Georgian wine prices go up
12 December, 2013
Georgian wine prices go up
Prices on Georgian wine are expected to increase after the New Year by 20-40%. The price on Khvanchkara may go up by 70%. Wine companies attribute the price hike to high prices on grapes this year, and problems caused by state subsidies; the government cites increased demand. However, neither wine producers nor government predict a drop in sales.
In spite of the abundant grape harvest this year, prices were kept exceptionally high, fluctuating between GEL1-2 per kilo, depending on the
grape type. Last year the price was just 30-40 tetri per kilo. So, it means prices increased by 60-100% this year. Wine experts blame the successful opening of the Russian market, as well as the state subsidies. In 2012, some 22 million bottles of wine were exported. But this figure was exceeded in September this year, and since June, when the market was opened in Russia, about 7 million bottles have gone there.
The state subsidized the price of grapes, paying 25-40 tetri per kilogram of purchased grapes to growers. Sector pundits predicted the price hike immediately, and warned that it might affect the competitive power of Georgian wines on the international market.
But neither wine producers nor government expect any drop in sales on either domestic or export markets. 20-30% is not too high an increase, they say; and Khvanchkara is produced in such small quantities that it will sell out at any price. But Georgian wines are in a higher price category now.
“The price is regulated by supply and demand, and this price structure is normal,” Levan Davitashvili, Head of the Wine Agency of Georgia, operated by the Ministry of Agriculture, said in an interview with Georgian Journal. “It was defined by high demand for grapes and not by any internal structure [of price-making]. No wine producer will increase prices so much to lose markets, and besides, we are in a higher price category now since the wine quality has improved.”
Shalva Khetsuriani, President of the Association of Georgian Sommeliers and owner of Khetsuariani Cellar, believes the price hike is more likely a result of increasing demand on the Russian market.
“The price increases have come not because the quality of Georgian wines has increased but due to huge demand for them on the Russian market. Russian distributors ask for more and more wines, and pay beforehand,” he said. But Georgian wine really has a price problem, Khetsuriani believes, and the reason is not the state subsidies. The problem is the small difference between prices on low and high class wines.
“In Georgia prices between low and high class wines fluctuate by just 10-20%, whereas on the international market the similar price difference is fivefold higher. For example, I know of Georgian wines where the difference between high and low classes is 50 cents, while the difference in quality is five-fold,” Khetsuriani said.
According to him, wine prices must increase based on quality; and the classification of vineyards and appellations is crucial to this end. “The prices are similar on all grapes in Georgia today - that is not acceptable. Once the consumer learns the difference between wines produced from vineyards of renowned appellations and ordinary vineyards, the price will be settled automatically,” Khetsuriani concluded.
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