(Republic of) Georgia on my mind: Wine tourism’s future in the “Cradle of Wine”

In a few days Sue and I will be jetting off to the Republic of Georgia for the first United Nations World Tourism Organization Global Conference on Wine Tourism.We have been trying to learn all we can about Georgia and its wine and wine tourism industries in preparation for the trip. I thought you might be interested in three of the resources we have found especially useful.

Taber’s Final Frontier

George Taber spent the best part of a year circling the globe collecting wine tourism experiences that he chronicled in an entertaining 2009 book called In Search of Bacchus.  Most of the places Taber visited would be on any globetrotter’s wine tourism map — Burgundy, Bordeaux, Tuscany and so on — and his reporting and first person accounts are very interesting. Taber waited until the final chapter to veer off the conventional road map to visit Georgia, which he calls wine’s “final frontier.”

Taber had a great time in Georgia, the “Cradle of Wine,” 8000 vintages and counting. He loved the people and culture and was fascinated by the wine, reporting on the traditional wine-making process using big clay jars called Qvervi (which are buried in the earth as shown below) to ferment and store the wine until ready to drink.

Taber comments on consumption patterns as do most who write about Georgian wine. A rule of thumb, he notes, is to allow for two or three liters of wine per person at a supra banquet or celebration, where tradition requires that guests drain their glasses after each toast.

When celebrity chef Anthony Bourdain visited Georgia (see video above) he also cited high alcohol consumption and complained of frequent hangovers, although this might be Bourdain being Bourdain as much as Georgian tradition. I will let you know what I find out.

Wine Tourism as Economic Developmentqvevri1

My wine economics colleague Kym Anderson visited Georgia a few years after Taber to analyze the wine industry’s potential as an engine of economic development. His 2012 report, Georgia, Cradle of Wine: the next “new” wine exporting country? (pdf), makes good reading.

Anderson found the wine market quite segmented. Most of the large domestic demand was satisfied by basic traditional wines, a surprisingly large proportion being home-produced. Industrial production of wine for export to former Soviet countries made up a second market segment. Rising quantities of wine are made for export to other markets (including US, Canada, UK, etc), where quality expectations are different than the Russian market and production adjustments necessary.

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.

Anderson clearly sees potential for Georgian wine exports if industrial and agricultural upgrading continues, but he is especially interested in wine tourism, which he sees having potentially greater  impact on rural incomes and employment. Georgia’s decision to host the UNWTO program is consistent with this priority. International tourism is an important income source for Georgia and wine tourism has growth potential.

Anderson makes a number of specific recommendations for upgrading hospitality and winery facilities to make them more appealing to wine tourists. We will be interested to see what progress has been made in this regard in the short time since Anderson’s report.

Back to the Future of Winefeiring

Natural wine proponent Alice Feiring seems to have found her “tribe” in Georgia. Her 2016 book For the Love of Wine is an entertaining, informative and deeply personal account of her encounters with Georgia wine and wine-makers.

Feiring is taken by the naturalness of the Qvervi wine-making process and the dedication of those who kept this tradition alive during the long Soviet wine winter. Whereas Anderson’s concern is economic development, Feiring worries more about the soul. She sees Georgia’s past as a path to a better, more soulful future.

But she worries these traditional wines are threatened by a new foe — those US, UK, and EU markets that seem to demand “me too” wines made in an international style with lots of additives and manipulation. For Feiring, Russian communism and international capitalism are “twins separated at birth” in the sense that each destroys the essence of wine in its own way.

Feiring’s mission is to support those who seek to make high quality traditional wines. But there are problems. The Georgian domestic market for such wines with their necessarily higher price compared with home production is not large enough to support the craft industry, which means that buyers must be found in other countries.

Feiring’s tribe needs to grow to support the wines she treasures. The natural wine movement is growing in part due to her determined efforts. Perhaps wine tourism will convert visitors to natural wine (and Georgian wine) ambassadors.

That is a sip of what I’m learning and a hint of the sorts of questions we hope to explore. Georgia is definitely on my mind!

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We appreciate everyone who helped us prepare for this trip including the officials and staff at the UNWTO and the Georgia National Tourist Administration plus Mariam Anderson, Prof. Kym Anderson, Nino Turashvili, Viktoria Koberidze, Irakli Cholobargia, George Akhalkatsi,  and Hermes Navarro del Valle.

The BRICs: Russian Wine Market Report

This is the third in a series on wine in the BRICs Brazil, Russia, India and China.

Just Say Nyet!

The BRIC nations used to be characterized as “emerging” or “transition” economies and in the case of Russian wine these terms still apply, but in a complicated way. Russia is an important wine country (the vineyards are down south, on the Black and Caspian Seas); it produced about 7.3 million hl of wine in 2007 according to OIV statistics, which puts it just behind Chile and ahead of Portugal in the world wine league table. But the domestic industry today is just a shadow of what it was 30 years ago.

Gorbachev’s 1980s anti-alcohol campaign (which included propaganda posters like this one) targeted wine along with spirits and both production and consumption of wine declined dramatically. The Global Wine Statistical Compendium indicates that per capita wine consumption in Russia more than doubled from 6.2 liters in the early 1960s to about 15 liters in 1970s (consumption of other forms of alcohol also rose — wine makes up less than 10% of Russia’s total alcohol intake) then fell dramatically as Gorby’s program gained traction.

The Gorbachev crackdown and continuing anti-alcohol efforts pushed wine consumption down to just 3.7 liters per capita by the late 1990s. It has risen since then, up to about 7 liters per capita today. Wine is only now reemerging and is still stained by its association with spirits and alcoholism.

Good Russian Wines Exist …

I have not visited Russia nor sampled any of the wines on offer there, but the reports I’ve read  make it sound like I am not missing too much.  There is fine wine in Russia, including some excellent domestic products as you will see below, but the good stuff is mainly imported and very expensive.   And the bad stuff is really really bad.

In fact I think the theme for this post should be that classic spaghetti western, The Good, The Bad and The Ugly. The good wines are certainly there. Jancis Robinson’s tasting notes from her 2009 visit to Russia include some tempting wines. A Myskhako Organic Red Cabernet 2008 from Kuban, Russia’s warmest wine producing region, received 16+ points out of 20 with the descriptive note, “Sweet and very wild and direct. Different! Very lively. Really wild tasting. Explosive.” Sounds like something I’d like to try.

A Fanagoria Tsimlansky Black 2007 Kuban (16 points) is “Dusty, bone dry, rather interesting flavours with good round tannins and acidity and plenty of fruit weight on the palate. Very dry finish with good confidence.” I’ll have a glass of that, please!

Along with the Bad …

Bad wines, and there are many of them, reflect Russia’s sorry wine history. It seems like every country has experienced the stage where wines are simple, sweet alcohol, sometimes to cover up faults and disguise poor wine making.  These bad wines still figure prominently in Russia.

Wine for the masses sells for less than $1 a liter in many cases and it seems to be sourced in bulk from whoever offers the least cost supply. Imported bulk wines from countries as varied as Spain, Ukraine, France, Argentina, Bulgaria and Brazil are shipped to factories near Moscow and St. Petersburg where they are mixed with sugar (to appeal to local tastes) and water ( to bring the alcohol level down to 10.5 percent), packaged and sent to market.

Traditionally much of the wine came from Moldova and Georgia, but these countries are on the Russian government’s political black list and Moldovan wines are currently banned, causing great hardship for a country that is very dependent upon wine for export earnings. Low quality is the official excuse — a Russian health official says of Moldovan wine “it should be used to paint fences” – but it is hard to see how Moldovan wines can be worse than the sugar water wines I just described. I think it’s politics.

But Then it Gets Ugly

The ugly wines are frauds — not even made from grapes in some cases. This video report suggests that perhaps 30% of the bottled wine on offer in Russia is counterfeit. This is bad for consumers, of course, but particularly bad for legitimate producers whose reputations suffer from unhappy experiences with fake wine.

Thinking of trying to sell your wines in Russia? Despite all that I’ve said, many people see great potential in the Russian market. Some are just interested in the “bad wine” bulk market, but others have grander plans. Russia is a BRIC, after all, one of the fastest growing major economies in the world. Russia will host the 2014 Winter Olympics and the 2018 soccer World Cup; this international exposure may accelerate changing domestic tastes. It is a major market for Champagne, with more than a million bottles purchased annually.

The Future of  Wine in Russia

As Russia’s middle class expands, a larger market for quality wines can be expected to emerge. So it is not surprising that winemakers are testing the waters and negotiating joint ventures of various sorts.

There are reasons to be cautious, however. Alcoholism is still a major concern in Russia and the expanding wine sector will have to swim  against a prohibitionist tide. Tastes and social attitudes will change as better quality becomes available, but the transformation will not happen overnight.

And then there’s the “oil patch” problem. Petroleum is a major driver of the Russian economy and this introduces an element of economic instability. Exporters will need to be able to ride out falling oil price effects in order to benefit from high price periods.

Finally, there is the Russian legal and administrative systems, which make it difficult to bring wines into the country and to assure payment. The fact that some in the Russian government would prefer that the wines stay away – because of the alcoholism problem – probably contributes to this problem.

It is easy to be very pessimistic about wine in Russia given its current state and recent history, but I believe that cautious optimism is warranted for the long run.  There are many cases of countries that have opened up their wine markets with positive results and perhaps Russia will follow this path. In the meantime, it looks like a difficult project.

The BRICs: The New New World of Wine?

This is the first of a series of articles on wine markets in the BRICs. BRICs? Is that a wine term? No, although it sounds just like brix, a measure of a grape’s sugar level. Jim O’Neil of Goldman Sachs coined the term BRIC in 2001 to refer to  Brazil, Russia, India and China.

Initially many people suspected that BRIC was just a gimmick — a way to package four very dissimilar countries into an appealing acronym that would draw investor interest. If it was a strategic maneuver it was a brilliant one because of the way it captured the world’s imagination.

More than a Gimmick

“BRICs” is an attractive name for many reasons, perhaps especially because it looks and sounds like NICs — the Newly Industrialized Countries of Hong Kong, Singapore,  Taiwan and South Korea that have been so successful in the global economy.  There was some question initially about why these four particular countries were chosen (why Brazil and not Mexico, for example, and what about Turkey?) and what if anything they had in common, but the idea quickly caught on.

Today the BRICs are firmly established, as the Economist noted earlier this year in an article titled, “The BRICs: The trillion dollar club.”  The BRICs have turned into something real.  Why? According to the Economist

The BRICs matter because of their economic weight. They are the four largest economies outside the OECD (Organisation for Economic Co-operation and Development, the rich man’s club). They are the only developing economies with annual GDPs of over $1 trillion (Indonesia’s is only half that). With the exception of Russia, they sustained better growth than most during the great recession and, but for them, world output would have fallen by even more than it did. China also became, by a fraction, the world’s largest exporter.

In a recent Economist article (that included this provocative graph), Goldman’s O’Neil was asked to look ahead 25 years, from 2011 to 2036, and to speculate about the future.

One of the questions he raised was whether the BRICs would have greater total (but obviously not per capita)  income than the G-7 countries and what that might mean if they did. A good question to discuss … over a glass of BRIC wine.

The Future of BRIC Wine?

BRIC wine? Well, yes. All the BRIC countries produce wine and all are important wine markets for the future. As these economies grow, their expanding middle classes will be increasingly attractive target markets for the world’s wine makers and their wines will begin to appear on you local shop’s shelf.

China was the 6th largest wine producer in the world in 2007 according to International Organization of Vine and Wine (OIV) statistics, with an estimated 12 million hectoliters of wine produced (for readers who still think in “English” units, a hectoliter equals 100 liters or a little more than 11 standard nine-liter cases of wine).

By comparison, #1 Italy and #2 France produced nearly 46 million hl each in 2007 followed by Spain (34 million hl), the U.S. (20 million hl) and Argentina (15 million hl). BRIC Russia was 11th in the global wine league table, with 7.3 million hl of output followed by Brazil in 15th place with 3.5 million hl.

India does not appear in the OIV wine statistics, indicating that its wine industry is quite small at present. But India definitely is on the wine map — the omnipresent Michel Rolland even has a client there (Grover Vineyards). India is already a major producer of table grapes, with 2007 production only a little less than Chile and the U.S. combined (that’s a lot of grapes), so it is not unreasonable to suppose that higher levels of wine grape production may follow. India would be on the wine BRIC list for its potential as wine import market, of course, even if it didn’t make any wine at all.

Solving the BRIC Puzzle

Some people in the wine industry dream that the BRICs will be the solution to the problem of global over-supply. OIV estimates that 266 million hl of wine was produced in 2007 but only 249 million hl consumed,  a gap of 17 million hl or about 200 million cases. Yikes! Do the BRICs have the potential to soak up all that extra wine and bail out the global industry?

Dream on, say the experts consulted for a 2009 article in Meininger’s Wine Business International. “Are the BRIC countries going to solve the problems of oversupply in the world today? I don’t think so,” said Arend Heikbroek, associate director for beverages at Rabobank (and one of the sharpest wine analysts I know). “It’s a long-term shot,” he continued, ” it’s complicated, each market is completely different. You need to understand the risk, the dynamics, the traders, the distribution system and the legal system in each of these markets.”

Fair enough. Each BRIC is its own particular puzzle, I guess, and it is too soon to know how they will fit into the bigger puzzle of global wine.

The BRICs will be important to the future of global wine even if they aren’t a silver bullet solution to current problems. They are the new new world of wine and we need to figure out what we know about them– and we don’t know.

In this series I’ll examine each BRIC wine market in turn starting with Brazil by bringing  together and synthesizing various published reports and then try to pull things together into a summary. I hope readers with particular expertise will leave comments to help broaden and deepen the analysis. So away we go!