Bloc tactics

Are Old World and New World old hat? Is "New Europe" the new New World? And could Juhfark be the new Chardonnay? These are the questions tormenting Giles Fallowfield

THE FIRST problem is one of image.  The "Eastern European" tag which most of the wine-producing countries grouped around Romania still endure, is not a helpful one when it comes to marketing.

In the eyes of consumers and often, it seems, supermarket buyers, such a label mostly conjures up negative images.  The worst of the Old World in terms of grape growing and wine production practices with grapes grown for their high yields, not quality, and technology lagging behind the standards in countries like Chile and Australia.

Unfairly, given their extensive cultural differences, the large range of indigenous grape varieties they each boast, and the good potential for producing better quality wine below and above the £5 price point, countries like Hungary, Bulgaria and Romania are lumped together in one block by Britain’s largest wine retailers and filed under "declining sales".

Bulgaria is seen as a cheap producer of international favourites Cabernet Sauvignon and Merlot, Hungary barely gets beyond aromatic whites and the ubiquitous Chardonnay – although its most famous vinous offering, Tokaji Aszu, still commands a small but dedicated following – while Romania’s claim to fame is for producing the lowest priced Pinot Noir on the world stage. Collectively they, and other potential players like Slovenia, Croatia and Serbia, are all saddled with the negative connotations of being regarded as Eastern Bloc producers.

There is, however, a great opportunity for these countries to dispel this negative image as they await membership of the EU and continue to distance themselves from the past under communist rule.

Efforts to reposition collectively as the "New Europe" are being aided in the UK by the travel industry’s push to discover new holiday destinations and a burgeoning of cheap flights to cities like Bratislavia and Budapest.

For Dan Muntean, who runs Halewood International’s wine operations in Romania, looking after five active wineries employing more than 200 staff, the term New Europe is a positive effort to move away from the negative connotations of the Eastern Bloc.

"We are talking about a very diverse hotchpotch of countries with their own cultures and traditions.  Countries that in terms of wine production have widely different topographies and terroir and which are at different stages of development," says Muntean.

"Yet the supermarkets still regard us as a single category, a myth Neilsen promotes further by lumping us together.  And because they show the category in decline, the supermarkets’ analysts want to give us even less shelf space.  It’s a vicious circle."

Muntean says his company is working together with producers like Boyar Estates and Reh Kendermann, which currently sells more than 230,000 cases (9 litres) of the River Route brand and own-label wine from Romania, to try and help dispel the negative image.

"It’s not a generic campaign but an effort to help show the potential of these countries which are soon to be integrated with the rest of Europe and no longer at the periphery.  Currently, if Bulgaria drops as a category it is assumed neighbouring countries are also in decline whereas, in fact, Romanian sales are rising.

But there are many other reasons why performance is not uniform, like the level of investment and the progress of viticultural reforms.  "As an investor in Romania we can see a huge viticultural potential.

While in Hungary they make great whites and in Bulgaria great reds, Romania has the best of both worlds [Romania actually produces around twice as much white wine as red wine]. Progress has been significantly helped by investment from wine companies in France, Italy and Germany.

The wine Hungary’s Houses of Parliament by night  business there has been shaken up by Western companies’ management values and investigation of the potential of different terroirs.

As a result, what’s in the glass has made a tremendous leap forward," says Muntean. "Prejudice in Britain, where typically Romanians are all seen as old people wearing long leather trench coats, is difficult to overcome.

It’s important for us to do so, however, because although we are exporting all over the world, the UK is a trendsetting market for Europe and success there helps acceptance in other places," says Muntean.

"And the UK is also the number one market for Halewood, although for Romania, as a whole, Germany is by far the biggest market in terms of volume and value with a share around 40%."

There have been considerable developments in viticulture over the past decade or so in Romania.  "There’s still a lot of work to be done, but the situation is now helped by the availability of EU funds for developing quality vineyards.

The EU wants to get rid of hybrids planted in back gardens which people use to make wine on a very small scale.  And, partly because vineyards are not very expensive, the pace of change has been fast."

While Romania has "the ability to produce very good value Pinot Noir", taking advantage of the rapid growth in sales of this variety in the UK over the past couple of years by providing "the best quality at £4 in retail," Muntean also sees a future for various indigenous varieties.

 "The aim is to produce wines that are New World in style but to retain the local character." He sees good potential for red variety Feteasca Neagra, which he describes as "a full-bodied, deeply coloured variety, similar to Syrah, which needs a bit of oak ageing. We use a lot of Romanian oak which is very suitable for the price."

Over half of the 250,000 hectares or so of vineyards in Romania are planted with noble varieties and while production is concentrated in Moldovia in the east and Muntenia in the south, which between them account for around 60% of the vineyards, Muntean says areas like Transylvania, where grapes are grown on a 400 metre plateau, are suitable for aromatic varieties like Gewürztraminer and Pinot Gris.

His company, which is planning to plant another 300 hectares, already has new clones of French Pinot Noir, Sangiovese and Syrah and intends putting in some Petit Verdot and Viognier next year.

In neighbouring Hungary, while export sales are currently dominated by white grape varieties and include Chardonnay, aromatic whites like Pinot Grigio, Irsai Oliver and Gewürztraminer feature too.

Myliko, a major distributor of Hungarian wines in the UK since 1992, is also introducing more exotic indigenous white varieties Juhfark, Zenit and Zefir.  Representing five leading producers from six major Hungarian wine regions, Myliko has two principal ranges – Chapel Hill and Nagyrede Estate – and while these brands mainly comprise white wines, there are also rosés, fruity reds and oaked styles.

But at present their hottest variety is Pinot Grigio, sales of which have expanded rapidly thanks to Italy’s inability to provide sufficient volume at the right price point, according to Arabella Woodrow MW, business development manager at Myliko.

"Sales of our Pinot Grigio are doing very well both in the offand on-trade," she says, "thanks to Hungary’s ability to hit the right quality and price. It’s become a must-have variety with Terry Wogan talking about it every morning.

And with Italy pushing its prices up and being short of wine, Hungary has filled the gap with a retail price around £4."  However, while Hungary’s past successes have largely been with international white varieties she feels, "The time is right to introduce local varieties.

People are more receptive to something different today; the ‘anything but Chardonnay’ club has gathered momentum.  Booth’s already stocks Juhfark, which is Hungarian for ‘sheep’s tail’ and we are launching ZZ, a blend of Zenit and Zefir at the London International Wine & Spirit Fair (LIWSF), although it will be available for tasting before that.

These white varieties and the red grape Kekfrankos work on their own, or if you blend them with an international variety you get a better product," says Woodrow.  "Hungary’s market share in the UK is about 1.5% and it’s static in volume terms.

In the major multiples Eastern Europe all gets lumped together along with Austria, Cyprus and English wine and it’s put on the bottom shelf because they don’t know what to do with it. With less shelf space it just declines further.

That’s part of the thinking behind the ‘New Europe’ campaign, to get away from communism and the negative image it conjures up.  We put ‘wines from the New Europe’ on the Chapel Hill label and it helps give it a lift.

People that buy these wines enjoy them and come back for more, but their exposure is not as good as it could be.  The quality is good partly because Hungary has enjoyed foreign investment for a lot longer than other former Eastern bloc countries.

Myliko employed flying winemakers like Kym Milne as long ago as 1994," says Woodrow. One of Myliko’s success stories has been the Spice Trail brand it developed specifically to go with curries.

"The company is owned by a family of Indian extraction and they know their curries inside out," says Woodrow.  "As well as being very acidic, you have spices and chillies to contend with and this is quite a challenge.

The original two Spice Trail wines are both blends, the red of Merlot and Kekfrankos, the white Pinot Grigio and Irsai Oliver, and now we’re introducing a rosé made from Cabernet and Kekfrankos, partly to take advantage of the growth in rosé sales in general, but also because rosé wines tend to go very well with spicy food.

Sales of the Spice Trail wines have grown over 200% since the brand’s relabelling a little over 12 months ago."  The largest importer of Hungarian wine into the UK is Bottle Green, which accounts for nearly two-thirds of the million or so cases shipped. Bottle Green’s MD Jerry Lockspeiser, who has een importing Hungarian wine for over 13 years, says the market has changed completely over that period.

"It used to be huge amounts of own label, mainly white wines, supermarket buyers looking for something different being attracted to the unusual indigenous varities like Irsai Oliver.  But now Eastern European own label is declining even faster than own label generally and all our growth is coming from the Riverview brand.

We have been delighted by the continuing growth of Riverview, when it was launched we didn’t know how consumers would take to a brand from Hungary.  "In the past it has been hard to sell Eastern European wine at £4.99 and impossible to sell it at over £5 but  riverview will possibly allow the retail price to rise above £4 and we hope, in the long term, even £5. Whites like the Sauvignon Blanc and Gewürtz really are stunningly good value and would sell for much more if they came from other countries," says Lockspeiser.

"Riverview has managed to over perform in the category growing at 46% year on year in the total off-trade, despite it sitting in a declining sector."  This means that not only is Riverview the fastest growing Eastern European wine brand, but it is also the fastest growing Old World brand.

Even better than this, it is now the sixth fastest growing wine brand out of the top 30 brands in the total offtrade, according to the recent ACNielsen total UK off-trade MAT to January 2004 statistics."

Lack of investment in the vineyards and winery production facilities in Bulgaria has been one of the main problems holding back development there.  However Boyar Estate’s investment behind its embryonic Blueridge brand, which resulted in 23% MAT increase in sales (to October 2003, AC Nielsen) may signal the start of a new era of growth for the company and Bulgaria in general.

The £500,000 poster campaign developed by M&C Saatchi to give publicity to the new bottle design certainly seems to have paid off with TV exposure care of Richard and Judy.  Blueridge is now available in ASDA, Budgens, Sainsbury’s, Somerfield, Tesco and Waitrose.

Marketing manager at Boyar Estates, Steve Abrahams says, "We will continue to be different, to stand out and to grow, showing our long-term commitment to Blueridge with a new advertising campaign supporting the brand and our customers.

Developments at winery and vineyard level include the employment of two award-winning winemakers whose work on the 2003 vintage will be showcased at the LIWSF with the new vintages of the current Blueridge lines, Chardonnay, Merlot and Cabernet Sauvignon, plus Blueridge Black Rosé which will be launched in a clear angular bottle."

If Boyar Estate can breathe new life back into Bulgaria and the concept of New Europe really does take off perhaps the future will be rosy. But will the UK supermarkets take note and create a new category on their crowded shelves? ere’s huge viticultural potential in Romania