The real story behind Georgian wine
If you thought Georgia was all about small family producers and artisanal winemaking methods, think again.
Georgia’s ancient wine culture is undoubtedly marketing gold, with taglines such as “8,000 vintages”, “The cradle of wine” and “525 indigenous varieties”. Together with the sacred tradition of making wine in giant, buried terracotta vessels (qvevri), this has exalted the country’s artisan winemakers to the status of natural wine shamans. “Wine is born, not made”, they pronounce. And they have become global poster boys (and girls) for all that is authentic, rootsy and raw.
Worldwide exposure seems to be helping sales too. Georgia’s wine exports are booming, with 76.6 million 75cl bottles sold at a value of around USD 170,000,000 in 2017 – a more than ten-fold increase since the chaotic first years of independence in the 1990s (figures: National Wine Agency, Georgia).
So much for the sales pitch. Like most marketing, this romantic tale of clay pots and peasant farmers toiling in the fields is a heavily abridged edit of the full story. The iconic qvevri albeit died out in commercial winemaking during the late 20th century, and to date traditionally made qvevri wines account for perhaps 3% or less of Georgia’s total wine production.
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Qvevris are clearly not dead, even if they are buried.
What has actually driven Georgia’s winemaking resurgence in the post-communist world? The truth is far stranger, if less beautiful than a qvevri. It’s a tale of Soviet destruction, of near total destitution giving way to ambitious entrepreneurs and industrialists, shaped more by politics than culture.
It’s also a tale of mass produced semi-sweet wine, made to satisfy a thirsty Russian market. This ever popular product, epitomised by wines such as Alazani Valley (a generic style, even though it sounds like a producer) or Kindzmarauli, represents around 50% of the country’s total output. And Russia is still the biggest customer, lapping up about 60% of Georgia’s total wine exports by volume.
The modern wine industry emerged out of a scorched earth scenario after the break up of the USSR. It then had to weather years of civil war, followed by Russia’s devastating embargo on all Georgian wine between 2006 – 2013. To properly understand this phoenix like recovery from Soviet ashes, it’s necessary to look back to the seven decades when Georgia was subsumed into the USSR.
As the most important, most loved wine producing entity in the Russian hemisphere, Soviet Georgia had a thriving wine industry - but the stock-in-trade had little to do with artisan ethics or natural wines fermented in qvevris. Under Soviet rule, Georgia’s grape growers delivered their harvest (mostly of white Rkatsiteli or red Saperavi) to one of hundreds of “primary wineries”. These wine factories processed the grapes and turned them into “wine materials” - essentially, bulk wine. This was then delivered to a designated “secondary winery”, often located in Tbilisi or another big city. Here, the bulk product was processed, bottled and labelled, before being shipped to its designated destination.
The winery’s name didn’t appear on the label, as all Georgian wine was bottled under the monopoly “Samtrest” brand. Differentiation was achieved through style or “appellation”. Denominated areas such as Kindzmarauli, Khvanchkara or Tsinandali were popularised more as sub-brands, each with a regulated stylistic signature. Khvanchkara – reputedly Stalin’s favourite - was naturally semi-sweet, Mukuzani was oak aged, Tsinandali was a dry blend of Rkatsiteli and Mstvane.
The objective of this highly distributed system was quantity, not quality. Wineries such as Tbilvino (based in the capital Tbilisi) produced as many as 18 million bottles a year in their heyday. But after the collapse of the USSR in 1991, these giant wineries fell silent, stripped of their order books, with no sales contacts and no marketable brand identity.
Georgia’s minister of agriculture Levan Davitashvili, who worked at Schuchmann winery between 2009 – 2012, recalls that every part of the supply chain was decimated after 1991: “It was a very difficult period, especially for agriculture. Most of the land was [re]distributed to farmers. People switched to growing cheap sustenance crops just to feed their animals. No-one cared about commerce, so the value chain was broken – including wine.”
This partly explains the extraordinary destruction of Georgia’s vineyards. According to Irakli Cholobargia, head of marketing and PR at the National Wine Agency (the successor to Samtrest), Georgia had around 150,000 hectares of vineyards during the Soviet era. By 2006, only 36,000 remained. “After Soviet collapse, many of the farmers got rid of their vineyards and planted watermelons or whatever. It was a market economy driven thing” Cholobargia explains. In fact, both vineyards and the rarer grape varieties had been disappearing ever since the Soviets took control in the 1920s. Many of Georgia’s oldest wine producing regions, such as Guria, Abkhazia and Adjara were zoned for wheat or potatoes. Vines were pulled up, in some cases forever.
Those vineyards that survived communism were often in bad shape, as Co-founder of Telavi Wine Cellar (AKA Marani) Zurab Ramazashvili recalls: “We started by renting vineyards from the government, but their condition was devastated by civil war and generally very poor. Old vines, non-standard trellising systems, missing plants”. Furthermore, they were not necessarily planted with the stated varieties. Hybrids were popular during Soviet times, while many indigenous varieties were grubbed up in favour of the ubiquitous Saperavi and Rkatsiteli.
To exacerbate matters, Soviet viticultural expertise didn’t extend much further than systemic use of herbicides and fungicides. Winemaker Eko Glonti, a medical doctor in a previous life, has been working with growers to restore these chemically-dependent vineyards. He notes many issues in the soils, such as compaction and calcium deficiency. “There’s no macrobiology there”, he says with regard to a plot in Kakheti, “There is nothing to help the roots consume minerals, and after the rain the water just runs away.”
Post-communism, failing, bankrupt wineries were snapped up by the private sector, as entrepreneurs realised that Russia was still thirsty for Georgian wine. A string of JSCs (Joint Stock Companies) sprang up in the late 1990s, GWS (Georgian Wines & Spirits), Tbilvino, Telavi Wine Cellar and Teliani Valley amongst them.
The names and company structures might have changed, but the product and its intended market largely hadn’t. Wineries had the legacy of old Soviet equipment, and most owned not even a single hectare of vineyards. Corruption was rife, right up to government level and there was more than a grain of truth in Russia’s accusations about adulterated or fake wine, a problem which has take decades to stamp out.
Brothers Zura and Giorgi Margvelashvili were shareholders in Tbilvino, post 1991. Their story is typical. Zura returned from a winemaking internship in California, inspired to work with wine. The brothers invested the family savings in a share buyout, taking control of Tbilvino in 1998. The brothers would not confirm the price they paid - but it doesn't take a genius to figure out that it was probably a bargain.
As Giorgi recalls “Tbilvino was not in very good shape in 1998 – it had close to zero production. Contact with former suppliers and customers was lost.” So what had the brothers got for their money? Tbilvino didn’t own any vineyards, but it did boast a winery. Occupying a vast five hectare site in Tbilisi, the facility was in fairly good shape, albeit with outdated technology. And there was a bonus - three million litres of bulk wine lay in the winery’s cellars.
A cohort of international wine experts were summoned to assess these “wine materials”. The advice was brutal - “It’s rubbish, you should not bottle this”. Still, it was a lifeline for the fledging business, as Giorgi recalls “We managed to sell the wine in bulk, and paid off a few debts. With the remaining cash we went and bought grapes in Kakheti in 1999, and made our first vintage”.
The brothers built Tbilvino up from this unpromising start, with a radically different approach to its Soviet function of blindly accepting and bottling bulk wine. The new strategy meant getting involved with the many different growers who supplied the grapes, taking an active part in the harvest and upgrading the quality of the wine.
In 2006, the company lost around 52% of its business when the Russian embargo kicked in. It turned out to be a blessing in disguise. Most of the Tbilisi site was sold off to raise money, and a new, smaller, quality-optimised winery was built. By 2008, Tbilvino had recovered, stronger than ever. Today the company produces around 4 million bottles a year and exports to 30 countries. Surely this “seat of the pants” first decade was stressful, but Giorgi is disarming: “We were quite young, we didn’t have much experience. We took all the challenges as normal occurrences. We didn’t have much to lose, we didn’t come into this business with a lot of money. It was challenging but it was also fun.”
Many of Georgia’s major wine producers recognise the importance of the embargo as a vital turning point. Tea Kikvadze, head of marketing at Teliani Valley JSC, confirms: “With Russia you could sell everything you had. But with Europe and other markets, you needed quality wine. The embargo was bad for companies, but it was good for Georgian winemaking, it forced winemakers to care about the quality. It has really changed a lot.”
The embargo also forced producers to aggressively court new markets such as China, Poland and the UK. Since 2013, Russia is back in the fray, but its absolute dominance of Georgia’s wine exports has reduced, down from 90% to 60%
Sales channels look healthy, but unresolved challenges with wine production persist. The vast majority of vineyards are parcellated up amongst small farmers, making it challenging to control quality. Major wineries like Telavi Wine Cellar and Tbilvino are planting hundreds of hectares, but must still rely on a network of small growers to supply 50% or more of their grapes.
Ramazashvili is the first to admit that “We cannot really control farmer’s grape growing techniques”, but as Tbilvino owns 'only' 165 hectares of young vineyards, they are still heavily reliant on growers. There’s an additional challenge now that grape growers realise they can make better money by making their own “artisan” wines , making vineyards more expensive and difficult to buy. Eko Glonti relates his recent experience securing a five hectare plot in Kakheti - “It took five years of negotiating with around 35 separate owners!”. Almost none of the newer artisan producers setting up in the last few years owns enough vines to fulfil their order books or ambitions - the Italian idea of the family estate, with a few precious hectares of well tended vines passed down through the generations is a distant dream in the post-Soviet world.
Still, the political climate is definitely on the side of grape growers and wineries. There’s been an acceleration in regulation and development funding for the wine industry since the regime change in 2012, when the left wing Georgian Dream coalition took power. “To give you an idea of how big this change was,” says Levan Davitashvili “The total budget for agriculture was ten times less, before 2012”. The ministry of agriculture has also clearly realised the symbolic importance and economic potential of qvevri wines – from the 2018 vintage, tradition qvevri wines are recognised and strictly defined in Georgia’s wine law. The preferred term for these wines, when made with white grapes is "Amber wine".
Although Marani's qvevri range (Satrapezo) was only launched in 2004, the winery has a surprisingly long history in the niche, as Ramazashvili explains: "Our winery was specialised in qvevri wine production during the Soviet period. We had more than half a hectare of qvevris in a half-underground cellar, but the state decided in the 1980s that qvevri production was too costly. They decided to remove most of the qvevris and sell them. When we arrived there were still 40 qvevris left, but there was no soil anymore!". He's proud that the Satrapezo range is now "overbooked" and intends to scale production up to around 100,000 bottles a year.
All of Georgia’s largest producers are following a similar path based on market demand - Schuchmann’s Vinoterra range will exceed 300,000 bottles in 2018, making it the biggest producer of traditional qvevri wines in Georgia (and hence effectively the world). So qvevris are clearly not dead, even if they are buried. Perhaps their production volumes will never reach the same saturation point as the marketing, but nevertheless the next decade in Georgia’s winemaking history looks set to be every bit as fascinating as the previous 8,000 years.
A shorter version of this article was published in Meininger Wine Business International Issue 4, 2017.