#5-The Future of Romanian Wine in Export Markets

Afin de valider mon Wset Diploma, j’ai du écrire un essai sur ma vision du futur des vins roumains à l’export.

Il s’agit d’un SWOT qui est en fait une analyse stratégique où l’on répertorie les forces, faiblesses, opportunités et menaces dans un domaine d’activité, en l’occurence ici un pays. Un essai qui mêle géographie, politique, histoire, économie et vins bien sur. Au fil de mes recherches mais aussi à force de discuter avec Edgar Brutler, j’ai découvert un pays fascinant avec une histoire tumultueuse et complexe.

Vous découvrirez par exemple que le pays est le sixième producteur de vins en Europe, planté à plus de 50% de cépages hybrides (qui ne sont interdits dans les vins en appellation et à l’export) qu’il y a 845 692 cultivateurs de raisins et seulement 1350 qui possèdent plus de 5 Hectares et qu’Edgar Brutler fait parti des 0,18% qui travaille ses vignes sans pesticides ni autres produits de synthèse.

Finalement, il fallait donner quelques conseils à une "boutique winery” comme disent nos amis anglais pour faire connaître ses vins à l’étranger. Mon point de vue s’inspire du travail de l’ami Edgar. Il réalise des vins magnifiques, qui sortent des sentiers battus dans son village de Beltiug, situé proche de la frontière hongroise.

Le Wset est un programme uniquement donné en anglais, j’ai donc laissé le texte dans sa version originale non traduite.

Vous avez aussi toutes les références en bas du texte si vous êtes intéressés, bonne lecture et n’hésitez pas à laisser un commentaire.

The Future of Romanian Wine in Export Markets.

Overview of wine production in Romania

Since 1927, Romania has been member of the International Organization of Vine and Wine (OIV). The country ranks sixth in production of wine across the entire EU and “among the first 15 countries in the world with regards to area under vine” (Apev Romania, 2018). In 2018, the total area under vine was 182, 6 thousand hectares (Apev Romania, 2018). In 2016, the wine market value reached 218 million euros, with 25 producers controlling 45% to 49% of the total wine market in Romania. Wine production mostly focused on the quantity of wines commercialized while respecting legislation regarding standard quality.

Historically small wineries and vine growers have sold their products in bulk to larger wineries. This continues to happen today, as smaller wineries lack the funding, expertise and technology for certification of their wines as PDO or PGI which would allow them to be successful independently.

In 2014, there were 332 hectares of vine certified as organic, representing just 0.18% of the Romania’s vineyard surface, leaving a large market of organic wine unexplored (Agrosynergie, 2018, p.2- 3). In 2018, the wine production reached a level of 5,088.2 thousand hectoliters (Apev Romania, 2018).

Throughout this paper a SWOT analysis will be completed based on the Romanian wine export market, as well as recommendations to boutique wineries when entering the Romanian export market.

(Source: Apev Romania, 2018)

Strengths

Romania has a long history of viticulture. “ The region known today as Dobregea, on the Black Sea was settled by the Ancient Greeks in the 7th century BC and they may have introduced viticulture” (Robinson, J., 2017, p.621).

Romania has eight well-defined zones, all with different climatic or topographical characteristics. The diversity of zones is undeniable in explaining the country’s ability in growing grapes.

Romania also has a system of laws in place to protect the authenticity of the area in which the wine is produced. According to ONVPV (National Office of Vine and Wine products) report, in 2017, there are currently thirty-four PDO (Protected Designation of Origin) areas in Romania also known as DOC (Denumire de Origine Controlata) and eleven PGI (Protected Geographical Indication).

These laws allow Romanian wine to follow the same regulations as the rest of Europe, ensuring that all PDO wines are made from Vitis Vinifera or are crossed with other Vitis species. (Robinson J., 2015, p.622). In providing regions with protected status this allows the wines to gain an identity and thus elevate their status through recognizable characteristics of the region and terroir.

There are many indigenous grape varieties in Romania. Among them, the two most planted are Feteasca regala, Feteasca alba. Both grapes originate from Moldavia and Transylvania (Robinson J., Harding J., Vouillamoz J., 2012, p.347-349), and have great aptitude in terms of aromatics and quality to produce world-class wines. These grapes represent authentic Romanian viticulture aiding in creating an identity for the country’s wine export market.

(Source: Agrosynergie, 2018)

The country also has all of the tools and the infrastructure needed to educate skilled labor in Agriculture and Viticulture sciences at the University of Agricultural Science and Veterinary Medicine in Cluj-Napoca, founded in 1869. Moreover, there is a WSET branch in Cluj-Napoca providing further internationally recognized education to sommeliers and wine connoisseurs.

In addition, since Romania joined the EU in 2007 there has been a large move of modernization and funding through the SAPARD program in both wineries and vineyards. The Romanian wine industry received “€210 million between 2007 and 2013 through an EU-funded national support program. Further funding continued to be available to the tune of €47.7 million per year until 2018” (Gilby C., 2018, p.151).

Much of this funding was used for promotion of wines, geographical indications, remodeling and planting of vineyards, harvest insurance and winery equipment. “Within the last five years, a number of high qualities, small private estates appeared, many with EU subsidies (Gilby C., 2018, p.151).

The investments were evident in the vineyards as well, with the replanting of resistant vines being both indigenous and of the Vitis species. Old vineyards were brought back to life with the planting of higher quality vines (Agrosynergie, 2018, p.13-14).

The country’s wine export market at present represents 30 million euros. Romanian wines being most present in the UK, Germany, Netherlands, China and Spain (Apev Romania, 2018). This presence allows the country to have a great exportation base to develop.

Weaknesses

Romania has multiple weaknesses in terms of its foreign export wine market due mainly to a succession of political choices, leading to the communism era and further carried on by the Dictator Nicolae Ceausescu. One of these weaknesses is the effect of communism on the quality of wine, “semi-dry and semi-sweet wines were common because the sweetness could be used to hide faults” (Gilby C., 2018, p.137). After 1949, under communist rule, “all wine was processed through state-owned Vinalcool plants and satellite wineries” (Gilby, C., 2018, p.137). Each region had its own processing plant and identity which later served in creating regional brands.

With the industrialization of agriculture in the 1960s, the Romanian wine market focused on high yields, leaving behind indigenous grapes to focus on quantity vs. quality, expanding their wine market into fellow communist countries such as; the USSR, East Germany and Czechoslovakia, as well as their national market. “The Romanian wine industry under communism was never really set up as an export industry and foreign trade in Romania was a state monopoly where direct export by producers was not allowed” (Gilby, C., 2018, p.138, 145). In 1990, the land was given back to the former owners, resulting in 180 thousand hectares of vineyard being returned in plots of 0.1 hectares or less.

Currently there are 518,050 growers owning 0.1 hectares or less, leaving the country in a fragmented state (Gilby, C.,2018, p.333).

(Source: Gilby, C.,2018, p.333)

Nowadays, the reality of Romanian wine is, “about 70% of sales are low-medium shelf prices of €3 to €5 in countries with no excise tax. The UK and Germany take 27% and 11% of exports respectively and 90% of the markets is low-priced wines” (Meininger’s Wine Business International, 2015). The prestigious Romanian wine market is in Canada, Scandinavia, Japan and China, however, the volume of export is usually quite small (Meininger’s Wine Business International, 2015).

Grape varieties planted post Phylloxera in 1889 may also be considered as a weakness. Romania planted cheap American hybrid vines, to replenish their devastated vineyards; however, hybrid vines are not permitted for commercial production of wine in the EU. Seeing as the planting of hybrids still represents 50% of Romanian vineyards (85454 ha), half of the vineyards are neither eligible for EU wine export nor eligible for PDO/PGI status (Agrosynergie, 2018, p.1).

Due to the wineries believing the following grapes to be prestigious, international grapes have also been planted, such as Merlot, Riesling, Sauvignon Blanc and Cabernet Sauvignon, however, the vines were not always suitable to the terroir in ways the indigenous grapes are (Gilby, C., 2018, p.152).

Romania also struggles in retaining skilled workforce, seeing as there are major salary gaps between European countries. In 2016, Eurostat found that the minimum monthly wage in Romania was €277, in comparison to Luxembourg, which was €1,923 monthly wage. Romanian workers also struggle with heavy taxation, due to inefficient public services and lack of infrastructure. In 2015 taxes reached 41.8% (Stoian,M., Lădaru,G.R., Marin F., 2017, p.906). Minimum wage in Romania also does not consider higher education, thus giving employees zero incentive to stay in the country.

According to the Unemployment and the Migration of the Romanian Labour Force, Causes and Effects, 2017, “Poverty is the leading cause for migration. Therefore, many Romanian workers take the opportunity to work throughout Europe seeing as they may complete 8 multiple harvests due to different climates and be paid substantially more” (Gilby, C., 2018, p.156).

Opportunities

Romania has all the tools to improve and invigorate its image internationally. In order to distance themselves from the market of cheap low-quality wines, the subsidies received from the EU must be used differently. The country could dedicate part of the subsidies into research in improving their viticulture practices, as well as educating and training their winegrowers using the already established University of Agricultural Science and Veterinary Medicine in Cluj- Napoca.

While educating their own people, Romania must begin paying their skilled workforce accordingly, in order to encourage their workforce to stay in the country and elevate the status of their own wineries. Investing in the marketing and promotion of tourism could be very beneficial as well. The country has several Unesco World Heritage

Sites such as the picturesque city of Sighisoara located in Transylvania, the fortified church of Biertan, the Saxon village of Viscri, the monasteries of Southern Bucovina and the wooden churches of Maramures (Pettersen, L., 2011). These sites hold great potential for tourism.

The organic wine market also has a large potential, seeing as it only represents 0.18% of Romania’s current vineyard surface. According to a recent study commissioned by SudVinBio and conducted by drinks research group IWSR, “organic wine consumption is forecast to increase to 976 million bottles in 2023, up 34% from 729m bottles at the end of 2018, and more than double from 441m bottles in 2013” (Meininger’s Wine Business International, 2019).

This enormous market for growth in qualitative and sustainable wines holds much potential for Romania, if tapped into. Seeing as this market holds so much interest on the international export market, the perspective on hybrid vines is changing as well. This interest seems to be driven by environmental, health and cost concerns seeing as, Vitis vines are known for their sensitivity to climate change and susceptibility to fungal diseases such as mildew, therefore requiring more attentive care and fungicide use.

This has been seen in France with the acceptance of four resistant cultivars, Artaban, Vidoc, Floreal and Voltis, officially registered under the French grape catalog (Henry, C., 2020).

Although they are only allowed to be sold under Vin de France, these changes show that the mentality of the old wine world is progressing. These changes have already been embraced in North America where hybrid vines are well adapted to the climate and wine laws are more flexible. The success of hybrid vines can be seen when looking at wine production in New York, Vermont, Minnesota and Quebec (Mc Coy, E., 2019). This shifting perspective shows a promising future for the vast hybrid plantation in Romania.

(Source: Eurostat, 2017)

Threats

One of the main threats to the Romanian wine export market is international competition. Fellow European competitors are France, Italy and Spain, being the three largest exporters of wine in Europe, France exporting 47%, Italy 26% and Spain 10% in 2018 (Eurostat,2018). These countries have well-organized distribution networks and have many entry-level products with competitive prices. These countries have a considerable lead in acquiring the consumers’ confidence, due to a long history in viticulture and producing qualitative wines.

Confidence can be placed in these countries due to well established appellations, each having their own identity and terroir producing premium wine for centuries. In contrast to Romania, the international image of wine from these countries projects glamor and prestige. Romania is also faced with competition from new world countries such as USA, Argentina, Chile and Australia, accounting for 22% of world wine production in 2018 (Karlsson, P., 2019).

These countries have been able to enter the market at entry-level pricing due to less legislation and modern and efficient infrastructures, as well as adequate climate for grape production. The new world wines have gained consumers’ confidence due to good value for the price, pushing consumers to try their premium wines.

Seeing as Romania relies strongly on EU funding for the success and revival of their wine industry, a possible threat would be political changes and economic instability of both Romania and the EU. When looking at Brexit, many uncertainties remain, considering that the UK represents the largest importer of Romanian wine totaling 29% of sales (Apev Romania, 2018).

When looking at a paper conducted by Kym Anderson and Glyn Wittwer, from the UK Trade Policy Observatory in 2017, in their ‘large’ Brexit scenario “for consumers in the UK the price of wine in 2025 is 22% higher in local currency terms than it would be without Brexit. The volume of UK wine consumption is 28% lower, and the value of UK imports is 27% lower because of Brexit.” Meaning this would have an immense impact on the Romanian export market, therefore emphasizing the need to develop other current export partners and new markets.

3) Advice to a boutique winery

First, let's define what a boutique winery is. When using this term, we have in mind a small winery producing wine with a clear identity. The wine is high quality, produced in smaller quantities and the vines are worked by hand. There should be a strong connection between the wine producer and their land and vines.

Romania has a plethora of indigenous grape varieties, cultivated for millennia and adapted to the continental climate of the country. The export market is increasingly looking for authentic wines made from indigenous grape varieties. We therefore suggest producing wines from local grape varieties, such as, Feteasca regala, alba, neagra, Negru de Dragasani which is related to the Georgian Saperavi, or the Muscat-like Tamaioasa Romaneasca, in order to develop wines with a strong identity and character. The global market is already flooded with cheap wines made from international grapes.

In order to distinguish your winery from competitors, we strongly advise adopting organic viticulture and low intervention processes in the winery. Seeing as the international market for organic wine is on the rise, the demand is present. This niche market would be ideal in targeting since there are only a few in the country, therefore automatically differentiating you from other producers.

A prime example of this is Edgar Brutler, a young ground breaking Romanian wine producer from Beltiug in the Satu Mare region, producing low-intervention wine (Gilby, C., 2018, p.169). Organic wine is made from fermented grapes, exempt of pesticides, fungicides and other synthetic molecules. It supports few oenological inputs, mainly using sulfites in conserving the wine.

In adopting these methods your winery would be eligible in integrating organic wine fairs such as Millesime Bio, the biggest organic wine fair in the world, and on a smaller scale, RAW Wine Fair, organized by Isabelle Legeron MW. These wine fairs are frequented by a new generation of wine lovers and many recognized wine importers, thus creating importation opportunities in many countries.

We also suggest innovations in terms of winemaking and the use of alternative wine vessels. The use of amphoras and Qveri has been extremely successful in Georgia and has now been adopted in other countries. They are commonly used when producing white maceration wines which are now in high demand in international markets (Golysheva, N., 2019).

Another common theme among the new generation of wine drinkers is their appreciation of rosé wines and light red wine with few tannins, causing the wine to be fresher and easier to drink. Social media could be responsible for the US boom in rosé as the young generation is influenced by pictures posted on Instagram. “Rosé has become the Champagne of millennials” said anthropologist Richard Delerins at the 5th International Rosé Symposium (The Drinks Business, 2019). As for sparkling wine, the new rage is Petillant Natural, made from the ancestral method and derived in the Loire Valley (Asimov, E., 2018).

These potential changes will allow the winery to break free from clichés attached to the Romanian wine image and help create an invigorating new market reaching a younger clientele known as millennials who are the current target wine drinking generation.

The choice of wine labels must be innovative, favoring artistic, fun labels that can be easily recognized, branding the product to its consumers. “With 64% of consumers trying a new product simply because the package catches their eye, package design is one of the most underappreciated marketing levers” (CPG, FMCG & Retail, 2015).

Establishing one’s presence on the Romanian wine fair scene is important as well. Revino, being one such fair, is organized in November, attracting wine professionals from all over the world and organizing winery tours. Eventually when the winery has taken off, establishing a presence on Premium Wines of Romania would be beneficial as well, seeing as it is well recognized and is managed by The Romanian Wine Promotion Association.

Finally, with the importance of social media in today’s culture, creating and maintaining a strong following will be essential. This requires daily posts on everyday life in the winery, transparency in viticulture practices and showcasing your team that helps produce your wine. Basically, sharing all the elements that help create your identity as a boutique winery and differentiate you from others.

In following these recommendations, we strongly think that your winery will succeed in creating its own identity on the Romanian wine market, further leading to international recognition. Our strategies will allow your winery to move away from previous clichés and negative images of the Romanian wine industry; making way for innovations.

Rédaction : Nicolas Despeyroux

References :

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