In 2006 Moscow banned the import of all Georgian wines. This embargo was particularly painful for the winemakers in the regions of Kakheti and Racha, famous for their vintage wines. If in 2005 they managed to sell about 50 million bottles of red and white wine, paying the farmers a dollar per kilogram of grapes, in 2007-2010 only 20 million bottles were exported from Georgia (mostly to Ukraine and some other countries of the CIS), with the farmers receiving just 20 cents for each kilo of fruit.
In a situation when the very existence of wine production raised considerable worries, the Georgian government provided subsidies to this industry amounting to tens of millions of dollars a year. In addition, it helped to advertise and promote products in new markets, especially in Europe and the US, and took measures against the falsification of famous brands.
When studying the US wine market, where finding your niche is no easier than in France or Spain, Georgian businessmen found out that the famous wine brands Khvanchkara and Kindzmarauli have already been registered by Evgeny Dozortsev, an American businessman of Russian origin. Taking into account that Khvanchkara is perceived in Georgian as a national treasure, one can understand why this news from the U.S.
caused such a shock. The test sales in American market revealed some interest in the wine from a country with an "exotic" name so confusingly similar to the name of one of the states. However, without the permission of Evgeny Dozortsev, the Georgian companies had no right to export a single bottle to the U.S.
In response to that the Georgian government urgently hired a group of lawyers, knowledgeable in the nuances of the vast bureaucratic machine and the legal web of world's largest economy. Dozortsev foresaw this and thoroughly prepared for the court battles. He offered to resolve the problem to their mutual benefit. After long negotiations a compromise was reached: Dozortsev acknowledged that Khvanchkara and Kindzmarauli are brands owned by the Georgian state, but in his turn received the exclusive right to sell these wines in America. The deal was advantageous to the winemakers as well, because through Dozortsev and his company "Dozortsev and Sons" they got connected to the U.S. business community.
So Georgian wine has been able to fit into a niche of inexpensive wines in the huge American alcohol market. For their relatively low price the Georgian wines offer very good quality. Michael Saakashvili has repeatedly thanked Russia for the embargo, which, in his words, "forced us to seek new markets and improve the quality of the wine." Moreover, the Georgian leader said that, although in recent years the amount of wine exported to other countries declined compared to 2005, the monetary gain is comparable to the pre-embargo times, due to the improved quality and the development of new markets.
The analysis of the American market interestingly reveals that the highest sales of the Georgian wines are in New York, with its large diaspora of immigrants from Russia and the former Soviet Union. They became the main consumers of the imported Georgian wines whose names say little to other Americans and Europeans, more used to Chianti and Bordeaux.
The producers of Khvanchkara also signed a special agreement with the duty free shops in Istanbul airport, counting on the millions of Russians that pass through it every year. The results exceeded all expectations, as Russians indeed tend to buy familiar brands that are no longer available in their own country. So despite the severe prohibition of the former Russian Chief sanitary inspector, Gennady Onishchenko, Khvanchkara and Kindzmarauli are being brought back to Russia, though by a roundabout way.
Georgi Kalatozishvili, Tbilisi, specially for Vestnik Kavkaza.
