Andy Morton

Comment - Georgian Wine Has Moved On Since Russia Ban

By | 11 March 2013

When Russia closed its borders to Georgian wine in 2006, it was a bitter blow for the former soviet republic's industry. Russia accounted for around 80% of Georgia's wine sales. 

But now that the ban looks set to be overturned, Georgia's wine representatives are not as excited as you might expect. That's because in the past seven years Georgia has found other countries to focus on.

“The Russian market was always important for the Georgian wine industry,” Levan Davitashvili, the head of Georgia's National Wine Agency, told just-drinks today (11 March). “But between the embargo and now, Georgian wines have found their way through to other world markets such as China, Poland and the US.”

The agency is to spend US$500,000 this year marketing to these “emerging markets”, an outlay it says it will double next year. And while Georgian wine used to occupy 30% of Russia's premium wine sector, this capacity has now been diverted elsewhere, mainly to other former Soviet republics such as Ukraine, Belarus and Kazakhstan, Davitashvili said. Overall, the agency expects exports to Russia to be one-fifth of the 50m bottles a year it sent pre-ban.

But while Georgian wine has moved on since 2006, the Russian market has also changed.

Russia has a saturated and diverse wine market, according to Alexander Kaffka, the publisher of Georgian wine site Hvino News, and the new generation of wine drinkers in the country may see Georgian wine as a throwback to the old days.

It is also a lot more expensive, on a par with French wine, and is in need of heavy investment in advertising to educate consumers on its improved quality. The ban may have been partly political - relations between the two nations were heavily strained at the time - but the official charge that Georgian wine contained dangerous levels of pesticide is difficult to shake.

Despite the obstacles, Kaffka remains optimistic.

“I think Georgian wine will find its place in Russia's market, he said. “For instance, the thousands of Georgian restaurants - very popular all over in Russia - mean a huge market for wine alone. And there is no need to invest in marketing in that case.”

Behind all of this is Russia's coming ascension to the World Trade Organisation, which in theory should force it to fully open to other member states, such as Georgia.

Davitashvili said the WTO membership played a key role in the lifting of the ban - “though not decisive”. Kaffka said it was one of several factors, one being the election of opposition leader Bidzina Ivanishvili as Georgia's prime minister, who has called for better relations with Russia. 

What Russia's WTO membership does mean for Georgia, however, is a more stable framework for trade relations in the future. That, in turn, means Georgian wine is less likely to again find itself left out in the cold.

Expert analysis

Wine in Georgia

in Georgia, there is a significant difference between casting wine (wine in bulk) and wine packaged in bottles. Although it is often the same wine, the difference in price to final consumer is rather considerable. The price of bottled wine exceeds the price of wine in bulk some three times. Therefore, local consumers see a large difference between wine in bulk and bottled wine. If the former is intended for everyday consumption then the latter is usually purchased for holidays, gifts, or...

Sectors: Emerging markets – BRIC, Wine

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