EASTERN EUROPE: Trio on track

Eastern Europe’s three biggest wine producing nations have set up producer associations to convey a united message. Caroline Gilby MW discovers welcome signs of progress in Bulgaria, Romania and Moldova

New producer associations have been set up recently in the three most important wine producing nations in Eastern Europe. Their aims of promoting wines with a united message is a welcome change for countries that have been relying on more or less non-existent government funds to do this job for them. Volumes have been in free fall in previously important western export markets, including the UK, but perhaps this new spirit of unity will bring renewed interest and increased sales.

Bulgaria, Romania and Moldova have seen their wine industries transformed in recent years, taking a roller-coaster ride via privatisation – and the fragmentation that followed – to today’s pattern of wineries investing heavily in their own vines. The influence of the EU and its euro-million subsidies has undoubtedly been a key factor. Both Bulgaria and Romania benefited enormously from pre-accession funding, where a 50% rebate has attracted money from foreign investors, as well as industry outsiders. Moldova is much further away from linking up with the EU but is seeking European money to support export initiatives, while the US government programme USAID is funding the CEED (Competitiveness Enhancement and Enterprise Development) project to help bring its wine industry up to global standards.

Bulgaria’s new outlook
The re-shaping of Bulgaria’s wine industry is still continuing. Recent developments include Telish’s new Castra Rubra winery, with 110 hectares of vineyards planted so far, under the guidance of consultant Michel Rolland. Belvedere’s Domaine Katarynza with its 365 hectares of vineyards was opened last year and is already making an impression with its well-crafted wines. Other significant investments include the Italian Miroglio project, Bessa Valley (majority shareholders are Stefan von Neipperg & Karl Hauptmann) and organic producer Terra Tangra. Domaine Boyar completed a refinancing deal in December 2007, specifically “to meet new market conditions, namely dramatically reduced western markets and growing home and Russian ones”, according to joint MD Margo Todorov. The renamed Domaine Boyar International is “putting together an aggressive marketing campaign directed at the home market, where sales have seen a shift towards better wines”. Aleksander Kanev of Bessa Valley agrees: “We sell 80% of our wine in Bulgaria – not what we expected.” Ognyan Tzvetanov of boutique producer Valley Vintners has just planted his first 12ha and sums up: “The Bulgarian wine industry has been transformed. It is 100% private and most of the players are now operating their own vineyards. Even the latest planted under the SAPARD program will start bearing fruit this autumn. I wouldn’t like to be in the shoes of grape growers relying on the spot market.” He adds: “With the rising percentage of imported wines, the industry will need [the UK] market to absorb at least part of the volume. This won’t be easy. Poor image combined with inappropriate price expectations are key factors.”  

Belvedere’s export arm, Vinimpex, is now working directly with its major customers in the UK. Export director Vili Galabova says: “I see a great opportunity for our wines. Difficult as it is now, with the new excise and the weak pound – we have managed to start direct deliveries to a few major UK multiples like Tesco, Sainsbury’s and Morrisons.” She adds: “I am especially happy with a new listing of Augusta Merlot in Sainsbury’s to be launched in July at £3.99.” Domaine Boyar is switching the Blueridge XR listing at Tesco to a “more classic/Old World look under Domaine Boyar”, according to agents Ehrmanns, which also reports a strong following for the brand in Bargain Booze.   Ehrmanns has also just agreed to taken on Bessa Valley’s premium Enira later this year. Chairman Peter Dauthieu says: “We see this as complementary to our existing business – it will give credibility to Bulgaria and help the category.”

The London Wine Fair saw the first joint event of the embryonic Bulgarian Wine Guild, a group of eight leading wineries, including Santa Sarah, Bessa Valley, Terra Tangra, Damianitza, Telish, Domaine Katarynza, Logodaj and Villa Liubimetz. As Kanev points out, “Our idea is to show a new image, because Bulgaria’s image is negative. We’ve been talking for two to three years, but the state was doing nothing, so we realised the wineries had to create something themselves.” Philip Harmandjiev, owner of Damianitza, confirms: “The participants were happy with the tasting at the LIWF and we will now proceed to incorporate a generic body.”

Romanian Perspectives
Romania has also seen huge changes in its industry, with vineyard area falling to an estimated 89,000ha of Vitis vinifera, and the development of a very buoyant (and profitable) domestic market. This consumes over 90% of production and growth is forecast to increase by 6-7% per year. The country became a net importer in 2006, a trend that is set to continue, with several producers taking on portfolios of major international brands.  Romania set up its wine producers’ and exporters’ group APEV back in 2003, though it has recently become much more pro-active. Director Rodica Capatina explains that “wineries are starting to recognise the need to promote together under brand Romania”, while Dan Muntean of Halewood Romania says: “We need this – one of the reasons Romania is disappearing in the UK is because we haven’t done any activity.”

Halewood supplies predominantly entry-level wines in UK such as Sainsbury’s recently repackaged own-label, now in its 20th year of continuous supply. Muntean remains positive: “We have made a breakthrough with Direct Wines and now sell four lines at over £5.” Recas’s Philip Cox says: “The UK wants the cheapest prices and the best wine. It’s worse than the US as it’s dominated by so few companies. However, it helps around the world – if we sell in the UK, other countries hear about it.”  Cox adds that he’s planted another 140ha this year – “it’s all about having good grapes”. And with a new listing in Thresher for Pinot Grigio this approach appears to be paying off. Carl Reh has also invested heavily in vines, with 235ha now in the ground, including 45ha planted this year. MD Nik Schritz says: “Our aim is to have a strong basis to build volumes from our own vines.” He agrees that “the UK is difficult but Germany is growing nicely, especially for our Val Duna brand”. Val Duna has just undergone a packaging facelift, and other innovations include 25cl bottles for Pinot Grigio and Merlot, and a new rosé. Sales director Alison Flemming comments: “Rosé gets you out of eastern Europe into the rosé sector, which should work better.”  

Moldova’s challenges
This tiny country shares a western border and language with Romania, but its wine industry is totally different. Arguably, it’s the biggest of the three countries in terms of area with Vitis vinifera in commercial production at just over 102,000ha. Moldova is incredibly dependent on wine, the country’s leading export, with an estimated 28% of households involved in the industry. It exports well over 90% of its commercial production and lacks a domestic market to soak up the slack caused by the off–on relationship with Russia. Russia was taking around 80% of Moldova’s wine until the ban imposed from March 2006 to November 2007. This was pretty much catastrophic for the industry’s cash flow with losses reaching US$180m, and has forced a new focus. In fact the leading producers had already started to invest in vineyards, equipment and new attitudes ahead of the ban. They realised that even in Russia, tastes would start to change from traditional semi-sweet stuff to drier varietal wines, with increasing exposure to imports from South America and Western Europe.  

The Moldovan Wine Guild was set up in August 2007 with the aim of bringing together Moldova’s most dynamic producers, including Acorex Wine Holding, DK Intertrade, Bostavan, Purcari, Dionysos-Mereni, Lion-Gri and Château Vartely. All are notable by their investment in vineyards, and that they either use international consultants or employ young winemakers who have worked abroad. Douglas Griffith, head of the CEED project, that has supported the Guild, says: “I think that it surprised them – a group of seven wineries that typically see themselves as competitors managed to pull together in the face of crisis and represent themselves and their country in a way that they felt proud of.”

There are only two Moldovan wineries currently selling into the UK, though as Guild executive director Veronica Russu-Marin commented, “Moldovan wineries are committed to investment in the UK market and building strong partnerships with the wine trade. Our priority is to increase our presence in both off-trade and HORECA channels.” Acorex has a strong track record, from working with Direct Wines for a number of years, and has recently developed a new brand called Taking Root aimed at the major multiples. The range includes Pinot Grigio, Sauvignon and two red blends of local Bastardo with Cabernet and Merlot, though as yet has no listings. DK-Intertrade’s Firebird Legend range is distributed through HBJ. There are retail listings for three lines in Waitrose and HBJ is now developing its focus on the on-trade and into international markets like Sweden and Asia.

United gains
It is quite a change for these former collectivised states to choose to work together voluntarily and invest in marketing, but is a welcome sign of progress. Undoubtedly, the quality of wine has improved on the back of investments and restructured industries, but communication of these changes to gatekeepers, let alone consumers, has been sadly lacking, and without this, listings won’t follow. It will take time and money, and won’t be an easy road forward, but at least producers in Eastern Europe look to be back on the right track.

db © August 2008