Uncorking Romania’s wine potential(2)

Plonking a lid on own consumption

“There is no comparison between homemade wine and wine made in a cellar,“ Ghenadie Bobeica, general manager at WineRo, a local startup, tells The Diplomat – Bucharest. Although per capita consumption in Romania is good – 23-24 liters in comparison with 9-10 liters in America, for example – only a small percentage of this is in bottled product form. “We have a large area devoted to self-consumption, but in the coming years we believe we will shift it towards the bottled product. I think that self-consumption will decrease,“ says Cosmin Popescu. Homebrew is still a problem not only for wine producers, but also for the Romanian State, which loses money, and even for consumers, who are drinking products of dubious quality. The practice affects cheap wine producers offering questionable quality in particular. “The feeling that I have, after working in this area for 18 years, is that own consumption has not limited the quality wine market producers. No household will be able to make wine like bottled wine, so we are not targeting the same consumer,” argues Mihaela Tyrel de Poix, general manager at Serve, another startup in the Romanian wine market.

Harvesting high hopes

There are many signs that the wine market has stabilized this year. In addition, the recent grape harvest was good, thanks to the favorable climatic conditions in summer and autumn which allowed the fruit to ripen without much disease or excessive rain, which would have hit both quality and quality, according to the National Organization of Wine. Production this year is predicted to top last year’s output, because thousands of hectares of vineyards have borne fruit for the first time in 2011, conversion of the vineyards.
“I have said many times that this year is a quality one – the accumulation of sugar in grapes will help produce some stronger wines with a higher degree of alcohol. We’ll see next year if this year’s product will be more expensive. In general, elasticity is quite low on wine,” says Popescu. Most wine producers have high hopes for this year’s harvest. But the wine market is not very closely related to that year’s harvest. This year’s harvest may, however, boost the optimism for sales in future years. Only in 2012 or 2013 will it manifest its presence on the market.

A toast to the future

In recent years the wine market has evolved in a good way, according to many producers in the market. Remarkable progress has been made in quality, thanks in part to European money – new cellars were built, old ones were furnished with the latest equipment, and funds were channeled into replanting, which will increase the quality of Romanian wine. “You must be realistic and recognize that the market is the most unpredictable thing. We work in an economic space with various problems. If things remain normal, the market will move towards specialization,“ says the Murfatlar head. In addition, according to him, the coming period will see more players enter the market and bring news of many small new wineries. “I do not foresee the emergence of a huge player in the coming years, while self-consumption will decline. This is what we are hoping,“ says Cosmin Popescu. Although there are visible signs of recovery, producers hope the international situation will not worsen, because this would affect them all. “I estimate that in the coming period the market will shrink. The yield is higher for owners of hybrid vines (individual), which will make the fall greater. Wine should be part of Romanians’ daily basket of goods,” argues Ciprian Rosca.

From plonk to premium

“I tasted several Romanian wines in 1997, and it was hard to find something for my taste, because the local market had been educated in a different way from the European market. I remember the same trend in Germany in the 60s, but things changed in the 80s. And this has happened in Romania, but 30 years later,“ says Baron Jakob Kripp, adding that in recent years the quality of Romanian wine has skyrocketed and a lot of producers have invested heavily in modern technology. The premium market is defined not only by price but by the price-quality ratio. This high-end niche is addressed to a very small percentage of Romanian consumers. The number could rise as people enjoy new experiences and raise their living standards, meaning they taste new wines. “Consumers tried to buy less but of better quality,” advises Ghenadie Bobeica. On the market there is room for new players, especially in the premium segment, and there are many consumers who have still not had the opportunity to taste quality wines. According to wine producers, the natural conditions such as soil and climate are ideal for making premium wines in Romania. Know-how and good oenology training systems are other vital ingredients.

Too many players in the mix

“Romanian wine is changing constantly: new wineries appear, others disappear, there are imports, but all these things are normal in a competitive market and I think they are very beneficial because the customer can choose, compare and settle upon the best product,“ Catalin Grecu, director of marketing at Cotnari, tells The Diplomat – Bucharest. Companies are still entering the market, especially because wine has a very good absorption rate of European funds. All money invested must be found somewhere in the market. The newcomer producers are usually niche operators, focusing on certain categories of products and consumers. But this is a beneficial aspect for the market and for consumers. With a growing number of companies on the market selling products, the quality will increase. “A country with wine potential like Romania’s should have far more small (10-50 ha) and medium (50-150 or 200 ha) producers. The situation has improved considerably over the past three years, but it started from zero,“ says Mihaela Tyrel de Poix.

Romania needs a large number of wine producers – on this all voices are in agreement – but consumption as it stands now is not encouraging for new products, and new producers are making big efforts to distribute their wines, determined efforts which are proving to be of extremely limited use at this time. But the situation will change rapidly, once the market overcomes the current crisis. “I would not discourage any initiative to start new vineyards in the coming years, especially considering the time required to reap the first harvest is at least three years,“ adds the Serve director. Meanwhile, Ciprian Rosca, commercial director at Recas Winery, says that producers who manage 15-80 ha have appeared in the last two years, boosting the quality of the market. He is convinced that in the coming period the wine industry will become fragmented with the emergence of other players at this level. “Currently the wine market is crowded: everyone wants to sell in a limited space and there are enough strong players. But with traditional and new players we have to find a niche in this market. We have some resources and concrete plans in this direction,“ says the Murfatlar chief. One such project is the promotion of Romanian wines in the US, where the firm has a budget of USD 2.5 million. This is being done through six wineries in Romania, using European money. “We are trying to find our identity and a niche in the highly competitive US market,” he concludes.

Vineyard surface in Romania

Year Vineyard surface
(hectares)
2000 247,536
2001 244,431
2002 242,850
2003 233,316
2004 205,381
2005 190,606
2006 190,542
2007 187,629
2008 183,971
2009 184,439
2010 176,991
Source: econtext.ro

Top ten wine producers

Murfatlar Romania
Turnover 2010: EUR 28.3 mil.
Income 2010: EUR 2 mil.
Number of employees: 210
Shareholders: Euroavipo ( Dobronauteanu brothers, Catalin Bucura, Nicolae Mermeze, Gheorghe Zlotea)

Cotnari
Turnover 2010: EUR 20 mil.
Income 2010: EUR 0.5 mil.
Number of employees: 282
Shareholders: employees and management

Jidvei
Turnover 2010: EUR 18.2 mil.
Income 2010: EUR 3 mil.
Number of employees: 286
Shareholders: Textil Promotion, Claudiu Necsulescu

Vincon Vrancea
Turnover 2010: EUR16.8 mil.
Income 2010: EUR 0.9 mil.
Number of employees: 686
Shareholders: Luchi Georgescu

Angelli
Turnover 2010: EUR 12.5 mil.
Income 2010: EUR 1.3 mil.
Number of employees: 117
Shareholders: Henkell&Co.
Casa de Vinuri Zoresti
Turnover 2010: EUR 12.5 mil.
Income 2010: EUR 0.03 mil.
Number of employees: 133
Shareholders: Familia Lepadatu

Cramele Recas
Turnover 2010: EUR11.6 mil.
Income 2010: EUR 2,6 mil.
Number of employees: 67
Shareholders: Philip si Elvira Cox, Gabriel Iova, Ioan Georgiu

Vinexport Trade-Mark
Turnover in 2010: EUR 10.8 mil.
Income 2010: EUR -0,2 mil.
Number of employees: 123
Shareholders: many shareholders

Cramele Halewood
Turnover in 2010: EUR 8,2 mil.
Income 2010: EUR -0,2 mil.
Number of employees: 182
Shareholders: Halewood International (Great Britain)

Domeniile Viticole Tohani
Turnover in 2010: EUR 8,0 mil.
Income 2010: EUR 0.1 mil.
Number of employees: 167
Shareholders: Virgil Mandru, many shareholders