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If Georgian Wine Companies Face the Problem of Market Diversification – Prime Minister’s Call and Companies’ Reply

In 8 months of  2015, Georgian wine exports went down by  46%. The current economic situation in the region was named the main reason for this.

The National Wine Agency officials say that the sharp decline in exports in the two  largest exporter countries – Russia (-58%) and Ukraine (-63%) had an impact on  total exports for 8 months, which is  46% less compared to the same period of 2014. Georgia’s Prime Minister says the government is doing everything to diversify markets in the current situation. At the same time Prime Minister calls  the wineries to be more active.

Whether the companies are working to diversify the markets and how the government is involved in this process?

Director  of Tbilvino Zurab Margvelashvili notes in a conversation with  CBW that the company  has one of the most diversified markets among wine companies and exports its products to more than 30 states. However, Margvelashvili says that they carry out the market diversification through  the company’s financial and human resources.

Nevertheless, the head of Tbilvino notes that  the state really promotes this process and it would be ungrateful not to mention this. In Margvelashvili’s words, the  government offers the  companies co-financing  to participate  in wine exhibitions. The Ministry of Agriculture has signed a contract which ensures the arrival of the experts from the target markets. Zurab Margvelashvili adds that the Georgian companies  are visited by foreign specialists, who own the wine shops, or are consultants.

According to Director of Kakhetian Traditional Winemaking (KTW) Zurab Chkhaidze, if the Prime Minister’s call to the companies to be more active aims to increase sales, then this is absolutely right move.

As for the company and the steps that are taken in this reality, in Chkhaidze’s words,  the company has done everything possible to prevent a drop in sales. Specifically, the wine was exported to a new market of  Malaysia, at the same time the number of contractors in export countries have increased. The company increased capacity and added a new building that allows  to process additional 3 tons of grapes. At this stage, the company exports wine to 15 countries.

Chkhaidze believes  that the diversification process is very time consuming and requires   the market investigation, study, however, the fact that Georgia’s name is unknown in many countries creates the problem. In Chkhaidze’s opinion,  the traditional markets like the CIS countries are more familiar with Georgian wine while  the rest of the world recognizes  France, Italy and Spain the largest producers of wine.

Zurab Chkheidze says that the current difficult situation requires putting emotions aside and working. He notes that  last year there was a stir and chaos around the harvest that led to  unrealistic prices for grapes. “Telliani Valley” exports wine to about 25 countries  both in Europe and the US. The company is trying to export wine to China. According to them, the diversification process is individual for each country. They say in the company that the entry into the US market is more difficult than in other markets.

As for sales, due to recent developments, the sales to Russia didn’t decline while in  Ukraine a drop is being observed.