{"id":241656,"date":"2007-03-27T17:06:00","date_gmt":"2007-03-27T17:06:00","guid":{"rendered":"http:\/\/new.moldova.org\/2007\/03\/27\/analysis-moldovan-wine-exports-to-russian-market-are-still-stopped-38802-eng\/"},"modified":"2007-03-27T17:06:00","modified_gmt":"2007-03-27T17:06:00","slug":"analysis-moldovan-wine-exports-to-russian-market-are-still-stopped-38802-eng","status":"publish","type":"post","link":"https:\/\/www.moldova.org\/en\/analysis-moldovan-wine-exports-to-russian-market-are-still-stopped-38802-eng\/","title":{"rendered":"Analysis: Moldovan wine exports to Russian market are still stopped"},"content":{"rendered":"Reading Time: <\/span> 4<\/span> minutes<\/span><\/span>

Author: Andrei Cibotaru, BASA-Press<\/p>\n

Government and business languages were marked starting last year by a relatively new word: embargo. On 27 March 2007 there is exactly a year since the Russian Federation blocked imports of Moldovan wines. <\/p>\n

This measure had a very serious impact on Moldovan economy, given that one third of Gross Domestic Product was ensured by the viticulture and winemaking sector. The economic growth slowed down, industry and exports are operated with losses for the first time in more than six years. <\/p>\n

The macroeconomic situation of the country continues to worsen. Every month, earlier pompous indicators, now are diluted. If all over 2006, wine production reduced twice, then in the first two months of this year, wine produce dropped five times. According to some optimistic data, wine factories are using now one third of their capacities. The pessimistic data point to a poorer situation: every enterprise is using only one tenth of its potential. <\/p>\n

"It’s a real tragedy to see how the company doesn’t work for a period of time, and the employees are forced to take vacations", says Constantin Olaru, Director of Vismos Factory, one of the biggest in the Republic of Moldova. The equipment of the company degrades daily because of not being used in production. <\/p>\n

Experienced vintners were forced to leave abroad, to Ukraine, the USA, or even Russia, while others opted for business in other spheres. <\/p>\n

Until today, the Government made no exhaustive report on the impact of stopping wine exports to Russia. Or at least did not make public such a report. <\/p>\n

According to the data provided by the Union of Oenologists of Moldova, the Moldovan wine production stored in Russia before the embargo is estimated to be worth US$180 million. Winemakers admit that they will never probably see this money. <\/p>\n

In exchange, they are forced to reimburse the bank loans they contracted, and which are estimated to 2 billion lei (US$160 million). "There were times when the banks were courting us. Financial groups were fighting for us. But now the situation changed", says Nely Sonic, Director of Lion Gri Company. Financial institutions are intolerant. "When the embargo was imposed, we were asked not to make pessimistic statements in order to avoid creating panic on the currency market. The bankers came off clear then. But they have forgotten about the favor we made them", says Nely Sonic. The forced execution titles by courts for not reimbursing loans in time started to appear. The banks are forcefully selling the goods pledged by wine companies. <\/p>\n

Besides the banks, wine companies have debts in the amount of 350 million lei for the procured grapes in the fall of 2006 and other more than 200 million lei to the companies operating in the associated industries (glass, cardboard, printing houses). <\/p>\n

The losses of the state budget as a result of the Russian embargo on wines amounts to 40-50 million lei monthly. <\/p>\n

Every enterprise tries to get out of the crisis situation as it can. One can buy in Chisinau a bottle of Cabernet 10-15 years old (bottled hurriedly in 2006) for up to US$10. Factories started to sell at a very low price their vintage wine reserves, and this is an expressive argument for the current condition of vinification industry. <\/p>\n

Domestic market, although with a great potential, was lost for industrial wines. "Moldovans consume annually more than 45 million bottles of vodka and only 3.5 million bottles of wine. The domestic market was lost although nobody imposed any embargo", stated Nicolae Taran, Deputy Director of Vine and Wine Institute. <\/p>\n

"The only breath of air that remained is the possibility to export bulk wine, this was closed too", says Gheorghe Cozub, Chairman of the Union of Wine Producers and Exporters. From 1 January 2007, Chisinau prohibited supplies of raw material wine in order evaluate the reserves and institute a more severe quality control. What is most alarming is that exports were stopped based on a simple letter issued by Moldova-Vin Agency, which raises many questions regarding the legality of this measure. <\/p>\n

In reply, Belarus, the third market for Moldovan wines, stopped imports of bottled wines. All winemakers are expecting regulations by Moldova-Vin that would allow resumption of exports. <\/p>\n

\"\"Earlier, wine exports accounted for 30% of external supplies of Moldovan goods. In 2006, Moldova exported wines and other spirits worth US$173 million, 45% less than in 2005. <\/p>\n

If in 2005 supplies on the Russian market amounted to US$250 million, then last year, in January-March, before the embargo was imposed, exports to Russia amounted to US$45 million. <\/p>\n

"Russian restrictions represented the worst news of the year for vintners, and the reorientation to other markets failed to remedy the handicap", says Iurie Mudrea, Spokesman of Moldova-Vin. <\/p>\n

If we are to exclude the influence of the Russian market, then exports increased on a range of destinations. In Romania supplies increased by 17 times, exports to Ukraine doubled, while supplies to Poland advanced by 25%. Following the embargo, Chisinau intensified measures of promotion on other markets. <\/p>\n

Experts point out more and more often that untraditional markets would be a solution for Moldova. Countries such as China, India, Japan, or Sweden may be "exotic markets" for Moldovan wines. <\/p>\n

"Export to China made its first step from zero to US$300 thousand in 2006. We are starting to reach common ground with the Chinese", says Iurie Mudrea. Fourteen companies have already entered on the Chinese market. On 23-25 March 2007, in Shanghai (a city in the eastern part of China) a Festival of Moldovan Culture and Vinification took place. <\/p>\n

On 18-20 April 2007, a presentation of Moldovan wines will be organized in Stockholm, capital of Sweden. <\/p>\n

Moldova will also try to penetrate on the Italian spirits market, where a Moldovan Community of more than 200 thousand Moldovans lives. "It is a population of a whole city and we believe that it is a good niche for our winemakers", Mudrea estimated. According to him, Moldovans living in Italy would prefer wines, in particular, Moldovan cognacs and strong drinks. <\/p>\n

"It is odd that we are talking so much only about Russia. The latter with a population of 170 million inhabitants can be compared to Japan, for instance, with a population of 140 million inhabitants. However, if the former traditionally consumes vodka, then highly industrialized countries tend to increase wine consumption", says Feodosii Bors, owner of Doina-Vin company. <\/p>\n

Anyway, most winemakers admit that the Russian market was and will be a key market for them. Nevertheless, they have already been warned: export conditions will be even tougher than in the European Union. <\/p>\n

"Every lot will be checked in terms of all parameters, and be subject to about 42 tests", said Andrei Gurin, Head of State Inspectorate for Spirits Supervision, after the meeting with Rospotrebnadzor experts. \/\/ BASA-Press<\/p>\n","protected":false},"excerpt":{"rendered":"

Reading Time: <\/span> 4<\/span> minutes<\/span><\/span>A year after introduction of embargo, Moldovan wine exports to Russian market are still stopped (Commentary by Andrei Cibotaru, BASA-press<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[],"class_list":["post-241656","post","type-post","status-publish","format-standard","hentry","category-economy"],"content_social_share":"Reading Time: <\/span> 4<\/span> minutes<\/span><\/span>

Author: Andrei Cibotaru, BASA-Press<\/p>\n

Government and business languages were marked starting last year by a relatively new word: embargo. On 27 March 2007 there is exactly a year since the Russian Federation blocked imports of Moldovan wines. <\/p>\n

This measure had a very serious impact on Moldovan economy, given that one third of Gross Domestic Product was ensured by the viticulture and winemaking sector. The economic growth slowed down, industry and exports are operated with losses for the first time in more than six years. <\/p>\n

The macroeconomic situation of the country continues to worsen. Every month, earlier pompous indicators, now are diluted. If all over 2006, wine production reduced twice, then in the first two months of this year, wine produce dropped five times. According to some optimistic data, wine factories are using now one third of their capacities. The pessimistic data point to a poorer situation: every enterprise is using only one tenth of its potential. <\/p>\n

"It’s a real tragedy to see how the company doesn’t work for a period of time, and the employees are forced to take vacations", says Constantin Olaru, Director of Vismos Factory, one of the biggest in the Republic of Moldova. The equipment of the company degrades daily because of not being used in production. <\/p>\n

Experienced vintners were forced to leave abroad, to Ukraine, the USA, or even Russia, while others opted for business in other spheres. <\/p>\n

Until today, the Government made no exhaustive report on the impact of stopping wine exports to Russia. Or at least did not make public such a report. <\/p>\n

According to the data provided by the Union of Oenologists of Moldova, the Moldovan wine production stored in Russia before the embargo is estimated to be worth US$180 million. Winemakers admit that they will never probably see this money. <\/p>\n

In exchange, they are forced to reimburse the bank loans they contracted, and which are estimated to 2 billion lei (US$160 million). "There were times when the banks were courting us. Financial groups were fighting for us. But now the situation changed", says Nely Sonic, Director of Lion Gri Company. Financial institutions are intolerant. "When the embargo was imposed, we were asked not to make pessimistic statements in order to avoid creating panic on the currency market. The bankers came off clear then. But they have forgotten about the favor we made them", says Nely Sonic. The forced execution titles by courts for not reimbursing loans in time started to appear. The banks are forcefully selling the goods pledged by wine companies. <\/p>\n

Besides the banks, wine companies have debts in the amount of 350 million lei for the procured grapes in the fall of 2006 and other more than 200 million lei to the companies operating in the associated industries (glass, cardboard, printing houses). <\/p>\n

The losses of the state budget as a result of the Russian embargo on wines amounts to 40-50 million lei monthly. <\/p>\n

Every enterprise tries to get out of the crisis situation as it can. One can buy in Chisinau a bottle of Cabernet 10-15 years old (bottled hurriedly in 2006) for up to US$10. Factories started to sell at a very low price their vintage wine reserves, and this is an expressive argument for the current condition of vinification industry. <\/p>\n

Domestic market, although with a great potential, was lost for industrial wines. "Moldovans consume annually more than 45 million bottles of vodka and only 3.5 million bottles of wine. The domestic market was lost although nobody imposed any embargo", stated Nicolae Taran, Deputy Director of Vine and Wine Institute. <\/p>\n

"The only breath of air that remained is the possibility to export bulk wine, this was closed too", says Gheorghe Cozub, Chairman of the Union of Wine Producers and Exporters. From 1 January 2007, Chisinau prohibited supplies of raw material wine in order evaluate the reserves and institute a more severe quality control. What is most alarming is that exports were stopped based on a simple letter issued by Moldova-Vin Agency, which raises many questions regarding the legality of this measure. <\/p>\n

In reply, Belarus, the third market for Moldovan wines, stopped imports of bottled wines. All winemakers are expecting regulations by Moldova-Vin that would allow resumption of exports. <\/p>\n

\"\"Earlier, wine exports accounted for 30% of external supplies of Moldovan goods. In 2006, Moldova exported wines and other spirits worth US$173 million, 45% less than in 2005. <\/p>\n

If in 2005 supplies on the Russian market amounted to US$250 million, then last year, in January-March, before the embargo was imposed, exports to Russia amounted to US$45 million. <\/p>\n

"Russian restrictions represented the worst news of the year for vintners, and the reorientation to other markets failed to remedy the handicap", says Iurie Mudrea, Spokesman of Moldova-Vin. <\/p>\n

If we are to exclude the influence of the Russian market, then exports increased on a range of destinations. In Romania supplies increased by 17 times, exports to Ukraine doubled, while supplies to Poland advanced by 25%. Following the embargo, Chisinau intensified measures of promotion on other markets. <\/p>\n

Experts point out more and more often that untraditional markets would be a solution for Moldova. Countries such as China, India, Japan, or Sweden may be "exotic markets" for Moldovan wines. <\/p>\n

"Export to China made its first step from zero to US$300 thousand in 2006. We are starting to reach common ground with the Chinese", says Iurie Mudrea. Fourteen companies have already entered on the Chinese market. On 23-25 March 2007, in Shanghai (a city in the eastern part of China) a Festival of Moldovan Culture and Vinification took place. <\/p>\n

On 18-20 April 2007, a presentation of Moldovan wines will be organized in Stockholm, capital of Sweden. <\/p>\n

Moldova will also try to penetrate on the Italian spirits market, where a Moldovan Community of more than 200 thousand Moldovans lives. "It is a population of a whole city and we believe that it is a good niche for our winemakers", Mudrea estimated. According to him, Moldovans living in Italy would prefer wines, in particular, Moldovan cognacs and strong drinks. <\/p>\n

"It is odd that we are talking so much only about Russia. The latter with a population of 170 million inhabitants can be compared to Japan, for instance, with a population of 140 million inhabitants. However, if the former traditionally consumes vodka, then highly industrialized countries tend to increase wine consumption", says Feodosii Bors, owner of Doina-Vin company. <\/p>\n

Anyway, most winemakers admit that the Russian market was and will be a key market for them. Nevertheless, they have already been warned: export conditions will be even tougher than in the European Union. <\/p>\n

"Every lot will be checked in terms of all parameters, and be subject to about 42 tests", said Andrei Gurin, Head of State Inspectorate for Spirits Supervision, after the meeting with Rospotrebnadzor experts. \/\/ BASA-Press<\/p>\n

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