Wine
Posted: 4 months ago

Georgia is in a Perfect Position to Build a Story Around the Wine Industry

Professor Fernando Cortinas held a master class on Wineconomics at IE Insider Day in Tbilisi. Fernando has extensive, international experience, and holds an MBA from Harvard Business School. He has been teaching continuously at IE since 1992. During the last 28 years, he has taught different courses in the field of marketing.

The lecture was about major changes and trends taking place in the global wine industry, and discussed both macro and micro perspectives, and explored the current competitive environment in this business. During the interview with CBW, Mr. Cortinas also reviewed Georgia’s position on the wine market, and what steps should the country take:

How do you combine your corporate and academic career?

One of the factors that made IE special was having two types of professors: there are conventional academic professors, those who bring lots of theoretical knowledge based on what they studied and researched, while I was part of what IE calls practitioners.

We learn by doing at IE. We base our studies on a case method. It’s important for the university to have people with managerial experience. I learned this in Spain 27 years ago: I was moved to a metal mechanical company, and then I joined Telefonica, which is one of the top 10 largest telecommunications companies in the world. I was busy with digital marketing at that time. It was really hard at the beginning, being a professor of International Marketing and traveling a lot, it’s quite difficult to combine, and that’s why I began to teach a limited number of sessions with my expertise. So, I would concentrate my classes in the times of year when I wouldn’t travel due to seasonal reasons.

It was very refreshing, and I feel that it’s very important for students to not only have the views of academics, who develop good theoretical frameworks, but it’s important to bring experience from what’s going on on the ground. This is why IE has several hundred professors together with me, which brings practical expertise. I developed this part-time professorship over more than 20 years, but 6 years ago I took a retirement plan and now I’m devoted to full-time to teaching. That’s why I feel that I’m still young and that my international experience is relevant, and that’s why I teach international marketing.

IE seems like an extraordinary University. What are the most innovative approaches to learning taught there?

IE has some distinguishing characteristics that make it unique. One of the main one that everyone claims is internationalization. When I studied in the US,24 % would be foreigners, while 95% are foreigners at the IE–only 5% are Spanish-so when you have such a strong international environment, it’s like a micro-cosmos, a small slice of the entire world.

On top of that, IE puts the focus on entrepreneurship. Let’s say you have structured periods, you have chore courses, but then after the first term you begin to have elective courses, and on top of them you can develop your own entrepreneurial project. So part of the credits you can get is not only based on conventional learning, in which you study and take credits but also you develop projects under the mentorship and sponsorship of companies, professors; that’s what we call learn by doing.

So when you combine internationalization with entrepreneurship, then you have learn by doing its best. Every year there is a contest for these new projects-even many professors are investors, who also teach entrepreneurship, and they are judges at this contest, so you make a project, run a contest and, if you win, you get money. But sometimes, there are so many interesting projects that you might get funding even if you don’t win. It’s not mandatory. I would say one more important factor is that we are very pragmatic. IE is very diverse, we don’t have any type of religious or political affiliation. That’s why I’m so happy and comfortable to work there. The IE is a place where being different is a plus and not a minus. Given that, when you’re different, you normally bring different perspectives, the bigger the number of different people with idiosyncratic ideas and putting them on the table and discuss them, that’s where innovative ideas are born. I think this diversity is the key to success for IE, and over the last three decades, that’s reflected in the numbers, the story of our success. We are open to everything.

What suggestions do you have for students?

If you’re in Spain and planning to invest a significant amount of Euros studying in a programme, on top of the one or two years, it is worth it to buy a plane ticket, visit all the schools. It seems like a good idea for me to spend a week or two, just as a job, not as a tourist, to visit this course, feel the place. This research will pay out, and make you more confident. Make sure that your school you want to go to is good for you. It’s like a picking a partner, it must fit your personality, lifestyle and expectations.

What are the major marketing trends in the global wine industry?

Now we are passing from volume to value. We favor smaller editions, smaller quantities of higher quality, and thus higher prices. This is why big wineries are still powerful, but there is room for small wineries who are producing limited editions, a limited number of bottles with peculiar characteristics.

A person who pretends to be an expert in wine wants to taste something different. The more of an expert you pretend to be, the more willing you are to pay more money for unique things. The number of liters being traded internationally is growing, meaning more people are willing to buy wines from foreign countries. Besides, the average price per liter is higher. We saw that the average price for water 15-16 years ago was 2 Euros per liter, and now it’s 3, and the trend is going in that direction. A higher proportion of wine consumed internationally is from a non-local origin, and the average price per liter is growing steadily.

You’ve mentioned how Georgia’s positions on the wine market during the master class. Can you tell us more about your advice and forecasts?

Georgia has a uniqueness, as far back as the recent archaeological discovery that  Georgia is the birthplace of wine. When you have 50-60 different types of grapes, lots of microclimates, micro-locations, you are in the perfect position to build a story. The facts around peculiar denominations of origins. Georgia is a small country, the number of bottles is small, and because of that, it doesn’t make sense for you to compete in volume. You have scarce resources, and a limited amount of land, and you should focus on, in the medium and long run, try to produce high-quality, high-priced wines, and build a story around this fact that Georgia is a cradle of wine. It’s an opportunity, but also a challenge because marketing is a war. But this is not a war of products, my product is not competing with yours, it’s a war of perceptions. We compete based on the percentage of the market.

If we were to invest in wine now, what should we be looking at?

The French are the market leaders, in terms that nobody beats Italians. They produce excellent wines, but meanwhile, they’re great marketers, building stories based on facts, and they’re not lying. They’ve produced wine only for 2000 years in the best case scenario, you have been producing for 8000. Who’s in the better positions in terms of stories? You need to recover the stories. It’s easier to continue apace where you are, and you’re selling wines to your traditional markets, making money, but you sell to Russia, Kazakhstan, Ukraine, China. But what if you have a problem with one of your markets, as happened with Russia? You were selling almost 100% of your wine to Russia, after the issues you learned the importance of diversifying. You’re still largely concentrated on the Russian market. You need to diversify markets, geographically speaking and in terms of positioning you to have to add value, and be perceived as producing higher-quality, high-priced wine. Of course, Georgia has to invest money to educate consumers, Western Europe has to learn about you. More than 85% is concentrated on these same markets. China is a promising market, but in terms of competition, it’s easier for you to educate consumers, in the US, UK, Eu.

You need to invest in promoting yourselves. First, invent a storyline, and then implement that. You can’t do that as a company, but at a high-volume level, as a country. The market is big, and Georgia is a small fish in a huge pond full of sharks. Still, you have this fact: you are the birthplace of wine.