Friday, 07 December 2018

Georgian Wine and Its Narrative Drive Development

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 By Mamuka Tsereteli

December 7, 2018, the CACI Analyst

Georgian wine and its narrative are emerging as a major driver for the global marketing of the country. The evidence of 8,000 year old wines, discovered in Georgia, helped galvanize the promotion of the country as a Cradle of Wine. The story of Georgian wine contributed to reaching record numbers in wine exports, as well as record numbers of visitors to the country, thus contributing to the development and economic growth of Georgia.

 

 

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BACKGROUND: Wine and viniculture have been central elements of Georgian civilization for millennia, contributing to the cultural diversity, spirituality, and prosperity of the small South Caucasus nation. Wine is a part of the Georgian identity and a fundamental element of the social fabric. A November 13, 2017 publication in the Proceedings of the National Academy of Science of the U.S.A. confirmed Georgia to be the home of the earliest grape wine and viniculture discovered thus far. This evidence of 8,000 year old wine at least partly explains the depth of the wine culture in Georgia. The central role of wine in Georgian spiritual, societal, and economic life also explains why wines and vineyards were targets for every invader of Georgia. The good news is that the Georgian nation, and with it more than five hundred unique native grape varieties, have survived all those invaders. Today, the story of Georgian wine is one of the major drivers for growing awareness of Georgia around the world.

In recent years Georgia has been successful in branding the country as a Cradle of Wine, with UNESCO recognizing the ancient qvevri winemaking method in the Representative List of the Intangible Cultural Heritage of Humanity in 2013. In the newly opened wine museum of Bordeaux, La Cité du Vin, Georgia was honored with the first international exhibition with ancient wine-related artifacts attracting thousands of people. Georgian producers of different sizes and philosophies of winemaking are regularly recognized with the highest awards in prestigious international competitions, as well as rankings from publications like Wine Spectator, Decanter, Wine Enthusiast, Wine and Spirit Magazine, Food and Wine Magazine, and the Washington Post. 

The recent three-day long Ghvino Forum (named for the Georgian word for wine) in Washington, D.C. brought together historians, archeologists, geographers, economists, experts of geopolitics, wine industry representatives, and journalists for discussions on the origin, geography, politics, and economics of wine, centered around Georgia. With wines available in trendy restaurants, boutique wine shops, and the Whole Foods chain, the D.C. region’s market was a natural choice of location for this first annual Ghvino Forum. 

IMPLICATIONS: All these success stories became important elements of the marketing of the country, supporting exports, tourism, and the overall positive image of the country all around the world. Georgian wine, paired with natural beauty, ancient cultural heritage, and diverse and sophisticated cuisine, has become an emerging global attraction.   

According to the National Wine Agency of Georgia, in January-October 2018, more than 68 million bottles of wine were exported to 53 countries worldwide. This is 12 percent higher than similar data for 2017, which was a record-setting year since the country regained its independence in 1991. Wine export receipts were at $162 million, a 20 percent increase from the previous year. And while Russia still holds by far the dominant share of the Georgian wine export market, the growth rate in recent years in other strategic markets like Ukraine, Poland, China, and Kazakhstan is very significant. 

There is no doubt that the dependency of Georgia’s wine exports on the Russian market is a subject of concern, due to the geopolitical realities. Russia occupies 20 percent of Georgian territory, and in the past, Russia banned the import of Georgian wines under the false pretext of quality concerns, in order to impact Western-oriented foreign policy priorities of the country. In April 2006, after a Russian ban on the import of Georgian wines, it was predicted in these pages (See CACI Analyst, April 19, 2006)  that the Russian move would only strengthen the Georgian wine industry. That is exactly what happened. And the industry is much more resilient today than it was in 2006. But further efforts for market diversification are essential.

In addition to wine, in January-October, the Georgian export of the other products of the wine industry, brandy and Georgian pomace brandy – Chacha – also increased. The total value of the wine and wine-related alcohol export exceeded $252 million, which makes this industry the fifth largest export generator for the country. 

Georgia’s wine industry indirectly contributes to the increase of tourism revenues for the country. In 2017 there were record number of visitors to Georgia – at 7.6 million, out of which more than 62 percent spent at least a night in Georgia, which qualifies them as tourists. Tourism-related revenues were at $2.7 billion in 2017, and are expected to be higher this year. While wine-focused tourism may not be dominant in the total spectrum of visitors, almost everyone who comes to Georgia drinks wine and thus contributes to the growth of in-country consumption of wine and wine products. At the same time, the number of tourists coming to Georgia to explore its unique and diverse wine culture is also growing.  The Georgian hospitality sector has already responded to the growing demand of visitors and locals alike, and the number of retail and hotel outlets which focus on wine is growing rapidly. Retailers like “8,000 Harvests”, hotels like “Vinotel”, wine bars like “Vino Underground”, as well as wineries’ retail outlets in larger cities became major tourist destinations for visitors, as well as Georgians. 

The growing interest towards Georgian wine also attracts foreign investors in this sector. Some visionary investors successfully invested in the early stages of the revitalization of the Georgian wine industry. Large wineries like Teliani Valley, Schuchmann Wines, and Chateau Mukhrani have sizable Western investments, but there are also a growing number of smaller boutique wineries with foreign direct investments, as well as small and large hotels in wine producing areas. The first Radisson Collection hotel opened recently in Tsinandali, in the heart of Kakheti, the main wine producing area of the country.

CONCLUSIONS: Wine culture has gradually emerged as one of the key drivers for the awareness of Georgia on a global scale, helping exports and attracting tourists to the country, thus contributing to development and growth. Obviously, there is still a long way to go for Georgia to become a global destination for wine tourism, but the trend is positive and the trajectory is upward. Being the largest wine market in the world, open to imports of the best of global wine production, the United States is a natural strategic market for Georgian wines. Georgian producers and American importers have an ambitious plan to have American wine drinkers buy at least one bottle of Georgian wine a year. If that were the case, the United States would become the number one destination for Georgian wine exports, even if Georgian wines would make only 1 percent of the total US market for wines. This is an important goal from both political, as well as economic, point of view. Larger sales on the U.S. market would reduce the risks of dependency on the politically volatile Russian market. At the same time, significant presence on the U.S. market with much greater purchasing power of consumers would have a positive long-term impact on the Georgian economy.

AUTHOR’S BIO: 

Mamuka Tsereteli, Ph.D. is a Senior Fellow at the Central Asia-Caucasus Institute, President of the America-Georgia Business Council, and the founder of the Georgian Wine House.

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The Central Asia-Caucasus Analyst is a biweekly publication of the Central Asia-Caucasus Institute & Silk Road Studies Program, a Joint Transatlantic Research and Policy Center affiliated with the American Foreign Policy Council, Washington DC., and the Institute for Security and Development Policy, Stockholm. For 15 years, the Analyst has brought cutting edge analysis of the region geared toward a practitioner audience.

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