2023 December-January Analysis Featured

Georgian winemakers uncorking new ways to market wine at home and abroad

Aside from the risky Russian markets, Georgian wine companies do not have an easy time in any market – neither abroad nor at home. So wine companies are applying ingenuity, as the following Georgian version of the marketing sciences shows.

The latest novel marketing push has seen Kakhetian wine producer Badagoni associating its products with electric vehicles (EV), building on the top of a current drive to sell Chinese Leapmotor EVs in Georgia. This should hit the right buttons as EV numbers in Georgia, though tiny, have almost doubled in the last year. Stellantis also has the rights to manufacture EVs in Europe, leaving local hopefuls speculating that Georgia may be able to join in.

Appealing to Georgian drinkers is vital for the wine companies. A bigger, stable, Georgian market base is important given huge exposure to risky Russian markets and the challenges of diversifying into new international markets. Georgia exported $95 million-worth of wine to Russia in January to September this year, according to Georgia’s National Statistics Office, 63% of the total – the highest level since 2005.

The strength of exports to Russia “is a result of developed trading networks and benefits from widespread popularity of Georgian wine in Russia (removing additional marketing costs). “Considering the painful effects of the Russian 2006 embargo and the unpredictability of this market, we believe that diversification to other markets should remain a number one priority for Georgian wine companies in the medium- to long-term,” advised investment bankers Galt & Taggart in a recent wine industry report.

A hard task it may be, but Georgia’s wine exports have been rising impressively, with sales now being made to 66 countries. The Ministry of Agriculture’s National Wine Agency is spending GEL 2 million this year to drive foreign sales, funding the increasing participation of Georgian producers at international wine fairs and creation of websites. The agency’s years of steady support for Georgian wine exporters is helping to bring impressive increases: sales to Japan rose by 68% last year, to Germany by 34%, Poland by 32%, and the U.S. by 28%, although these are from low bases.

Appealing to the Georgian market

But every market counts, and the wine companies see the domestic market as an important one. Currently, most domestic sales of branded wine are into the tourist industry, with Georgians opting to largely consume home-produced wines on grounds of price and pride. This leaves a sales opportunity, yet good stories are badly needed to encourage the buying of branded wine as Georgians are not only drinking their home brews, but also less of them: there was a fall in alcohol consumption of 40% in the ten years to 2021, according to a recent TBC Capital report on the wine industry.

So marketing branded wines to Georgian drinkers needs to be persuasive. As Georgian wine marketing specialist Tamar Metreveli explains, while the companies eye TV and radio ads, these can be expensive and out of reach for all but large companies. So, “they use social media, hold targeted premium wine tastings to targeted groups who can afford wine at this price level, employ promoters to offer help to customers in supermarkets and wine shops, and sales teams to negotiate with supermarkets, restaurants and hotel groups.”

Yet while companies tell stories of Georgian wine on their corporate website, they rarely use them in home sales. Admonition on this front from French multinational consultants Capgemini is to appeal to emotions : “…86% of consumers always think of brands they are loyal to when there is high emotional engagement. In addition, 82% of consumers always buy from the brand they’re loyal to. But when it comes to low emotional engagement, the numbers above can be compared to 56% and 38%. Customers make emotional decisions; the brands that can develop an intimate relationship with their audiences have an advantage against competitors who aren’t establishing these connections.”

Taking this to heart more strongly than other wineries, Badagoni has balanced the EVs with a story at the other end of the spectrum going straight to the heart of Georgian culture and a beloved icon of its history by partnering with the Alaverdi Monastery. Badagoni has restored the historic 11th century wine cellar in the 9th century Alaverdi church complex, enabling the monks to begin making wine there again. Now, well-supported by pictures on the corporate website, the “Alaverdi Tradition” label is a brand line in the portfolio of wines that Badagoni sells. Badagoni has backed that up with the GEL 14 million construction of a hotel and a restaurant for visitors to the Alaverdi Diocese.

Selling 8,000 years of winemaking history

This cultural theme is also what Georgia has been using in its marketing internationally, deploying the history of the 8,000 vintages that the country has produced and the growth of a wine culture over the thousands of years since the Neolithic period. Tamar Metreveli points out that in the EU and U.S. markets, ideas that have been taken up by wine writers range from the supra tradition, the kantsi drinking horns, and the rediscovery of long-forgotten grape varieties popular centuries ago, such as Shavkapito. Georgian wine companies are spending heavily to live up to the country’s reputation for traditional hospitality, inviting potential customers and writers to come and taste in Georgia. And Georgia has led the current global wave of popularity of amber wines with wines from its qvevris.

In the highly promising Chinese market, Georgian culture is the theme at business centers, offering trade connections as well as wine. Plans for a network were first announced in 2015 after meetings of then Prime Minister Irakli Garibashvili and Chinese trade-economic Suolun Group. Starting in the city of Yiwu in eastern China, the concept is of buildings that showcase Georgian wine and hold regular exhibitions of crafts, folk dance, and music.

In the U.S., the opening words on the Wines of Georgia website are: “Ancestral grapes, ancient techniques.” The site is heavily populated with quotes from leading international wine writers referring to Georgians wine history. These include “Georgia uses methods of winemaking that you couldn’t invent in a modern world; you could only inherit them through the mists of time,” from the famous writer Oz Clark and from another, Andrew Jefford: “Georgia is the only country in the world where winemaking methods that were developed up to 8,000 years ago have not only never been abandoned but remain in many ways best.”

This form of marketing has helped Georgia climb up the list of the world’s leading bottled wine exporters – it now ranks 15th out of 50 nations, according to the 2022 data released by the American Association of Wine Economists (AAWE). Last year, Georgia’s bottled wine exports reached 99.76 million liters.

Domestically the status of Georgia’s wine industry is being raised (and local tourism enhanced) by the hosting of prestigious international wine events. Tsinandali Estate hosted the Grand Jury Du Vin Wine Symposium in early November, a first for Georgia, showcasing wine producers and attracting international wine experts, sommeliers, and journalists. The initiative to attract this Swiss institution came from Georgian investment group Silk Road and was supported by the National Tourism Administration and Bank of Georgia. And for a second year running, the International Wine and Spirit Competition’s owners have chosen Georgia as its location, and its 2024 event will team with the Gurjaani Wine Festival.

New tactics are needed all the time to stay ahead, especially as there are now over 1,000 Georgian wine companies, as Levan Davitashvili, Vice Prime Minister and Minister of the Economy, has pointed out – up five-fold in the last few years. The days when a company could just appoint a sales agent and then sit back are long gone.