Georgian wine producers over a barrel
FAO helping wine sector protect appellations, capture new markets
20 July 2006, Rome - Despite a winemaking tradition that dates back several thousand years, Georgia’s greatest liquid asset – today wine is the country’s third biggest export – is at risk, threatened by counterfeiting and the wine sector’s failure to diversify its markets.
Georgian wine exports generated more than US$80 million last year, but fraud continues to plague the country’s wine industry.
"Around nine out of ten bottles of so-called Georgian wines on the international market are counterfeits. Many other countries are using well-known Georgian appellations to sell wines that are in fact not of Georgian origin," says Emmanuel Hidier of FAO’s Investment Centre. “So protecting the country’s appellations is an important issue.”
Fakes range from alcoholic cocktails mixing spirits, colouring and flavours to wines bearing false appellations of origin. The small vineyard areas of some of Georgia’s most popular appellations mean supply often falls short of demand, a scenario ripe for counterfeiters.
Recent efforts by the Government of Georgia to limit wine counterfeiting within Georgia have been relatively successful, according to Hidier, but on foreign markets, the situation is not improving much.
Import ban closes biggest market
To make matters worse, a recent Russian import ban on wine from Georgia has cut the country’s producers off from their biggest market. Prior to the ban, around 80 percent of Georgian wine was exported to Russia.
“Georgia’s wine industry has to broaden its market,” says Frédéric Julia, an international wine expert employed by FAO, who will be heading to Tbilisi this month to explore ways to do just that.
“Identifying new markets is not the challenge,” he adds. “The EU and North America, for example, are large wine markets, but how does Georgia go about stimulating demand for its appellations there?”
What’s in a name?
FAO has been supporting the development of the Georgian wine sector since 2000 when, at the request of the Government, it provided assistance in drafting Georgia's first wine law.
Following the strategy used by other wine-producing countries, the Georgian law instituted an appellation of origin labelling system, which provides details about where the wine comes from, the grapes used in it and how it was produced.
“Now every parcel of land in an appellation has a passport and wine producers must show where they bought the grapes, which in principle allows the origins of the wine to be traced back to the farm,” says Julia.
FAO is working to help streamline the tracing system and fill in the few remaining gaps. For example, although documents are required at almost every stage of wine production, there are no documents required for the transport of wine in bulk or in bottle within Georgia.
A workshop in December 2005, organized by the European Bank for Reconstruction and Development (EBRD) and financed by FAO and Canada, brought together key players in the Georgian wine sector, from government officials to representatives of private industry and the donor community, to discuss how to protect Georgian wine appellations.
“Unlike brands owned by individuals or companies, appellations are the common property of the people of a region,” says Mamuka Meskhi, Assistant FAO Representative in Georgia. “So both the private wine companies, who are the direct victims of counterfeiting and have the money to fight it, and government authorities, who own the wine appellations but lack the resources to defend them, must work together.”
FAO is helping set up a public-private regulatory body, similar to those in other wine-exporting countries, to improve implementation of Georgia’s wine law. FAO will also assist with training of government officials in multilateral and bilateral negotiations, improving traceability of bulk wine and transferring international know-how on protection of appellations.
An FAO food composition and analysis expert will look into the country’s laboratory system for issuing wine analysis certificates.
According to Hidier, the benefits of enforcing the appellation system – in Georgia, the price of grapes doubled – accrue to small farmers and larger producers alike: “If you protect the quality of the appellation, the value of grapes automatically goes up, which means greater incomes for farmers.”
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