4/07 WINE BUSINESS

R E G I O N A L A N A LY S I S

TACKLING THE BIG BEAR

While Moldova has the potential to produce wines of flavour and intensity, its tiny industry has been beset by political problems. Robert Joseph takes a closer look at whats next for the countrys wine producers.
ne of the worlds least-known wine producing counSouthcorp Europe recalls. we were making good wine, but we tries, Moldova is one of 15 independent states that were pulled down by the low price image of other wines from emerged from the collapse of the Soviet Union. It is the region. probably unique in exporting 99% of its wine. For much Southcorps competitor also floundered and outside wine of the 20th century, most of that went to the Soviet Union. companies unsurprisingly lost attention for Moldova as a potenAlthough it was sometimes swapped on a litre-for-litre basis tial supplier of wines to the west. In 2004, less than 2.5% of the with petrol in the late 1980s, Gorbachovs famous or, in volume was exported beyond Russia and the Commonwealth of Eastern Europe, infamous efforts to combat alcoholism Independent States (CIS). Under half of that went beyond the almost crippled the industry. So, even before Moldova gained old Iron Curtain, as Poland, Lithuania and Romania remained independence in 1991, there were hopes loyal customers. 1 Benchmark Data www.md that western markets might prove as Decline and contraction Inhabitants: 4.2 million fruitful as they had already done for In the 1990s, Moldova went through Bulgaria, Hungary and Romania. GDP: $ 2.92 billion a dismal period. Its economy shrank by In 1988, a visit for British buyers, Currency: Leu 60%, rural illiteracy tripled and life and this writer, led to the export to the expectancy dropped by five years, partUnited Kingdom of small batches of Per capita wine consumption: 22.5 (1997); 13.6 (2001)* ly as a result of soaring rates of diseases mature red wine from Purcar, which Total wine consumption: 260,000 hectolitres like typhus and tuberculosis. The wine attracted favourable critical comment. A industry also suffered, as elsewhere in few years later, Southcorp the giant Legal drinking age: 18 this part of Eastern Europe, from the Australian company, believed in the Vineyard area: 147,000 hectares way in which land was privatised. potential of Moldovan wine sufficiently Unlike some other regions, Moldova had to launch a joint venture with the Total Production: 2.52 million hectolitres (2005) a system of collective farms, or kolkhoz, Hincesti cooperative in which the New Total exports: 2.06 million hectolitres (2005) which allowed villagers houses and World company initially exchanged small plots of land on which they could equipment (in the shape of a new bot* Note that 1 million Moldovans now live overseas farm vines, other crops and livestock. tling line) and expertise (from the flying After 1991, instead of returning land to winemaker Hugh Ryman) for wine. The its original owners or their heirs, project almost foundered because a rival Moldovan land was redistributed to the firm, employing another flying winecollective members who were given maker, Jacques Lurton, was under the unworkable and tiny non-contiguous impression that it had secured an excluplots plus shares of the collective sivity agreement for all of Moldovas winery and its fittings. There were widenon-Russia-bound export wines. spread stories of windows, doors and In the event, it was established that pumps being removed by the new owners, who sold them to the government official (still involved in the Moldovan wine make up for the income they were no longer earning. industry) had no prerogative to make any such exclusive deal The low point of recent Moldovan history was in 2001, just and over 150,000 cases of joint venture Hincesti wines were before the election of a new communist government. Since produced and exported. Initially these had to leave Moldova then, thanks partly to grants from richer countries, the picture under armed guard to protect them from potential interference, has looked a little rosier, with GDP growing from nearly $1.3 to but they made it successfully to the UK where they were sold $2.9 billion (2.1b) in 2006. Moldova is now a little healthier under the Hincesti label, and to the United States where they economically than it was when the Iron Curtain came down, were branded as Hickory Ridge. After three vintages, however, though it remains one of Europes poorest countries. According the Australians decided the combination of quality control to the World Bank, 2005 GDP for each of the 4.6 million inhabissues and the difficulty of selling Eastern European wine at itants was just $811.50, with an average monthly salary of the target price of 3.99 in the UK and under $5 in the US $105, less than a third of the $324 earned in neighbouring made the venture unappealing. As Michael Paul, then head of

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S O U T H O L D OC A M AFRI V

Romania. Around a million Moldovans a quarter of the workforce - live outside the country now, and contribute to their families livelihood at home, but Moldova has not yet created the kind of middle class consumer economy that is seen elsewhere in the region. The countrys first hypermarket only opened recently in the capital, Chisinau, a full decade after the citizens of Bucharest were first introduced to this aspect of western capitalism. Sales of wine to Russia were still crucial to the economy.

COMMENT

Moldova can make wines that will

Angela Muir MW

keep and improve...

Gorbachev Plus
This was the background to what one Moldovan ironically called Gorbachev Plus, the decision by Vladimir Putin to ban Moldovan and Georgian wine imports ostensibly on grounds of their dangers to health, but in reality in an effort to force the governments of these republics to pay increased prices for Russian petrol. Although the ban on Moldovan wine was lifted early in 2007 following a failure to support any of the accusations against its producers, it seems that Russian officials are still being rather more obstructive than their presidents pronouncements might lead one to expect. The impact of Russias bullying behaviour is all too evident from 2006 export statistics. In that year, Russia bought only a quarter of the wine and brandy it had been shipping and total exports amounted to $187m, compared to 2004s high of $411m. The volume of exports to non CIS went up to 34% that year, but the value of those exports was, at $0.65 per litre, low compared to the dollar a litre traditionally commanded by these products. Another weakness of the industry is the prevalence Vitis labrusca vines, whose wines, though internationally unacceptable, traditionally suited the Russian market. A large question mark hangs over Moldovas ability to rebuild its Russian market. According to Dinara Smardakova, import buyer of Dionis, a company that produces wine in Moldova, Georgia and other countries, while many Russian consumers will have discounted government-fed media stories about the dangers of drinking Moldovan wine, perhaps as many as 25% may still believe it. And, though Ms Smardakova doesnt say so, the fact that similar accusations about Georgian wine received independent support may lead some people to imagine that the presence of smoke may indicate a smouldering fire. Even more significant has been the speed at which wine producers in other countries have moved to fill the vacuum created by the absence of Moldovan and Georgian wines. Russias increasingly sophisticated wine drinkers are being treated to an ever broader range of wines from countries like Greece, Portugal, Chile and Australia. Spain is now the largest single volume supplier to Russia. Precisely the same phenomenon is to be seen elsewhere in Moldovas traditional Eastern European markets, some of which are part of the European Community. This is the unprepossessing context against which a group of Moldovas biggest and most dynamic independent wine producers formed a promotional Wine Guild along the lines of Portugals vinous G7. So far, the Guild has exhibited at events such as the London International Wine Trade Fair and

Its much easier to nd good, bright, lively avours with some real concentration and balance in southern Moldova than it is in most of Romania or even Bulgaria. But Moldovas wine producers need to pay attention to not losing the diversity of avour potential currently present in their old vineyards. Further, as pickers are becoming scarcer, they must plant to mechanise the vineyards more effectively. Too many grapes are often picked unripe for logistical reasons. Growers need to be re-educated to gain a greater understanding of pruning and training. Far too many seem to have lost touch with this aspect of viticulture. Young, up-andcoming, technical people - especially cellar technicians should be allowed to travel to work in or at least visit well run successful foreign cellars as well as tastings and wine fairs. Far too often overseas technical visits are restricted to more privileged senior management who are less well placed to make practical use of the lessons that are to be learned by these trips. If Moldova is to produce truly excellent wines, the producers will have to look more closely at exactly where to plant for premium grape production. It has been established that Moldova can make wines that will keep and improve, but we have no idea how much of the land or, with few exceptions, which bits, really can produce world-class long-lived wines. Angela Muir MW has worked for several years as a wine consultant in Moldova and is now largely responsible for Firebird, the countrys first successful commercial modern export brand. Vinexpo. Reactions to the wines were mixed, with the age of some of the white wines attracting coment, along with the need need to adapt labelling to export markets. While opinion was mixed about the export potential of traditional grape varieties, there were positive comments from buyers such as Nick Room of the British retail chain Waitrose, which has sold Moldovan wine under the Firebird label for two years. The range was created with guidance from British consultant Angela Muir, who now has better knowledge of the Moldovan wine industry than any other outsider. Room said the 2006 Firebird Merlot ros was a delight and shows just what potential there is in the eastern block. He was also impressed by the 2006 Taking Root Bastardo Cabernet, produced by the giant Acorex in conjunction with UK importers PLB. Modern wines like this and the ISO-standards to which the top producers now aspire, should help Moldova to build a market beyond Russia. But the I size of that market remains to be seen. 37

4/07 WINE BUSINESS