Challenges, Success and Plans – Wine Business Appraise 2018

The Caucasus Business Week (CBW) has inquired how the winemaking business appraises the year of 2018. The unsubsidized vintage in 2018, wine exports, the penetration of new markets, measures for the popularization of Georgian wines; this is a list of key directions that the LEPL National Wine Agency of Agriculture Ministry has worked on throughout 2018. The agency has assured that this year brought success. The image of Georgia’s wine grows more and more, the agency representatives said.

The LEPL National Wine Agency has not specified 2018 summary indicators. According to the January-November report, about 78 million bottles of wines were exported from Georgia to 53 countries (0.75 L), up 11% compared to the 2017 January-November indicators. The figure is expected to grow to 85 million bottles as of December 31, 2018.

The January-November indicators have already exceeded 2017 total exports, when Georgia’s exports beat a 30 year record, and the country supplied 76.7 million bottles of wines to foreign markets, Levan Mukhuzla, head of the National Wine Agency, noted.

The value of the January-November exports made up 184.1 million USD, up 19% year on year. Exports have increased to strategic markets: Great Britain – 34% (103,724 bottles), Japan – 30% (20,1275 bottles), Poland – 27% (302,6652 bottles) and the USA – 3% (456,376 bottles); Romania – 477% (99,774 bottles),  Czech Republic – 69% (57,708); Netherlands – 41% (72,249 bottles), Lithuania – 19% (439,980 bottles), France – 155 (113,885), Estonia – 11% (509,840 bottles), Latvia – 10% (1,612,234), Germany – 9% (439,638 bottles), Canada – 7% (173,538) and so on. As for traditional and Asian markets: Turkmenistan – 102% (135,294); Kyrgyzstan – 34% (179,610), Azerbaijan – 31% (146,256), Mongolia – 27% (214,398), Ukraine – 24% (9,525,172), Kazakhstan – 10% (3,396,452), Russia – 11% (48,587,707), South Korea – 275% (68,124), Singapore – 6700% (40,800) and so on.

The top five exports markets for Georgian wines are as follows:                  Russia (48,587,707), Ukraine (9,525,172),  China (6,275,909), Kazakhstan  (3,396,452) and Poland (3,026,652).  At the same time, in January-November, Georgia exported 17.8 million bottles of brandy to 25 countries (0.5 l), up 9% compared to 2017 January-November indicators. Revenues from brandy exports constituted 36.4 million USD, up 3% year on year.

According to the National Wine Agency, in the reporting period Georgia exported 360,000 bottles of Chacha (0.5 L) to 26 countries, 43% year on year. The value of the total exports amounted to 1 million USD, up 32% year on year.

Total revenues from exports of wines, brandy, chacha, spirits and brandy on tap made up 281 million USD, up 10% year on year.

For the first time over the past 10 years, the country had an unsubsidized vintage with a record harvest. Winegrowers’ revenues exceeded 300 million GEL, Levan Mukhuzla noted.

Almost all strategic markets have recorded a growth tend. Thanks to the marketing projects carried out by the agency and  the improved quality of Georgia wines, Georgia’s wine exports and the demand for Georgian wines have grown in 2018, Levan Mukhuzla said.

“Since 2013, the National Wine Agency has been implementing the Georgian Wine Popularization program. The agency provides an active role in strategic markets. The role performed over these years brings real results now, and the benefits are reflected in export growth. Moreover, companies place more focus on quality. We hope this tendency will continue, because Georgian wine cannot compete in the low-price segment with countries which can economize thanks to huge scale. I mean, for example, Australia and other countries, which can get cheaper raw materials thanks to the more rapid growing of vineyards. Therefore, our niche in the global market places emphasis on premium or above the average wines,” Mukhuzla noted.

The year 2018 was quite successful in terms of sales, Zurab Ramazashvili, head of the supervisory board of Telavi Wine Cellar winemaking company noted. Namely, in 2018 the company sold 5.7 million bottles, and this is a record figure in the company’s history. The sales have increased thanks to growing popular awareness of our wines, Ramazashvili noted.

“The consumption of our wines increased in our exports markets, as well as in Georgia. Our major exporter countries are as follows: China, Russia, Ukraine, Poland, the Baltics, the USA, the UK and the Netherlands”, Ramazashvili said.

Rebranded packing on some products have also boosted sales, namely Chacha. At the same time, we have improved Chacha production technologies and product quality has also increased, he added.

“This year we introduced several new wines,” Ramazashvili noted.

“This year the  prestige of Georgian products has increased. Tourist inflow has also grown. The number of promoters of our wines has increased worldwide. This tells people who have visited Georgia and tasted wines here to try to do the same in their own countries, too”, Ramazashvili said.

This year a lot of positive steps were taken for ease of doing business, including the introduction of the Estonian model, he pointed out.

“For the first time, we have not paid a profit tax in 2018. This is of crucial importance, because we have accumulated more resources for reinvestment. The government carries out a normal fiscal policy. The authorities fund the participation of business companies in a lot of agriculture exhibitions, carries out various activities in various countries, including holding tasting events. The government has specially hired companies for the popularization of Georgian wines  abroad. All these efforts boost our sales”, Ramazashvili noted.

Akaki Tsopurashvili, founder of Shumi Winery, explains that the year 2018 was a success for both the winemaking business and specifically Shumi. This year sales rose in exports markets and domestically, he said.

For the first time, the Shumi company exported wines to Azerbaijan and sales increased in the USA. As for the domestic market, 2018 saw impressive year on year growth. This year the company started bottling Qvevri Saperavi and Qvevri Mtsvane. The demand has increased for Qvevri Qisi and  other premium wines, Tsopurashvili noted.