litres.

The USA, UK, Poland and China will be the target markets for the National Wine Agency in promoting Georgian wine during 2015. “From 2016 we plan to run a more active campaign in Japan. In a short term perspective we expect to have enlargement on the Chinese market. We expect the figure to reach over 2 million bottles this year. As for other markets we will have more stable growth. Our approach is all about enhancing awareness of Georgian wine globally,” - said Samanishvili, National Wine Agency.

    Georgian Wine Catalogue      
 To add this Search Box to your website,  click  here. Many designs are available.

No comments:

Post a Comment

Related Posts Plugin for WordPress, Blogger...