Georgia on the vine

By bne IntelliNews May 11, 2007

Hannah Cleaver in Tbilisi -

The Russian embargo on Georgian wine last year looked devastating on paper. Around 15% of the country's income comes from wine, and until the economic boycott, around 90% of Georgia's wine business was with Russia. But while a few wineries have gone under, some winemakers say the ban, and accompanying global publicity, has been the best thing that could have happened.

"We had four trucks at the Russian border when the ban came into force, the Russian authorities wouldn't let them in," says Zurab Ramazashvili, a partner at Telavi Wine Cellar. "We suddenly lost 60% of our planned income in one go. We had invested in bottles and corks and labels on the wine, it was not a small amount. Those trucks came back, 150,000 bottles."

Watching workers washing the labels off and replacing them with new ones so the bottles could be sent elsewhere, Ramazashvili, who was a medical doctor during the Soviet era, and bought into the wine business in 1997, said he was determined to turn the Russian ban into an opportunity.

"It is a good wine," he says, "We will sell it in another country. We are becoming better known on the international scene, with press coverage, particularly since the Russian ban."

Telavi Wine Cellar is one of a select group of Georgian winemakers who have, in the last 10 years or so, started modernising their production and looking at other markets than the huge, thirsty Russian bear to the north. Some of these were established winemakers, others are new to the business, but they are gradually introducing themselves to wine drinkers in Europe, starting from Ukraine and working their way into the EU.

There are enough Russians, Georgians and other former Soviet citizens living in the EU to create a niche market, should it suit the vagaries of ex-pat fashions. But further business development will depend on how well the Georgian story takes the fancy of other drinkers - and whether good quality can overcome teething difficulties such as lengthy supply procedures.

Figures from the UK government show British imports of Georgian wine leaping from 74,000 bottles in 2000 to 189,000 the following year, before collapsing to zero in 2002. A new importer has stepped into the breach and is battling three-month import times to build up a steady 20,000-bottle import business, starting with the Russian and Georgian diaspora, and slowly reaching out via restaurants and independent retailers.

Georgian wine may have a great reputation, but a bottle with a Georgian label is often viewed with mistrust in Moscow. Whatever the "real" reasons behind the Russian ban – it was slapped on in November after the government in Tbilisi arrested several Russians on espionage charges – the authorities justified it in public health terms, and not completely without foundation.

There have been hideous incidents of bad wine tainted with nasty additives, or water, or wood alcohol, having been sold with Georgian labels - often originating from elsewhere. Much of the genuine Georgian stuff that was being drunk in Russia was also pretty mediocre by many accounts, overshadowing the deservedly fabulous reputation of the top Georgian wines.

But the elite producers now reckon they have built up their corner of the market with an increasing reputation for quality, reaching back in time to ancient traditions and forwards with modern techniques, including advice from the West.

Knut Gerber, project coordinator in Georgia for private sector development at GTZ, the German government-related society for technical cooperation, believes the Russian ban was actually a good thing. "It provided an interruption, and made people have to look at everything again. It was an external market force, like a big scandal can sometimes be necessary to kick a market into action to work on itself. We were able to talk to the industry about quality, away from quantity, and about new marketing strategies, and markets."

This year could be a breakthrough year as the industry dusts itself down and gets to grips with Western markets, with a strong showing expected at May's London International Wine and Spirits Fair. This will show how well they have adapted, moving away from the semi-sweet red wines produced by the millions of bottles for the Russians, to a more modern taste suited to Western palates.

"I think it will sell on the international market, but we have to set a more modern Georgian wine style," says Raphael Genot, a French consultant oenologist working for Telavi Wine Cellar. "We need to make it more easy drinking. People outside of Russia want dry wines."

Genot says grapes like the Saperavi red make really good dry red wines, while other grapes such as the Rquatsiteli can give fat wines like the chardonnay. "The aromas are different from chardonnay, more vegetative, in a positive way," he says.

"They know how to make Georgian wine, we have to change some habits," he says. "There is a market opening in the USA, and China seems promising, while Canada is taking some too. I think the British will buy it, although there is already so much on the British market."

Long history

Georgia claims to be the cradle of wine-making, with a history of fermenting grapes dating back at least 7,000 years. From 4,000 BC, it is said, the Georgians were putting crushed grapes in large clay pots, called kveri, which were buried in the ground over the winter, yielding wine in the spring.

The wine industry in Georgia has flourished since then, taking advantage of weather that could have been designed for growing great grapes and soil comparable to some of the great wine-growing areas of France. Every rural family has a vineyard of sorts, turning out wine for the table. There, it plays a crucial role in the traditionally lengthy meals where a self-elected master of ceremonies punctuates proceedings with elaborate toasts, which prompt the swift downing of glasses of wine.

The Soviet era forced many people from the land into the capital Tbilisi, and collectivised to a certain degree, Georgian agriculture. While many families kept small gardens for food, grape production was industrialised, with huge amounts of fruit demanded for the wine factories which churned out millions of litres of semi-sweet wine for consumption around the Soviet Union.

The Georgians did not even often bottle it - the wine was bulk produced for a bulk market. Even after 1991, when Georgia declared independence from a collapsing Soviet Union, wine production continued in this fashion until the end of the 1990s, when people like Ramazashvili started realising there was a business to be built in Georgian wine.

"During the Soviet era, we knew a lot about producing a lot of wine but nothing about how to sell it," Ramazashvili says. "We now have a strategic plan for developing our product, aiming for quality rather than quantity, it is a different way of doing things than the Soviet system."

Another leader in modern Georgian wine making is George Dakishvili, chief oenologist for Teliani Valley Wine. This vineyard was not affected by the Russian ban, having already focused their efforts on non-Russian markets. "The ban was not such a big problem for us as we did not have such a big exposure to the Russian market," he says. "We were founded in 1997 and sell mostly to Ukraine, and to the US."

Dakishvili and others will be showcasing their talents in Tbilisi at the beginning of June at the country's first ever international wine expo. Russian buyers are unlikely to be attending.

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