The FINANCIAL — After 5 years of an embargo on Georgian wine, Russian sanitary watchdog Rospotrebnadzor says that the main Georgian export products of wine and mineral water may return to the Russian market soon.
“Everything depends on the Georgian producers,” said Gennady Onishchenko, Head of Rospotrebnadzor. It seems however that the Georgian Government is not enthusiastic about supporting wine export to Russia, which is considered the number one political enemy of Georgia.
Unlike Russia’s successful energy, finance and food distribution businesses in Georgia, Georgian export to Russia has been experiencing its worst times.
Import of Georgian wine and Borjomi mineral water in Russia were banned in 2006. The Georgian Government said it was the political decision of the Kremlin aimed at harming the fast developing Georgian economy. Since that time the main Georgian wine producers have managed to find new markets, including Ukraine, Turkey, Iran, China.
Some companies have doubled their sales. One of them is Tbilvino, marketing its products on 25 foreign markets including post soviet countries, Europe, Canada and China.
2,400,000 bottles of wine produced by Tbilvino are expected to be sold in 2011. The company, which was recently named a Golden Brand, reported total sales of 2 million bottles in 2010, and has exceeded the highest sales figure Tbilvino had before the Russian Embargo in 2006.
But even the companies successfully exporting Georgian wine products to world markets realize that the Russian market offers great opportunities for those who decide to make the first step.
“Georgian producers are more than interested in coming back to this market and have worked a lot on quality and new sorts of wine,” Artur Sarkisyan, head of the Union of Russian Sommeliers and Experts, told Moscow News last week.
The Government of Georgia made no comment in response. Even wine producers are keeping silent.
“Seven Georgian wine companies will restart the export of wine to Russia from October 2011,” Kakha Kukava, the leader of Political Movement Free Georgia, told The FINANCIAL. But he refused to give the names of these companies.
Kukava visited Moscow recently. He believes that returning to the Russian Market is important for the Georgian economy. He thinks it is almost impossible to replace the Russian market with other markets or by doubling domestic consumption.
“After closing the Russian market to Georgian goods in 2006, the Georgian economy was in a deplorable condition. Major export positions had fallen; wine and mineral water export had decreased. For example, whereas before the embargo, in 2005, 41.7 litres of wine and 119.5 litres of mineral water were exported, 12.3 litres of wine and 48.2 litres of mineral water were exported in 2010. Correspondingly the main agricultural crops yield has fallen. 227.3 tons of grapes, 98.9 tons of citrus and 7.5 tons of tea were exported in 2007. In 2010 only 120.7 tons of grapes, 52.1 tons of citrus and 3.5 tons of tea were exported. Overall, gross domestic product per capita is significantly lower not only compared to European countries, but also lower than the indicators of the nearest neighbours: Georgia – 4,900 USD; Armenia – 5,700 USD; Azerbaijan – 10,900 USD. Even today, under embargo, the Russian market is a far more important partner than China,” Kukava believes.
The leader of Free Georgia thinks that Georgia can sell products in Russia and follow Pro-Western orientation at the same time. “This can be solved easily, as Western countries have extensive trade relations with Russia themselves. The whole world is trading with Russia. Moreover, it will help Georgia very much to recover trade relations with Russia as America is in favour of free trade relations,” added Kukava.
The Ministries of Agriculture and the Ministry of Economy and Sustainable Development of Georgia are avoiding talk about Georgian wine export to Russia. At first, Head of the Economic Analysis and Policy Department Lali Gogoberidze agreed to talk about this issue, but then she changed her mind. Also, Mikheil Janelidze, head of the Department of Foreign Trade and International Economic Relations refused an interview after receiving the questions from The FINANCIAL. The Ministry of Economy and Sustainable Development explained that the Ministry of Agriculture is responsible for this subject. “We apologize, but this is the domain of the Ministry of Agriculture. We are sorry, but we can’t help you,” said the PR of the Ministry of Economy and Sustainable Development.
Samtrest, (State Department of Vine and Wine), Wine Regulations Division and Wine Association didn’t make any comment about Georgian wine export to Russia. The reason is the same – they need permission from the Ministry of Agriculture.
As for the Ministry of Agriculture, they promised to answer all the questions of The FINANCIAL, but for more than a week there has been no answer from them. Moreover, they have not given permission to other structures and departments to talk about Georgian Wine returning to the Russian market.
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