Message in the Bottles: Lessons from Georgia’s Wine Industry Rebirth

In a very interesting piece, Radio Free Europe/Radio Liberty profiles the transformation of Georgia’s ancient wine industry from a relatively low quality, single market provider to a diverse, sophisticated, and increasingly international supplier of respected vintages.  Ironically, the change came about thanks in large part to a politically-motivated 2006 Russian embargo of Georgian wines intended to punish Georgia in the wake of the Rose Revolution and Tbilisi’s subsequent moves toward European integration.  Prior to the ban, 80 percent of Georgian wine exports were into the Russian market.

Georgia’s wine making history stretches back to antiquity.  Georgians like to point to archaeological evidence that ancient Georgians were fermenting wild grape juice into wine as early as 6000 B.C., and some believe that the word “wine” has its origins in the southern Caucasus.  In the Soviet days, Georgian wines were produced exclusively for domestic consumption, and were favored over varieties from Moldova and Ukraine, their leading competitors in the closed Soviet model.  Their popularity in Russia continued after independence, although there were some restrictions on production under Gorbachev during his efforts to reduce alcoholism in the 1980s.

The embargo has forced Georgian producers to adapt their methods to meet the demands of the European market.  RFE/RL interviewed two producers, one from a family vineyard and the other a retired German railroad executive who has invested $10 million in his new Georgian vineyard since the embargo.  Both say the embargo was a driving factor behind the industry’s transformation.  They continue to produce their wines using traditional methods developed in ancient times, but they have employed modern, Western-influenced methods to satisfy new consumers in Europe and Central Asia.

Burkhard Schuchmann, the German immigrant, said Georgian producers would have Moscow to thank long into the future for the increasing quality and profitability their product.  “To see it from today’s point of view, Georgians can be lucky that the embargo came, because then they were forced to [improve] quality and to think about marketing. There was no need before.”  His Georgian colleague, Nikoloz Nikolaishvili, puts it more succinctly.  “When there comes a demand, there comes a need to do something,” he said.

Georgian wine exports peaked at $81 million in 2005, the year before the embargo, falling off significantly after, according to the Georgian Wine Association.  But exports have increased every year since, as much as 38% in 2011.  The rebound has been driven by producers’ need to modernize and adapt new methods of production to satisfy a more diverse market in the West.  Exports have nearly climbed back to their pre-embargo level, and are expected to jump even more once Russia officially lifts the ban on importation of Georgian wines next month.  The lessons for Georgia and the region in general are apparent.  Discovering new markets, methods, and influences are good for the product, and the bottom line.

If Schuchmann and Nikolaishvili are any indication, that lesson has taken root in Georgia’s wine industry.  Nikolaishvili told RFE/RL he doesn’t envision a return to the pre-embargo days of Georgian production going exclusively to Russia.  “We’ve already had several years to turn away and toss out our dependence on Russia and we’ve survived,” he said.  Schuchmann is deliberately planning against it.  He plans to dedicate no more than 25 percent of his exports to the Russian market once the embargo is ended.  “I don’t want to make the same mistake as they did in the past — to become dependent on one market,” he said.

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