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Georgia Looks East for its Greatest wine Hope

Riding on the back of strong Georgian wine export performance to China and a newly signed Free Trade Agreement between the two countries, Georgian wines are racking up interest among trade professionals and consumers, bolstered by expected exemption of 14% import tariff on Georgian wines which could take effect as early as the end of this year.

“With the implementation of the China-Georgia Free Trade Agreement, where wines from Georgia will be granted 0% import tax, along with wider of initiatives as part of the Chinese government’s ‘One Belt, One Road’ initiative, even stronger growth is predicted,” said Debra Meiburg MW, who has just hosted a Georgian Wine Festival event series across four Asian cities – Guangzhou, Shanghai, Singapore and Hong Kong – that showcased more than 80 Georgian wines.

Currently, the ancient winemaking country in the Caucasus has already become China’s 12th biggest wine importer, just behind Germany and ahead of Canada.

From January to July, China imported 3.08 million litres of wine from Georgia worth about US$10.87 million, representing a significant 126.2% jump in volume and 120.1% jump in value over the same period last year, according to figures from the China Association for Import and Exports of Wine & Spirits.

Different from other FTAs that China has signed with Australia or Chile where import tariffs on wines will be gradually reduced over a few years, the agreement between China and Georgia will see about 91% of China imports from Georgia become tariff-free immediately, and another 3% exempted within five years.

At the moment, semi-sweet, sweet and red wines made from Georgia’s indigenous grape Separavi are generating strong interest among consumers in China, thanks to their good value and Georgia’s vast reservoir of indigenous grape varieties that set them aside from many other wine regions.

“We are selling a lot of sweet wines in China,” said Mikail Sharoiko, a fluent Mandarin speaker and head of Bolero Company’s China office based in Guangzhou. “The interest is growing because everybody likes to visit Georgia, and they like the wine because they like sweet wines and dry wine of good quality. Right now, there are more Georgian wines in the market, more indigenous wines.”

The country has more than 500 indigenous grape varieties with white varieties such as Mtsvane, Rkatsiteli and red variety Separavi being the most recognised ones. For instance, Rkatsiteli, dubbed as “the famous variety you never heard about” by Meiburg, is one of the most planted white grape varieties in the world, popular in Eastern Europe and Russia.

Increasingly international wine varieties are blended with local grapes to cater to export markets, and oak, which has not been traditionally used, has became more popular among producers as wine exports grow.

In addition to its diversity and good value, Georgian wine’s lower alcohol level compared with some powerful Shiraz and Spanish reds also appeal to wine drinkers who prefer elegance and finesse. Most of the wines’ alcohol level range between 12% and 13%, according to Meiburg.

“I am just so pleased that Georgia has not fallen into a trap of chasing high-alcohol wines. They are still making wines to their cultural taste, and their own taste is still for wines grown at high altitude, and wines that are not so heavy. So most Georgian wines’ alcohol level is 12% and 12.5%, the maximum is 13%, which is really what the classic wine world and what the Bordeaux was doing a few decades back,” she commented.

Patrick Honnef, CEO and technical director of Château Mukhrani, a historic winery founded in 1878 by the Prince of Mukhrani, heir of the royal family of Georgia, agreed, “Even if I harvest in mid-November, the alcohol level won’t exceed 14%.”

Most of the wines from Georgia are planted on hills in Kakheti, the country’s most important wine region, adding the long cool nights and high altitude helped retain freshness and acidity in wine.

While the FTA between the two countries have been signed in May this year, the exact timeline for the implementation of the tariff exemption still remains unclear with a general estimate being the end of the year or early 2018, based on official news report, raising concerns for some merchants who were eager to capture profits from major festivals in the second half of 2017.

“A lot of the orders from China have to wait a little bit because merchants want to profit from the tariff exemption. But the problem is the main [wine promotion] season begins soon with the major festivals of mid-Autumn Festival and National’s Day. It’s not great,” commented Honnef.

“Most likely it’s 1 January. It’s a government habit, same for Australia, Chile and New Zealand but no one can confirm,” added Garry Leong, Asia commercial manager of Georgian Wine & Spirits.