Georgia - among top three wine importers in Russia
01 May, 2014
Georgia - among top three wine importers in Russia
The Georgian wine import to Russia exceeded its pre-embargo level as it takes over 6.4% of the Russian wine market compared to the 5% before the embargo. The unbelievably high demand for Georgian wines exceeded even the most optimistic expectations and laid ground to this success story, sector pundits say. However, the market remains risky. Georgian companies try to mitigate the risks through advanced payments.
After less than a year of return to the Russian market, Georgian wines went up
to the third place in the list of wine importers after France and Italy. In the first quarter of 2014, Georgia outpaced Spain and is now the number three wine importers with 14% of the total wine import to Russia. This translates into 7.4 million liter [or 9.87 million bottles] of wine, Russian RBC daily web-portal reported on 22 April. This volume runs closely with the Italian import that accounts for 14.8% and 7.8% million liters. France leads the wine import by 10.16 million liters which covers the 19.3% of the total figure. At the Russian wine market, Georgia takes over 6.4% which already exceeds its pre-embargo 5%. Commensurately Russia is the leader of Georgia’s export wine market with 71%. Georgian wine sector players and specialists consider this risky because of the existing political tension between the two countries.
However, nobody thinks about saying no to such a profitable market because of political risks. The wine companies try to mitigate these risks through advanced payment systems with the distributor companies, and also through more diversification of the export markets. For example Zura Ramazashvili, Head of the Telavi Wine Cellar (TWC), in spite of an increasing demand from Russia he only sends his surplus there. “In our position we can not diminish export to other markets for the sake of the Russian market, we only send what remains from the other markets to Russia,” Ramazashvili told Georgian Journal. As a matter of fact, he expected a high demand but not such a skyrocketing demand.
The reason for such a high demand is the recent high quality of Georgian wines and the nostalgia for Georgian products in Russia. Some believe that the anti-Georgian-wine campaign carried out by the Russian state since 2006 when Genadi Onishchenko, now ex-head of RosPotrebNadzor, the state watchdog observing consumers’ rights and sanitary condition of consumer goods, banned the product for alleged sanitary problems, did in fact a good job to Georgian products.
Onishchenko only lifted the ban in the summer of 2011 prior to Russia’s accession into the World Trade Organization. By this the Kremlin tried to woo Georgia and secure its consent for WTO membership because the latter intended to veto Russia’s WTO enrollment. Actually, Georgian wines only re-appeared on the shelves of trade outlets in Russia by June-July of 2013 after protracted bureaucratic and technical procedures related to the import to Russia. Within this two-year period no Russian TV, radio channel, or print and on-line media outlet was not highlighting the possible return of Georgian wines to Russia. This coverage was not too flattering, however, and predicted no big success of Georgian wine. Onishchenko for example predicted that Georgian wines would take up less than 1% and never be able to restore its pre-embargo position of 5% on the Russian wine market. The Georgian wine industry itself made a moderate forecast of 10 million bottles to be exported to Russia by the end of 2013.
Russia carries out a strong anti-alcoholic campaign which completely forbids the advertising of alcoholic beverages. Against the backdrop of full absence of ads on wine and spirit products, the active media coverage of Georgian wines rendered a service to the product: it triggered a huge intrigue and raised expectations. As a result, once the product showed up on the market it was a big success. And instead of the expected 10 million bottles, Georgian wine companies exported more than 22 million bottles within the first six months of 2013 which made up 2.45% of the Russian wine import.
“Sales exceeded our most bold forecasts,” Katherine Alekhnovich, Brand Manager at Rotor House Brand Management operating in Russia, told Georgian Journal. However, neither she nor Georgian wine pundits expected this high increase to be kept. Although no drop is forecasted either. They believe the high demand was caused by a full absence of Georgian products from the trade network and now once the trade outlets will make due storage the market will get saturated and the demand will be growing calmly but steadily by around 30%.

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