Moldovan wine facing Russian crisis
Russian market, dominating the market with a share as high as 70
per cent. But the arrival of more sophisticated wines from
countries such as Australia, Argentina or South Africa has left
Moldova's output looking downmarket and old-fashioned, prompting
the creation of a new fund to help boost quality, reports Angela
Drujinina.
The fund, set up at the instigation of Russian importers and Moldovan producers alike, is perhaps the last chance for wine makers in Europe's poorest country to protect their still impressive share of the Russian market against the upmarket invaders from Latin America, Europe and Africa.
For without the Russian market, there is likely to be no future for the Moldovan wine industry: data from the export promotion arm of the Ministry of Economy (MEPO) shows that 80.2 per cent of all Moldovan wine (excluding fortified wines) is consumed in Russia.
The problem for Moldovan producers is that this battle cannot be won on price, their most powerful weapon. Despite their abiding love affair with vodka, Russians are buying more and more wine, but it is increasingly rare that that wine comes from Moldova, even though its wines remain the cheapest on the market.
Instead, Russia's nouveaux riches are turning to countries such as Chile, Argentina, South Africa, Australia, Spain and France for their wine, swallowing the relatively higher price (on average, RUR20-30 more per bottle) in exchange for a feeling of sophistication and wealth.
"Moldovan wines have a reputation as being popular with low-income consumers, who pay around RUR70-80 ($2.30 -2.60) for a bottle but have no hope of paying any more," Pavel Shapkin, chairman of Russia's National Alcohol Association, told Cee-foodindustry.com. "For a producer from Moldova to sell his wine at, say, RUR200 a bottle, the same as a bottle of Spanish wine, would require a huge improvement in quality," he added.
So while Moldova's wine exports to Russia continue to grow in volume terms, not least because producers have little alternative but to sell their wines there, the country has seen it share of total wine imports drop steadily, despite a 20-25 per cent increase in Moldovan wine exports to Russia, according to MEPO. Moldova's share of the total Russian wine market was 70 per cent in 2000, but last year it fell to 63 per cent and in the first six months of 2004 it dropped again to 60 per cent. According to Shapkin, Moldova's share of Russian wine sales is in fact as low as 50 per cent.
But if investing in quality will be vital in the long term, the short-term aim has to be to revitalise the image of Moldovan wine. This is why Shapkin's National Alcohol Association has joined forces with the Moldovan Wine Exporters' Association and the Moldova Ministry of Agriculture's wine division to establish the new fund and promote the country's viticultural output.
According to Russian press reports, the Moldovan authorities have already contributed $150,000 to the fund, and importers are being asked to do the same, but the deputy director of the wine division at the Ministry of Agriculture, Valerii Tsira, said that the Moldovan government had yet to allocate the cash.
The chairman of the Moldovan Wine Exporters' Association, Georgy Kozub, also confirmed that no money has as yet be provided. "None of the Association's 16 producer-members has given money yet. Our Russian partners have not decided on the size of their contributions either." The exact sums to be paid - and by whom - are in fact to be decided at the Moldova Demonstrates exhibition in Moscow on 3-5 November, he said.
However much money the fund eventually contains, it will be used to finance a new advertising campaign highlighting the rigorous production techniques and quality of Moldovan wine, featuring TV clips, booklets and even scientific research supporting the quality claims. However, the "exact plan of action will only be known after the meeting in Moscow", said Kozub, who stressed, however, that the campaign would not focus solely on the capita but would run throughout the country.
Kozub also believes that the situation is not quite as hopeless as it first appears. "Many Moldovan wineries belong to Russian entrepreneurs, and a large number of Russians still enjoy our wines, so we are not completely at a loss.
"But the situation cannot remain as it is. We need to improve the quality, as well as the image, of our products. And I do not mean just the wines, but also the ingredients and the material used to make them - this is the area where Moldova is being outperformed by other wine-producing countries."
