Second Thoughts on Wine Strategies for Georgia, the Cradle of Wine

127895The Republic of Georgia is a wine economy in transition from its former status as a main supplier of wine to Russia and the former Soviet countries to an emerging position with sales in these markets plus Western Europe, North America and Asia.

Conventional Wisdom?

Last week’s column reported on the main sectors of the Georgian wine industry and presented a working hypothesis I developed before our recent trip there. Home production of wine for family use is very important in Georgia and crowds out the commercial product to a great extent, so the focus is on exports. But what strategic focus is best: which wines and which markets?

The traditional markets in Russia and the former Soviet nations represent the past, I hypothesized. The future? The most distinctive element of Georgian wine today are the high quality natural qvevri wines that have been much in the news recently, but is that too small a niche to support the industry? And production of these wines is very limited in any case.

So by process of elimination, I said,  Georgia needs to focus on what’s left — distinctive indigenous grape variety wines made in a clean international style that can compete in global export markets like the U.K., U.S. and Canada.

That is a conventional idea, I noted at the end of last week’s column, and I am generally suspicious of conventional wisdom. Georgia is an unconventional wine country, so I needed to learn more. I’m still trying to make up my mind, but I think my hypothesis was both right and wrong, too. Here is my report.

Orovela Saperavi: Export Onlyimage_2408901_full

If you want to see what the future of Georgian export wines in the international style might look like consider Orovela. But don’t look for these wines in Georgia — they are strictly for export and are essentially unknown in their country of origin. You can, however, find them in the United Kingdom at Waitrose stores and Whole Foods and in restaurants, too, where they are possibly the most successful Georgian wine in the market.

Current exports to the U.K., the U.S. and other markets are fairly small at 40,000 bottles, but there are plans to ramp up quickly to 200,000 bottles and then a million bottles in a few years. That’s big by Georgian standards.

The name, Orovela comes from a traditional plowing song, but the project is as contemporary as can be. Brothers Giorgi and Vasili Sulkhanishvili saw an opportunity for Georgian wine exports, began investment in 2000, and rolled out the brand in 2004. There is one red wine, a Orovela Saperavi,  and Oro chacha, which is Georgia’s signature grape spirit (think grappa). oro5-160x284

Quality was a key factor right from the start and this has paid off. Jancis Robinson declared the 2004 Orovela the best Georgian wine she ever tasted, for example. A search of the Waitrose website reveals that the Saperavi is a “buyer’s choice” selling for £16.79. Vasili told us that the wine is available in selected East Coast markets in the U.S. and sells for $30-$35 in shops and perhaps $100 in restaurants.

The packaging of both the wine and the chacha is beautiful and effective in communicating the wine’s origin and story. Orovela is a completely professional project, carefully designed and tightly focused, reflecting, I believe, the brothers’ international drinks industry experience.

Orovela isn’t the only example of an international-style wine made with Georgian grapes for export markets. We visited both Chateau Mukhrani and Telavi Wine Cellar and were impressed with the substantial investment and obvious commitment to quality.

The idea that Georgia could be successful in global markets with wines like these is certainly valid.But is it the best strategy for the industry? These markets are insanely competitive and effective product differentiation is critical. Are these wines different enough (there is little room for “me too” products) and can that difference and the quality be communicated effectively as Orovela has done?

Back to the Future?p1110808

I wasn’t prepared for what I discovered when we started tasting natural qvevri wines and meeting the winemakers. The wines varied a good deal, of course, but many of them were simply stunning and not at all the rustic products that I imagined. Wines from Gotsa Family Wines, Pheastant’s Tears, Iago’s Wine Cellar and the Alaverdi Monatstery especially stood out. The wines had real tension — they were alive in the glass. No funk, nothing mousy, just great wine. I was really impressed.

I admit that visiting the wineries and meeting the people made a difference, as it always does. I was moved by Iago Bitarishvili’s hard work and humility, for example, and excited by Beka Gotsadzes’ energy and ingenuity. The fact that these people can make natural wines like this using traditional Georgian methods is something to celebrate. The wines and the stories that come with them are the product differentiation I was looking for.

Maybe these are the wines that Georgia should highlight, I thought. Certainly they tell an authentic story of Georgia and its wines. But there are problems. The domestic market for such wine is limited, as I explained last week, and natural wines are a niche (albeit a growing one) in the global market. In any case, production of these natural qvevri wines is small and the best makers routinely sell out now. Market expp1110789ansion requires new investment and new players.

The natural qvevri wines are a great symbol for Georgia and its wines, but can they open doors for other Georgian wines? Not sure.

Past is Prologue?

My confusion reached a peak when we visited Teliani Valley winery, which is a large diversified producer. Production is about 3 million bottles divided 30% domestic, 70% exports, 30% semi-sweet wines for the traditional markets, 70% dry wines, and 90% conventional wines with 10% made in qvevri.

After a brief tour of the big factory-style facility, we were asked to choose wines to taste. Could we try three red wines, I asked? An international-style wine, a qvevri product and one of the semi-sweet wines popular in Russia and other traditional markets.

The wines were produced and the results were interesting. The oak-aged international Saperavi and the qvevri  wines were fine, but not especially memorable. No electricity here. Well made, but not distinctive.2014042019

The semi-sweet wine was different, which caught me by surprise.  100% Saperavi from the Kindzmarauli vineyard, it was fruity and, well, delicious. To paraphrase my favorite philosopher, Charles Barkley, it tasted like itself — it was good because it wasn’t trying to be something else. It was the surprise hit of the tasting. It was the wine that we would want to taste again.

Sweetish red wines enjoy a growing market in the U.S. (although their sweetness isn’t always advertised). High quality wines like this might have a bright future, not the dim past that I had imagined.

One Wine to Rule Them All?

My working hypothesis was based on the conventional idea that Georgia needed to choose a clear, simple strategy to move forward in the global markets — to decide which of its wines to take the lead.

But Georgian wine isn’t one thing, it is many things. And I think any attempt to over-simplify — to choose the one wine style to rule them all — is bound to fail.

International style, natural qvevri wines, and the semi-sweets, too. These are all Georgia wines and Georgia is all of them and more, too. My hypothesis was off base, but the journey of discovery it provoked has taught me a lot.

>>><<<

Thanks to all the wine producers who met with us during our Georgia expedition and to the Georgian National Tourism Association for all their help and encouragement.

Republic of Georgia: First Impressions of a Wine Industry in Transition

qvevri1Sue and I were fortunate to be able to extend our visit to the Republic of Georgia at the conclusion the  of United Nations World Tourism Organization’s (UNWTO) first Global Conference on Wine Tourism. The conference’s focus was on wine tourism, but we wanted to learn more about the Georgian wine industry itself.

Georgia’s DNA

As I explained in an earlier column, I came to Georgia full of questions about the wine industry here and with a preliminary hypothesis to help me shape the inquiry. Here’s what I was thinking.

Georgian wine is very old and the wine culture is strong. I have never been anywhere where wine was so central to the culture. Wine and vine were everywhere we looked. Wine grapes were a central element, for example, of a Soviet-era war memorial we saw in Sighnaghi. And grape vines are at the heart of the image of Georgia as a Christian nation. Saint Nino fashioned the first cross using her own hair to bind two lengths of grape vine. Wine is Georgia’s DNA.

A great deal of the wine that is consumed is produced by families for their own use and to give to friends and neighbors. The fact of such large family production necessarily shapes the market. Not much imported wine enters Georgia, for example. And a great deal of the commercially produced wine must be exported.

The Russia Factor

Russia was for many  years the largest export market for Georgian wine and because of this the focus was on semi-sweet red wines made in state-owned factories and often sold in bulk. Quantity was a priority over quality. But then came the Russian embargo of Georgian and Moldovan wines in 2006 and in an instant the most important market, accounting for perhaps 80 percent of sales, was gone and did not return until 2013.vino1mo

The Russian embargo was the worst thing that could have happened to the Georgian wine industry in the short term and the best thing in the long run. In retrospect it is easy to see that such complete reliance upon a single foreign market for wine sales was not a healthy situation.

The sudden loss of that market forced Georgian producers to develop new markets, improve quality to be competitive in those markets, and find strategies for product differentiation to raise margins and secure market niches.

Silk Road to China

A recent report lists Georgia’s five largest export markets as Russia, Ukraine, China, Kazakhstan and Poland although there have been substantial sales increases (albeit from a low base) to Germany, the UK, and Canada.

The recent  rise in the Chinese market has been particularly noteworthy and follows on investments in Georgia wine shops and culinary centers that were established in China. There are ambitious plans to open 100 Georgian wine houses there.

One wine executive we talked with noted a “Silk Road” connection that works in Georgia’s favor. Georgia has negotiated a preferential trade agreement with China and Chinese traders and investors who visit the country taste and enjoy the Georgian wines, learn about the country’s 8000 year wine history and its Silk Road connection. Nothing could make more sense than to buy Georgian wine with its long history and connection to China. Very smart of Georgian producers to leverage this cultural advantage!p1110666

Natural Wine Buzz

Here in the United States much of the buzz about Georgian wines concerns natural wines made using the traditional qvevri clay containers to ferment and sometimes age the wine wines. Alice Feiring is a leading advocate of these wines and her recent book For the Love of Wine gives a highly personal account of her passion for them.

No one we talked with is sure how much Georgian natural wine is made by families for their own consumption, but commercial production is relatively limited. One producer estimated total output of perhaps 120,000 bottles more or less with several wineries in the 3000 to 6000 bottle capacity range. Little of this wine is sold domestically in Georgia because of its relatively high cost and the existence of family-produced alternatives.

So the focus is clearly on export to markets where natural wines have a strong presence including Italy, France and Denmark, and developing natural wine markets such as UK, Canada and the United States.

Given all of this my working hypothesis when we left for Georgia was this. The Russian market is the past, now they need to look to the future. But which future? The natural qvevri wines are Georgia’s key to differentiation in the new markets, but high quality natural wine is too narrow a category to carry the ambitions of a great wine producing nation.

Process of Elimination

My hypothesis, based on the process of elimination, was that the way forward is for Georgia to focus on increasing the quality of their conventional wines, making them in a clean international style and differentiating by stressing a small number of exciting indigenous grape varieties (perhaps red Saperavi and white Rkatsiteli and various blends) from among the dozens of native Georgia wine grapes.

In other words, I saw Georgia in a very conventional way, much as I view Turkey or Portugal, for example. That was then. What do I think now? Come back next week to find out.

>>><<<

Thanks to the Georgia National Tourism Administration for inviting us to extend our visit to Georgia and generously providing  us with help in visiitng the wine regions and meeting wine producers.

Practical Guide to Wine Tourism in the Republic of Georgia: UNWTO Lessons

tbilisi-001Sue and I  recently returned from the United Nations World Tourism Organization’s (UNWTO) first Global Conference on Wine Tourism in Tbilisi, Georgia and we are still processing the experience.

One interesting feature of the conference is that the sessions weren’t confined to the usual convention center or hotel ballroom locations. The organizers boldly took the program on the road to four interesting wine tourist venues.

This experiment provided an interesting opportunity to talk about wine tourism while actually being wine tourists. Here is what I think I learned in the process.

First Impressions: A Georgian Supra

The conference opened with a gala dinner (hosted by Georgia’s Prime Minister Giorgi Kvirikashvili) at the beautiful Funicular Restaurant, which is located high on the hill overlooking Tbilisi next to the television tower. The view from the patio was spectacular (see Sue’s photo above), especially as the sun went down and the lights came up, highlighting the monuments. It felt like you could reach out and the touch the city.0a1_6242

There was good Georgian wine at the dinner, but the focus more more on Georgian food, wonderful polyphonic singers and traditional dance groups. Professor George Bagashvili was the master of ceremonies and he explained all that we were seeing and hearing. He deftly led us through the traditional series of supra toasts, but in a tourist-friendly way (without the feared requirement to drain endless glasses or horns of high-proof  chacha).

The gala dinner at the scenic restaurant was a reminder that wine tourism is first and foremost tourism and it is generally a mistake to think of it out of the context of other tourism opportunities. There will be some who will come to Georgia just for the wine, but most will be attracted by the complete package — sights, sounds, culture, people, food and so on with wine playing a larger of smaller part in each case. The dinner was a great introduction to Georgia’s best and a good lesson that wine tourism is most effective when it is embedded in the broader context.

1011 and All That

We loaded into coaches the next morning and headed east toward  Kakheti, the main wine region and the location of our first meetings. We stopped at the historic Alaverdi Monastery, were wine has been made using the traditional qvevri method since 1011.

We toured the monastery, visited the marani cellar with its qvevri vessels, and tasted one of the wines, a complex golden Rkatsiteli shown below. After the tour we adjourned to a cafe where we had coffee and cups of delicious matsoni (local yogurt) with local honey and walnuts (a fabulous combination).

The wine tourism here was seamlessly integrated into the cultural elements and featured local food products and the opportunity to purchase traditional crafts, too. A great tourist and wine tourist stop. And this is not an accident.p1110666

Georgia correctly sees tourism as an economic development opportunity, especially in rural areas like Kakheti. The Georgian government has worked to develop tourist infrastructure and marketing strategies in partnership with international development organizations including the World Bank, EBRD and USAID.

The Alaverdi Monastery is an example of how these efforts have come together successfully to leverage history, culture and wine to create real opportunities for local workers and producers while giving tourists a memorable experience.

Tunnel Vision?

If the monastery is a good example of adapting something quite old to create a wine tourism experience, our next stop showed a more contemporary touch. Khareba Winery offers a focused wine tourism experience built around a huge network of tunnels that date from Soviet days. The tunnels were reportedly built with military use in mind before eventually becoming a regional wine storage facility and now a wine tourist attraction.

Our afternoon conference session was held up at the Saperavi restaurant with its great view of the valley and then we walked down the hillside to the tunnel with its exhibits, wine tasting, and a group of polyphonic singers who filled the underground space with sound.

The tunnels are a noteworthy attraction, but there was more. A path meandered through the park-like grounds and along the way the visitor is offered the chance to bake bread in a traditional clay oven, watch chacha being made (and taste some, too), make churchikhela, which are strings of nuts dipped in concentrated grape must. A moveable feast was laid for us along with path with traditional dishes, including mountain trout and spit-roasted meat.

As at the monastery, the experience was orchestrated to create a complicated sensory experience filled with sights, sounds, smells and tastes mixed with a strong sense of Georgian culture. Wine was at the center of the experience, but there were many threads interwoven here.

A Georgian Chateaucastle

Chateau Mukhrani, the conference venue for the final day, was built in 1878 and, as the vintage image suggests, it resembles a French chateau to a certain extent. The likeness has been heightened by recent upgrades aimed at enhancing wine tourism.

The grounds and the facilities are beautiful and the wines are good, too, made mainly in the international style under the supervision of Frenchman Patrick Honef. We especially enjoyed the Reserve du Prince Saperavi that was served at the closing dinner

The reaction of some of the international conference participants was noteworthy. What is a French chateau doing here? Why isn’t this winery made along traditional Georgian lines, like the monastery, for example? The winery’s architecture, which most visitors will find appealing, was a turn-off to those seeking greater authenticity.

So why the disappointment? I think it is a example of something that I call the “globalization paradox.” We love globalization because of its ability to bring things from all around the world to our towns and cities. Good espresso, authentic wood-fired pizza, designer shops — it is great to have these things nearby creating a cosmopolitan local environment.

But there is a downside. Everyone wants these things and for the most part they get them. This means that when we travel abroad we see many of the same things we already have back home and not the quaint frozen-in-time images that we expect.

Globalization makes the local more diverse and interesting, but the foreign is rendered less exotic and disappointingly more like home. Sigh. Do you see how a French chateau in Georgia fits this pattern?  It definitely adds to the wine tourism experience in Georgia, even if it takes away a bit from the experience that  the seasoned international traveler may be seeking.

This video will give you a sense of Chateau Mukhrani and how it has been designed to serve as an attractive wine tourist destination. It is good to remember that wine tourists are a diverse group and a great many of them will enjoy visiting a chateau … even if they do it in Georgia, not Bordeaux.

>><<<

How did the conference’s experimental format work? As you might expect some venues worked better than others for particular purposes. And I am not sure that everyone realized that we were both discussing wine tourism and practicing it at the same time, meaning that some teaching moments were probably lost. But I applaud experiments like this and hope the organizers continue to innovate at next year’s UNWTO meeting in Mendoza, Argentina.

>>><<<

A quick shout-out to George Piradashvili and the staff at Chateau Mere, where we stayed during our brief tour of Kakheti after the conference. Chateau Mere is a good example of how wine tourist infrastructure can be creatively developed to serve diverse visitor needs. Personal thanks to George for sharing his great food, fine wine, and Georgian wine business insights with us.

Global Wine Tourism Conference in Georgia: A Preliminary Report

Sue and I have recently returned from the untwo2United Nations World Tourism Organization’s (UNWTO) first Global Conference on Wine Tourism in Tbilisi, Georgia and I know just what you are going to say. What in the world is the UN doing sponsoring a wine tourism conference and why was it in the Republic of Georgia?

First Things Second

Let me answer the second question first. Georgia is the self-styled “Cradle of Wine,” with documented wine production going back 8000 years so it certainly has standing. It is also probably the most wine-centric culture I have ever experienced. Wine is everywhere. Just about everyone drinks it, most families make it for their own consumption, and its symbolic and practical importance is everywhere to be seen. Wine and vine — these are key elements of the Georgian DNA. Really.

Georgia is a poor nation, especially outside of Tbilisi’s bright city lights. Mexico’s per capital GDP is about $9000 according to World Bank statistics. Georgia’s is about $3800. So anything that can create employment opportunities (especially rural jobs) and spur economic development is welcome here. Tourism of the nature and adventure varieties is a big contributor to national income. Why not leverage Georgia’s rich culture, and especially its deep wine traditions, to create economic opportunity?

So it is easy to see why Georgia would volunteer to host a conference like this — and they did a magnificent job.  But what’s the UN connection?

Wine Tourism Rationale

The basis for UN programs in tourism and now wine tourism is surprisingly strong, as the “Georgia Declaration on Wine Tourism (pdf),” which was promulgated at the conference, makes clear.  The UNWTO’s mandate, for example, states that,  “The fundamental aim of the Organization shall be the promotion and development of tourism with a view to contributing to economic development, international understanding, peace and prosperity, and universal respect for, and observance of, human  rights and fundamental freedoms for all without distinction as to race, sex, language or religion”. Tourism cannot accomplish all these goals by itself, but it can be part of the process.

Tourism is one way that we experience and understand other nations, peoples, and cultures. It creates jobs, of course, but it has the potential to also increase understanding. International tourism has been one of the global growth industries of the last 30 years, so it is not unreasonable that the UN pay attention to this economic and cultural exchange vector.

The Sustainable Development Goals (SDGs), approved by the  United Nations General Assembly in 2015,  includes tourism as a tool for sustainable economic development. “By 2030,” the document specifies, the UN should “devise and implement policies to promote sustainable tourism that creates jobs and promotes local culture and products”.

The UNWTO had previously identified gastro-tourism as being an important element of its sustainable tourism development program. The wine tourism initiative and this conference were organized as part of the gastro-tourism program.

About the Conference

The first UNWTO Global Wine Conference attracted more than 250  participates from 42 countries. My panel on best practices in wine tourism included speakers from Italy, Canada, Japan, Argentina and the United States  (I talked about Napa’s success and also its challenges).

The organizers designed the program to minimize talking head blah-blah-blah and maximize focused interaction among the participants. (I have never before traveled through 11 time zones and back in order to speak for 10 minutes!) There was a lot of knowledge and experience in the room and it made sense to draw it out through small group discussion.

I think the strategy worked on the whole and  Sue and I feel our time was well spent, but I wish there have been an opportunity for greater depth on at least some topics. The conference moves to Mendoza, Argentina next year — it will be interesting to see how the program evolves.

One interesting innovation was to move the conference out of the typical sterile hotel ballroom or convention center environment and to have the sessions in wineries, where wine tourism strategies could be seen in practice as well as discussed in theory. Come back next week for an analysis of what we learned from these experiences.

>><<<

uncorkSue and I were delighted to meet Matt Horkey and Charine Tan at the UNWTO conference. Their fist book, Uncorking the Caucasus: Wines from Turkey, Armenia, and Georgia, was published last week and it is recommended reading  if you are planning a wine tour to  this region or are interesting in these wines generally. Sue and I found their recommendations for Georgia and its wines on the mark.

I like this book so much that I wrote a publicity “blurb” about it. Here it is:

Matthew Horkey and Charine Tan take us along for the ride as they travel the wine roads of Turkey, Armenia and Georgia in their intriguing new book Uncorking the Caucasus. It is exciting to see these ancient wine regions through their eyes and to experience the ways that the very old and the very new come together through wine. A perfect read for wine lovers looking for new wines, new regions, and new perspectives. Pack your bags and join Matthew and Charine as they uncork the Caucasus. Highly recommended.

>>><<<

This is the first in a short series of columns on the UNWTO conference and the Georgian wine industry. Thanks very much to the UNWTO and the Georgia National Tourist Authority for making our participation in this conference possible.