Moldova uncorks new markets after Russian wine ban

By bne IntelliNews June 30, 2014

Clare Nuttall in Bucharest -


The largest market for Moldovan wines has traditionally been Russia and other former Soviet republics, but repeated closures of the Russian market combined with the opening of EU markets to Moldovan producers have caused a shift in the export strategy of local wineries.

Chateau Vartely's general director, Ludmila Gogu, has to refer to a world map to show the farthest flung market for the company’s wines. The company, which has vineyards in central and southern Moldova, recently shipped its first container of Cabernet Sauvignon to the Pacific island of New Caledonia, following a chance encounter made at Moldova’s annual wine festival.

A medium-sized player on the Moldovan market, Chateau Vartely has 250 hectares of vineyards where it grows both European grape varieties and indigenous grapes such as fetească albă and neagră, and rara neagra. Europe now accounts for more than half the company’s sales, with the remainder divided between the local market, the Commonwealth of Independent States (CIS), and other countries in north America, Africa and the Far East. Gogu, who comes from a sales background, says she is constantly pushing to open up new markets.

As a relative newcomer that produced its first vintage in 2004, Chateau Vartely does not benefit from the name recognition enjoyed by Moldova’s older and larger wineries – in particular the legendary Cricova. However, its recent launch means it does have the advantage of modern facilities and equipment, located in the cool depths of a former limestone quarry near the town of Orhei. At the same time, the company sticks to Moldovan traditions, including harvesting its grapes by hand. 

New markets

Like other Moldovan wineries, Chateau Vartely recorded an increase in sales to European markets after the lifting of technical barriers to trade at the start of this year. A further opening of EU markets to Moldovan producers is expected after Chisinau signs its EU free trade and association agreement on June 27. While a dramatic overnight change is not expected, Gogu forecasts a steady increase in sales.

This should help to offset the hit that Moldovan wineries took when Russia banned imports of wine and spirits in September, in response to Moldovan plans to initial the EU deal at the Vilnius Summit two months later. The head of Russian consumer health watchdog Rospotrebnadzor, Gennady Onishchenko, claimed the ban was due to concerns over quality control, telling Rossiya 24 news channel, “We have a feeling that the state has absolutely no control over the country’s major industry.”

As a result of the closure of the Russian market, Chateau Vartely’s total production is set to fall from 3.5m-3.6m bottles to around 2.6m-2.8m this year, despite the expected increase in exports to Europe. The ban, which follows an earlier closure of the Russian market in 2006, is also expected to have long-term consequences, with Gogu saying it is unlikely Chateau Vartely will return to the Russian market even if the ban is lifted. “The rules of the shelf are that if your product is absent for more than one month, your place will be occupied by others. Russian politicians carried out very bad PR around Moldovan wine, and people who don’t understand the politics behind the ban will still have the impression that it is poor quality and dangerous,” she says.

While the ban has not extended to the other countries of the Russia-led Customs Union, in both Belarus and Kazakhstan sales are also down, due to a combination of stricter certification rules within the bloc, which have created new barriers to trade with Moldova, and the depreciations of both countries’ currencies. Meanwhile, in Ukraine, usually another major buyer of Moldovan wine, the ongoing conflict has hit trade with Moldovan exporters.

This has forced Moldovan wineries to look to other export markets, where the country and its wines lack the same level of recognition as within the CIS. Gogu reports that when attending international wine fairs and meeting with international buyers, she often encounters a sceptical reaction – despite there being evidence of viticulture in Moldova from over 4,000 years ago. Moldovan wines are now struggling for shelf space against bottles from better-known wine regions.

State aid

To overcome this, Gogu believes a concentrated effort from the industry and the government is needed. A recent positive development has been the launch of the National Office of Vine and Wine, a government initiative to promote the industry outside Moldova. “In selling wine you are not selling just the product. You are selling the terroir of the wine: the history, the legend, the vineyard, the soil, the weather – everything that goes into creating the quality of the wine,” Gogu says. “If you look at examples like Chile, they demonstrate that you need time, money and effort before your wine is present everywhere.”

At the same time, she stresses the importance of growing on the domestic market. While Chateau Vartely only sells around 250,000 bottles a year on the domestic market – about 7% of its total production – the company's sales within Moldova are growing by around 10% a year. A large part of this increase is the transition from drinking wines from so-called “garage wineries” to professionally produced wine sold in shops. “It’s traditional to grow grapes and make wine in Moldova. Almost every farmer produces their own wine and has their own cellar, so we have to work very intensively to develop a culture of wine consumption from the bottle, not from the barrel,” says Gogu.

This includes organising wine tastings and promotions, and working with the local hotel, restaurant and catering sector. “From year to year it is becoming more difficult to play on this market because the number of wineries, including small wineries, is increasing. Many of them offer very good quality wines, so competition is becoming very tough.”


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