Tbilvino sold 2,000,000 bottles in 2010, beating pre-Russian embargo figures
The FINANCIAL -- 2,400,000 bottles of wine produced by Tbilvino, leading wine producer company in Georgia, are expected to be sold in 2011. The company, which was recently named a Golden Brand, has reported total sales of 2 million bottles in 2010, and has exceeded the highest sales figure Tbilvino had before the Russian Embargo in 2006.
JSC Tbilvino’s establishment dates back to 1962 and later in 1999 the company was completely restructured. Currently Tbilvino is the number one wine exporter in Georgia, with 93% of total production realization outside the country. The company is operating in 25 countries of the world. Tbilvino recently added Belgium, Sweden, Finland, China, Singapore and Cyprus to its markets.
“We have ongoing negotiations with India to bring Tbilvino over there. Moreover, we intend to add importers in Austria, Poland and Germany,” said George Margvelashvili, President of JSC Tbilvino.
The year 2010 was quite successful for the company. The company increased total realization by 40% with the major share in export, as for the local market sales increased by 15%. What’s more Tbilvino is among the top three most sold trademark wines in Georgia.
JSC Tbilvino currently produces more than 60 different wines under four trademarks: Tbilvino, Georgian Valleys, Special Reserves and Iveriuli. “In Georgia the most popular wine is Saperavi followed by Tsinandali. In export countries, out of dry white wines Tsinandali has high sales, and out of dry reds - Saperavi. However in terms of quantity Alazani Valley sales exceed both, white and red medium sweet wine, which are mostly popular in post soviet countries,” Margvelashvili said.
Tbilvino introduced three new products to the market in 2011 being produced from the 2010 year harvest. The first wine is under the name Kvevris and is prepared by old traditions of Kakheti. Moreover Tbilvino offered Saperavi Rose and Cabernet Saperavi, a bland of 85% Cabernet and 15% Saperavi.
Q. What are the major challenges the company is facing in 2011?
A. There are many challenges as Tbilvino is operating in different markets. At the beginning of the year, we set our goals and strategies for each market. There are markets where we are taking our first steps as well as markets where we have been selling wine for a long time already and where we are trying to sustain brand awareness and our market share. If one trademark is popular in the country then we try to offer another also.
Q. What will company development, business and marketing strategies for 2011 entail?
A. We are mainly oriented on export in 2010 and the major strategy is to increase export sales. Currently we export to 25 countries and would like to sustain our presence there and to even add other countries. Moreover, together with our foreign partners we intend to offer novelty products to the market.
Q. The year 2005 was the most important in Tbilvino’s history when company sales reached 1.5 million bottles. However the sales volume decreased in the following years. Company sales in 2008 were 1,241,477 bottles and in 2009 - 1,381,405. What were these changes in sales dynamics governed by?
A. This was the well-known event in the year 2006 when Russia announced an embargo on Georgian produce. Out of 1.5 million bottles approximately 52% of sales were from Russia. After the announcement of the embargo we lost most of our share. However since 2007 we have shown increased dynamics in realization and complete rehabilitation in sales. As for 2010 company sales reached 2 million bottles and since 2009 we are the first large-scale Georgian wine exporter company.
Q. Georgian wine producers are mainly focused on exporting to the Ukrainian market. However the example of the Russian Embargo showed that the dependence on one market provides a high threat to sales. What are the strategies Tbilvino is addressing for business diversification?
A. Tbilvino is a maximally diversified company operating in 25 different markets. For us Ukraine is the second biggest market holding an 18% share in total company sales. The first and most major market for us is Kazakhstan.
In general, 75% of total export sales come from Kazakhstan, Ukraine , Belarus, Lithuania and Latvia. The rest of the countries are Poland, Estonia, Azerbaijan, Uzbekistan, Canada, Holland, Finland, Ireland, Germany, Great Britain, Cyprus, China, Singapore, France, the United Arab Emirates, Belgium and Austria.
Q. What are the marketing strategies the company is addressing for brand popularization in different markets?
A. Tbilvino has different approaches from market to market. In traditional markets where we have high brand awareness and settled ground, the marketing strategies are directly aimed at sale stimulation. In those markets where Georgian wine is not consumed often we promote Georgian wine as a category, as in western countries, America and Asia people pay more attention to the country of origin rather than trademark. In those countries, we present Georgia, its traditions and culture, micro zones and production technology.
Q. The presidents of the German and England Wine Associations in interviews with The FINANCAL mentioned that the share of Georgian wine in the European market is not enough to create its own position. In your opinion, on which segment should Georgian wine producers focus to create their own niche?
A. Great Britain and Germany are two of the largest scale wine importer countries in Europe. Georgia physically cannot produce the volume of production to satisfy the demand of those countries. The second case arises - does Georgia really need to have such high demand? This should be seen as an advantage of Georgia. We are more or less constrained in vineyards and we can form a small niche in each market.
If we trust the statistics, within the last 15 years, the year 2005 was most successful for Georgian wine makers when the company exported 41 million litres. This was the maximum capacity Georgia could produce. If we look to the German market, the country imports 1,455 million litres of wine annually, and out of that 85% is sold in supermarket chains. While the remaining 15% is sold in on-trade market and specialized stores for middle and high income segments. As for the UK, the country imports 1,160 million litres of wine and 70% is sold in supermarkets, 16% in restaurants and cafes and 14% in specialized stores.
There is greater demand in the world for wine than Georgia can produce. Moreover, we have quite interesting grape variety and landscape to produce high quality wines. We have seen increased interest in Georgian wine especially during the last 4 years.
”Georgian wine should be for middle and upper middle price segments.”
Georgian wine should be for middle and upper middle price segments. Georgian wine will never be entry level wine, for sale in large supermarkets. Germany and the UK are the biggest importer countries and it would be difficult to gain floor on those markets. However, in the case of finding a niche market, Georgia should not have a problem with realizing 40 million litres of wine in log term perspective.
Q. What are the major obstacles Georgian wine producers are facing in international markets?
A. Low awareness and high competition are major obstacles for Georgian wine producers. Moreover there is the case of importers. The majority of importers have the desire to sell high public-awareness products in large quantities at competitive prices. There are fewer importers who observe long-term perspectives and invest in Georgian wine and wait while the company gains floor and public awareness. This is the challenge - that brand awareness is low in new markets where we are trying to settle down.
In traditional markets there is fierce competition, we have public awareness but with the older generation. There we have to assure youngsters that our quality is no less than other types of wines offered on the same price segment shelves.
“Low awareness and high competition are major obstacles for Georgian wine producers.”
Q. Which markets are usually most difficult to enter?
A. Commonly the most difficult markets to enter are those with a government monopoly like Canada, Finland, Norway and Sweden. There the government bureaucracy decides which types of wines can be imported. Firstly the state announces a tender, companies should participate in the tender and you never know whether you will win the tender or not. Luckily, for several years already we have been winning tenders in Canada, moreover we also won tenders in Sweden and Finland last year.
“The most difficult markets to enter are those with a government monopoly like Canada, Finland, Norway and Sweden.”
However, a difficult market which requires a lot of effort and the outcome is still low is Great Britain. This is a country with big traditions of wine consumption and import. Georgia has quite a small share there, however I believe a niche market could be found there.
Q. You recently entered the Chinese market, how easy was it to start operations in China?
A. It was not easy to enter the Chinese market as the country is far away and moreover we lack information about them. Despite some objective difficulties, the Chinese market has huge potential. Wine is not a popular alcoholic drink in China and only now is there a growing tendency in wine drinking. If in Britain 20 litres of wine is consumed per individual, in China the number is a litre, on the other hand the population of China is 1.5 billion and consumption is consequently higher. As in China individuals consume less, they are less loyal to concrete trademarks, countries or regions and welcome novelties. Consequently if you try to market Georgian wine as a particular brand, it may not be very efficient, what’s most important is to provide good quality, tasty wine at a good price and well offered.
Q. In your opinion, which country’s wines are the direct competitors of Georgian wine in international markets?
A. The competitors of Georgian wine are all wines which fall in the same price range category. In those segments one can observe traditional wine producer countries like France, Italy, Spain, Germany as well as new winemaker countries like Australia, Chile, Argentina, and South Africa.
However I believe that Georgia falls in to a different category; we are neither a traditional nor a new winemaker country but an ancient country when it comes to producing wine.
Q. As for the year 2009, you were awarded 14 medals in nine world famous awards. What do you address this success to?
A. For us as well as for our partner companies this is one of the providence of high quality wine. Since 2006 we have been actively engaged in different international competitions. The most important competitions are held in Great Britain like the International Wine Spirit Competition and Decanter Awards. In 2010 we were awarded 10 medals in Great Britain, Germany and Poland.
Q. How has the attitude of Georgians changed towards wine consumption during recent years?
A. For Georgians wine is an important attribute. However we have the strong wish for society to be more informed about Georgian wine types, regions, and variety of grape. We are trying to provide information on wine to our customers by all communication means.
The consumption of bottled wine increases from year to year. Bottled wine shows the maximum of its features as it is prepared by following all technological processes.
Q. What is the total capacity of vineyards Tbilvino has and what is the breed of wine you produce?
A. We work in Kakheti as well as in Western Georgia Racha-Lechkhumi and purchase grapes from farmers. In Kakheti we produce Rkatsiteli, Saperavi and Mtsvane mainly and last year started to purchase Cabernet. In Western Georgia we purchase Tsolikauri, Ojaleshi, Aleksandouli and Mukuretuli.