GEORGIAN WINE: UNITED WE STAND

A new Georgian policy to market the country’s wines in the United States and Canada has gained support, with caveats.

Nino Patsuria

The Georgian government is betting on a new, Georgian brand to help bolster wine sales in the United States and Canada.

According to the Ministry of Agriculture (MOA), a newly designed red and white sticker will be included on bottle labels for all Georgian wines headed to large North American markets.

Breaking into the U.S. and European wine markets has proven to be an unreachable goal for most Georgian wineries. While Georgian wines have survived the 2006 Russian embargo, large-scale success outside the former Soviet Union still eludes them.

Georgia currently exports about 400,000 bottles to America each year – less than 1 percent of the entire Georgian wine export. The Georgian government, however, hopes to increase sales to two million bottles by 2012.

Currently, half of all Georgian wineries export to the United States and Canada. Over 80 percent of wine produced in Georgia is now consumed locally.

According to official statistics, Russia imported 10 million bottles of Georgian wine a year – roughly half of the country’s production – before the embargo. Today Georgia exports just ten percent to Russia, mainly through third countries like Ukraine and Azerbaijan.

Traditional trade partners, like Ukraine and Central Asian countries, have helped ease the pain of the embargo by buying up more wine. But data shows their appetite for Georgian wine pales in the face of the potential, higher cost, markets of Europe and the United States.

The government’s plan will initially eschew the EU in favor of cultivating palates in the United States and Canada.

A sticker with the red-and-white inscription “Wines of Georgia” will be attached to each bottle exported to the U.S. and Canadian markets from Georgia starting September of 2010.

The sticker is part of the Ministry of Agriculture’s plan to promote Georgian wine exports, educate the new market and protect Georgian wines from counterfeit products.

“[The] state thinks promoting this sticker will make it easier to advertise wines from Georgia, rather than to promote wine companies separately,” Vasil Managadze, chairman of Samtrest [the State Department of Vine and Wine at MOA], said.

According to him, while wine exports were down last year, data from the first two quarters of 2010 indicates wine sales have doubled on the external market.

The new umbrella of Georgian wines, he hopes, will add to the momentum.

The government plans on spending $500,000 on a two year pilot program that will promote the “Wines of Georgia” alliance of wine companies in the United States and Canada.

First North America, then the world

Giorgi Salakaia, Director General of Badagoni wine company, also likes the umbrella idea in general but believes the government should start promoting Georgian brands closer to home. He noted that Ukrainian, Polish and CIS markets currently import much more Georgian wine than US and Canada.

According to the Ministry’s figures, approximately 500,000 bottles of Georgian wine – less than one percent of total wine exports -- are sent to the United States and Canada markets right now.

“Ukraine is swarming with fake Georgian wines. You find brands in Ukraine that nobody has heard of in Georgia. There are wines bottled in Odessa and Kherson and put next to our product on supermarket shelves as if they are Georgian products,” Salkaia said.

Managadze agrees that other markets are essential, however he believes it is a better investment to start with the United States. If the umbrella branding takes off in North America, the government plans to continue its promotion of Georgian wine in other markets, he said. 

“Promoting wine across the globe is very expensive therefore we will try in one country where the biggest chance is,” Managadze said.

“[A]ll marketing companies [we consulted with] recommend to start from America. It is the second largest wine importer in the globe [after the UK], and the American consumer is not conservative and likes novelties, unlike the UK … South Africa and Australia achieved success in their wine export through the American market and our consultant companies advised us to adopt this best world experience.”

But John Wurdeman, the founder of Pheasant’s Tears wine company, notes that starting globally, and then focusing on certain markets – like the United States – could be more effective. He said the American market is an attractive choice, however he stresses it would be better to have a global promotion strategy – including Internet-based advertising – that creates “a legend of Georgian wine.”

“The key challenge is the promotion of marketing around the globe; we have to create a legend of Georgian wine and promote the country first of all, to promote unique endemic vine sorts of Georgia and pottery-related wine-making technology. After the unified strategy is worked out, then break down nuances for different markets including American,” he said, noting that articles about his vineyard in Australian and Singaporean newspapers led to an order from England.

“I would advise to create a blog including full information of Georgia as a wine-producing country, its vine species etc and update the information regularly.”

Deputy Agriculture Minister Malkhaz Akishbaia, however, maintains the U.S. market is more attractive to start with because Georgia wines are exempt from certain customs tax.

In addition, he noted that Georgia has an economic partnership chart with the US, and Washington is interested in promoting Georgian imports. Within the industry, some Georgian wine producers are cautiously supporting the initiative. They claim, however, that marketing Georgian wine overseas requires a real strategy – not just catchy design.

“The umbrella idea is good, but just attaching a sticker on bottles cannot change anything,” Giorgi Margvelashvili, Director General of Tbilvino, told Investor.ge.

Margvelashvili exports to Canada already, and he believes the United States has the potential to be a great market for Georgian wines. The catch, however, he said is to raise awareness about Georgia – not just Georgian wine.

“If we take proper action we have a great potential there [in America], but we need to work out a program and contract marketing and PR companies to create a category of Georgian wines to promote country first and foremost; that Georgia is a wine-producing country and not the state of Georgia in the US,” he said.

Another issue, according to Shalva Khetsuriani, the President of the Association of Sommeliers of Georgia and founder of Khetsuriani Cellar wine company, is ensuring that every wine under the new umbrella will be the same high quality.

There is also a need, he noted, to educate international consumers about Georgian wines so they can appreciate the difference between types and brands.

“[A] brand does not start and finish by its inscription; a consumer needs to understand what happens under the Wines of Georgia [umbrella], when you buy Khvanchkara or Mukuzani, someone has to tell how they differ,” he said.

[top]