10.31.2007  
 

Republic of Georgia Targets U.S. Market

Combats Russian boycott with exports of popular and cult wines

 
by Paul Franson
 
Republic of Georgia Targets U.S. Market
Kvevri above ground
 
Tbilisi, Republic of Georgia -- With its wine business and economy devastated by a spiteful Russian boycott, the Republic of Georgia is taking many steps to recover--including increasing exports to the United States and other countries.

The small Christian Caucasian democracy was formerly the prime wine supplier as a member of the Soviet Union, but after it achieved independence in Dec. 1991, relations with Russia deteriorated. The Russian Federation is supporting Russian-speaking separatists who govern parts of Georgia, and one step in applying pressure was to close Georgia's biggest market.

The boycott's impact can be seen everywhere; the country has a reported 70% unemployment rate, and the infrastructure is suffering badly.

The boycott may be especially frustrating to a number of foreign companies, especially Italian, that invested in modern new plants to serve the anticipated Russian demand, including refrigerated tanks and filtering to produce the sweet wines popular there. Among the big joint ventures are very modern Badagoni, Kindzmaraulkis Mariani, Mildiani, and slightly older Teliani Valley (which benefits from 10 years experience with its excellent winemaker, George Dakishvili).

Wine was very important in Georgia's economy. Before the embargo, the country that borders Turkey, Azerbaijan and Armenia, as well as Russia, produced more than 7 million cases per year and most was exported; the country has a population of about 4.5 million.

Recognizing that 45 to 50% of the population works in agriculture, including winegrapes, Georgia's popular and pro-Western young government has instituted a number of steps to recovery. The U.S. government is helping, too. Through USAID, it has funded many programs to identify, improve and market agricultural products.

The country's minister of agriculture is 33-year-old skier Peter Tsiskarishvili, who attended both high school and college in the U.S., and has degrees in international relations and economics.

Tsiskarishvili told Wines & Vines at an interview in Tsinandali in the Kakheti wine region of Georgia, "The Russians wanted low-price wine, and they didn't care about quality. The West wants better quality, but of course we also have to be price competitive." Some Georgia companies are doing this well."

For now, Georgia's biggest wine markets are the former Soviet republics such as Ukraine, Eastern Europe, the Baltic States and Kazakhstan, but Georgia's sights are clearly on the United States. "The U.S. has the greatest prospects for Georgian wines of any country except Ukraine," Tsiskarishvili said. "Single cities in the U.S. are bigger prospects than some whole countries."

He noted that although there are small pockets of Georgians and Georgian-Americans in the U.S., many former Soviet citizens are fans of Georgian wines, and obviously they will be targets. Still, he said, "We must develop the whole market."

Of course, every other wine-producing country in the world has targeted the U.S. market, but a number of U.S. wine buyers at the same meeting later confirmed that they see a role for Georgian wines.

Keith Johnson, director of sales and marketing for Exclusive Brand Imports in Redmond, Wash., said, "We see a role for a red and white at about $8.99. That price shows some respect--it's not Two-Buck Chuck--and yet it's low enough to inspire some trials by curious customers."

Vinifera grapes come from the Caucacus, however, and Georgia has more than 400 varieties of grapes. It would be very easy to overwhelm and confuse most customers with too many.

Johnson suggested the varietal white Rkasiteli (you can safely ignore the "r") and red Saperavi as the best candidates. "Rkasteli could be a new Pinot Grigio," said Erez Klein, wine specialist for Whole Foods in Seattle.

He thinks that Saperavi could become a hot new wine like Argentine Malbec but he believes that many of the big wineries are overusing technology--especially filtering--and diluting some of the wine's character and appeal.

Republic of Georgia Targets U.S. Market
A priest stirs kvevri wine
A number of large joint ventures have been built to make the wine, and they're full of the latest Italian winemaking technology, but Klein and Johnson think the country's winemakers need to spend some time tasting the wines they will compete against. "They don't yet understand what Americans and others want," Klein said.

Interestingly, Klein also sees a market for some of the country's unique kvevri wines, which are made in giant underground amphorae with the whites having skin contact all winter and stirred many times per day. Made by true artisanal producers using ancient techniques, "These wines appeal to serious wine geeks," Klein said.

Johnson, in fact, planned to sign two or three deals before returning home, and pled not to disclose the name of a small producer that has enormous potential. "I promise I'll tell you after I sign the deal," he vowed.

Having tasted the winery's wines, I had to agree. They could become hot $35 to $40 treasures among knowing wine lovers. With American wine buyers constantly searching for the next big thing, Georgian wines could fill that role.
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