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Bogdan Nitulescu, Tremend
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In Vino est Prosperitatis

After an estimated six years of constant and relevant growth of the wine business in Romania, the taste for good wines emerged together with exigencies. The Diplomat - Bucharest asked the main wine producers on the local market about the fragrant opportunities and maybe not-so-sweet challenges of this full-bodied industry

2015-12-06 19:08:55 - From the Print Edition

Once a famed vineyard producer, Romania ranks today twelfth place in the world regarding wine production, and sixth in Europe, according to statistics of the local wine associations. However, Romanian vineyard real estate is almost halved compared to 1970, when the country accounted for more than 300,000 hectares of winery. The local producers in Romania are struggling to make a name on the international markets and now they export their brands to all corners of the world; from Europe to Asia, USA, Africa and New Zealand. They say that the past six years brought a constantly-increasing trend of production and wine processing, but it mostly depends on what you want to achieve: volume or exquisite tastes. The business strategies should take into account both, and the constant should be the quality.

Lacerta Winery: The fair price of a world-class wine

Wines made along the 45th parallel which positions the Dealu Mare vine estate at the same level with the Bordeaux, Saint-Emilion, Piemont as well as the Toscana vineyards, are described as "prestigious for their rich, complex and silken taste," by Lacerta officials. Established in 2002 and worth nine million Euro, Lacerta Winery sold its first bottle of wine in 2011. With over 250,000 litres of wine produced annually and 44 employees, Lacerta plans to post an around one million Euro turnover this year, a fifteen per cent increase compared to 2014. Since the beginning of their Austrian business, another five million Euro were invested in their production unit located at Dealu Mare, in the Fintesti commune of the county of Buzau, which spans a surface of 82 hectares. According to company data, the investment in the vineyard without the winery production is estimated at two million Euro.
Last year, 90 per cent of total production went to the local market, while ten per cent was sent to the European Union and China while other markets are also tackled such as: Poland, Czech Republic, Slovakia, Scandinavia, Canada and USA.

In the first half of this year, however, Lacerta registered an increase of over 20 per cent in export sales. "The opportunity for exports of premium wines from Romania are still limited. The image of Romanian wines outside the country is still not where it should be. This is due to very cheap exports of Romanian low-quality wines which had been performed for decades and still - unfortunately - are normal for several producers today. But we have a good growth of exports, mainly to the non-wine-producing countries of the EU, to Switzerland and to China," Walter Friedl, managing partner of Lacerta , tells The Diplomat - Bucharest.

The main challenge for such a producer is "to convince local clients that there are very good - even world class - wines produced in Romania already," Friedl says. "Unfortunately many Romanians prefer imports of cheap, low class French and Italian wines which are dumped for too-high prices in Eastern European markets like Romania. Foreign tourists or business people who live in or visit Romania are already buying local wines," the manager adds. But a switch in the local perception has also started to emerge, since Romania, in the eyes of foreign investors on this market, offers enough room for premium wines, based on a long tradition in this segment, even longer compared to most of the European countries. "Unfortunately, during a certain period Romanian premium wine consumers had no possibility to get them. This changes rapidly at the moment. The trend from cheap, sweet wines to more expensive and dry wines is already in full progress. Of course this goes hand-in-hand with the economic progress of the country, wealth and higher salaries. We see a direct correlation between the economic growth of 3.9 per cent and the consumption of premium wines. We invite many people to tastings of our wines at the winery and at several events all over the country all year round. We believe strongly that only through tastings it will be possible to accelerate this trend," Friedl adds.

What's lacking in the local market is the "common voice" of manufacturers and distributors in Romania. "The only interest of distributors is the maximizing of their profits. So they don′t care about the origin of the wines. They have no particular interest in promoting Romanian wines," Friedl explains. "The position of the wine-producers of course would be stronger if there was an efficient association. But an association can only work if the big and small producers and cheap and premium wine producers would be equally treated. There are many different interests. Unfortunately, there is little the European Union is doing to help us solve this problem. Regrettably, there is also no help for the export of wines which is efficient and useable. Especially in export we would need strong help at international fairs or with foreign journalists from the European Union and from the government of Romania because we have to fight on foreign markets against a bad image of Romanian wines from the past, which is not our fault," the managing partner of Lacerta adds.

Domeniile Sahateni looks beyond borders

With a strong background in wines, oenologist, Aurelia Visinescu and her associate, Steve Cacenco, established almost ten years ago the company Domeniile Sahateni, but the business idea was born even earlier in 2002. Domeniile Sahateni winery has benefited from an investment of over five million Euro and currently has processing facilities of about 1,000 tons of grapes per season (800,000 bottles), while the cellar is equipped with two production lines, with controlled fermentation - completely automated - for both red and white wines. In 2010, Aurelia Visinescu launched the premium and super premium wine range carrying her name, standing today for 70 per cent of the overall business of Domeniile Sahateni. Currently, the company has 76 hectares with 54 fully producing today. It runs on a project started in 2013 and financed with EU funds for 14 hectares' conversion for vineyard planting. Visinescu stated last year that this project will be completed in the summer of 2016, following an investment of 250,000 Euro.
The wine is present on the Asian and European markets and the company also plans to expand into Canada, USA, UK or Taiwan. However, the step beyond the Romanian borders would be much easier if the Romanian "common voice" represented by associations and decision makers would promote the Romanian market as a quality market, especially regarding the premium wines. For instance, the foreigners perceive the Romanian wine variety as exotic and this is only one possible aspect to be considered and capitalized, according to Visinescu.

For the development of vineyards, the company's officials estimated an investment of one million Euro and expect a turnover of 1.7 million Euro this year, compared to 1.5 million Euro achieved in 2014. "We expect 2015 to show an increase at the overall market level. The market is extremely dynamic, with many new entries in terms of local producers, better wines and more complex sales strategies on a highly competitive market," Visinescu stated. The manager felt that Romanian consumers, especially young people between 30-40 years old, are increasingly interested in wines and show mature expectations regarding this product. The manager said that the wine goes beyond restaurants and becomes a constant presence in pubs or bistros, where the accent is put on gastronomy. "Probably, on a medium and long term, other locations in HoReCa - such as clubs - will start to accept more this product in their offer list. Regarding retail, we are currently welcomed by the key account managers regarding the listings, new projects and gastronomic wines."

Even if the Romanian market is seen as welcoming place for the premium segment, Visinescu feels that a major variable in the growth estimations is represented by purchase power. "We are glad that premium wines are more and more appreciated by the younger public as some of them develop real passions and invest in this field. Beyond this, we focus on the HoReCa, as it brings the largest share of consumption for premium wines."

Cramele Recas: Premium wines, an argument for change

For Cramele Recas, 2015 showed better signs compared to the previous year, a growing trend that defined the Romanian market for the past six years. The company has a long history on the local market. In Western Romania, in Banat, specifically at Recas - a group company with British and Romanian investors - Cramele Recas was established at the end of the 20th century but owns vineyards in the area dating back to the 15th century, as the company history profile shows.

Currently, Cramele Recas owns two vineyards, with 1,000 hectares in Timis (Recas) and 20 hectares in Arad (Minis). The company plans to expand the areas in Timis and other locations in Romania. A first step in this direction has been made by purchasing 36 hectares of land near Recas. In 2015, the company invested in the vineyards development, modernization and new technologies for wine production, cultivation and land preservation. In 2014, Cramele Recas achieved a turnover of over 24 million Euro and a profit of 4.8 million Euro and expects an increase of 12 per cent for 2015. The exports volume is planned to grow by up to 15 per cent in 2016, on a growing market trend. Last year, the export volume was of 40 per cent from the overall bottled wine, the company said.

As Ciprian Rosca, the company's commercial director states, the overall Romanian wine market currently lives in better times compared to the same interval of the previous year, even if it faces several changes. "The Romanian market suffered several fragmentations, but from a positive point of view it signifies a flourishing trend both quantitative and qualitative. The growth and dynamic of retail and HoReCa chains marks a new world for this industry, compared to the interval of the past two decades. Also, the prices are competitive, both regarding the retail and premium segments. We can state that the local market becomes mature once the international trends emerge in Romania, a proof being the increasing preference for Rose wines - spectacularly blooming this year compared to the previous period," Rosca tells The Diplomat - Bucharest.

The international trends are also direction-setters in Romania and inherently influence local consumption patterns. "Now, the choices of producers and consumers are more and more assumed and responsible, while more consumers start to recognize and better understand the quality wines. Regarding the premium sector, the competition is more serious than ever, with new varieties and offers to tempt the buyer. In recent times, consumers can now afford to try new varieties that have never been previously considered. Therefore, we permanently look towards the best solutions for consumers, to react to their needs through quality wines, new variety offers and fair prices. The emerging of new producers in the last few years tightened the competition and directed the increase of wine quality. Hence, Romania gained a place on the world map of wine producers, compared to several years ago when Romania was rather unknown from this point of view."

The manager also observed changes regarding the purchasing power of Romanian consumers, estimating an increasing trend of this indicator, a fact that has been also mirrored in the sales of Cramele Recas wines. The company invests in technology and innovation, two drivers of the growing trend as the company invested in the new technologies and modernized the production unit at Recas to 18.5 million litres. Additionally, Cramele Recas launched this summer a new Rose wine variety called "Muse". "This brand defines our commitment to innovate and positively makes a statement in the Romanian market, through its taste and packaging solutions, through the self-sealing glass cork. We will continue the series of innovations this year; new cultivated areas will start to produce and therefore we expect new varieties for 2016," Rosca says. The change has also been observed in consumer taste. "The premium-category wines represented a valid trigger for the change in consumption patterns. If several years ago, the consumers preferred the demisec (semi-dry) white wines, now the consumers opened up to new categories and started to ask more and more for red and Rose categories," Rosca adds. Things will be even much better if several measures should be implemented. In Rosca's opinion, the absorption of European funds and faster access to these financing facilities would boost the industry and increase the competition. "Also, the design of a coherent strategy in assigning the subsidies and the support of exports through diverse promotional actions included in the country brand's international conveyance would align the local wine industry to international standards."

Corcova: New flavours to land

Located in South-Western Romania, in the Mehedinti area, the company "Viticola Corcova", branded under the name of "Roy & Damboviceanu" (the investors) was established in 2005. In that year, the company purchased the 12 hectares planted by former IAS Corcova and roughly another 50 hectares with vineyards in poor shape in a nearby village. With Sapard funds, the investors replanted the lands, about 40 hectares with red-type ranges such as Cabernet Sauvignon, Merlot, Syrah, Pinot Noir, Muscat Ottonel and Chardonnay and also refurbished the cellars by 2009. In 2010, after replanting, the cultivated area reached 60 hectares at present. Next spring, the company will plant another eight hectares, and plans for the next two years include the planting of another 15 hectares, all located in the Mehedinti area. According to company data, the average investment in one hectare of vineyard is estimated at 25,000 Euro until it starts to produce. For the upcoming years, company officials have planned 600,000 Euro worth of investments in new wineries. Corcova estimates it achieves 1.3 million Euro in turnover in 2015, compared to one million Euro in 2014. Regarding their export strategies, Corcova tackles markets such as UK, Belgium, Northern European countries. Currently, the Corcova brand is present in Switzerland, Netherlands, Germany, Austria, Poland, Hungary, Japan, China, and USA.

As Serban Damboviceanu states, the cultivated lands that started to produce in recent years shaped the current premium wine market in Romania. "The financing programmes supporting the replanting of vineyards stimulated the investments. Also, the consumption of high-quality wines increased, though at a slower pace compared to production. Therefore, for the new entries on the market, I estimate a challenging period. In this context, we intend to consolidate the Corcova brand on the domestic market and increase its presence at the international level," Damboviceanu says.

The manager identifies an international trend that could be favourable to Romania. He notes that the new wines produced around the Black Sea area, in Georgia, Turkey, Bulgaria and Romania have surprised consumers through their quality and originality and have thus triggered an increased interest in this area. "It remains to be seen if we will take advantage of this trend so that we can create a comparable trend to the new world wines, as happened 20 years ago when the wines emerging from South America, Australia, New Zealand and South Africa became known," Damboviceanu adds. According to the Corcova manager, the Romanian market should be developed, especially in terms of educating consumers towards the quality wines. The average wine consumption in Romania is over the European average but only a small share of the consumed wine is considered of quality. As the consumption of this product is tightly related to purchasing power, the shift towards premium wines will be a long-term endeavour. "I would hope for a rather natural development of the premium market in Romania, against a strategic one. The competition should be stimulated by the emerging of quality and original wines within a competitive landscape. Through strategies, only an artificial and substance-lacking market would be created," Damboviceanu says.

That's why a common voice of producers should not be dismissed. According to the manager of Corcova, the domestic market lacks the concrete measures in this respect, with a very weak voice of the market players, compared to the beer segment, for instance. "We should communicate more and encourage the moderate consumption of wine, with its beneficial effects on health. At international levels, Romanian wines are almost unknown. Even worse is the negative publicity attached to Romanian wines through the exports of low-quality wines. It is impossible for a small producer to promote the Romanian wine by itself. Only when we will be united and many, Romania will be recognized as a producer of high-quality wines," Damboviceanu says.

A common voice to S.E.R.V.E millions of potential Ambassadors

S.E.R.V.E., a family business currently with 45 employees, has blueblood roots thanks to Count Guy de Poix who chose to invest at Dealu Mare back in 1993. At that time, when S.E.R.V.E. (The European-Romanian Society for Exquisite Wines) was established, it was the first - and for some years the only - private company in the Romanian wine business and the first wine cellar to have a site in 2001. Currently, the investors cultivate 60 ha in the Dealu Mare region and 56 ha in the wine-growing region of Babadag (Cogealac) and this year celebrated its 21st harvest. Speaking of this year, it expects a turnover increased by eight per cent compared to 2014 where 40 per cent of its yearly production of 800,000 bottles are exported.

All the producer's plantations are between three to ten years old and are coming from crops grown in its private nursery. Moreover, located in the Dealu Mare Region is a 10 ha plantation which will be cultivated in 2012. Also, Count Guy de Poix created the locally-well-known "Vinul Cavalerului" in 1994.
The CEO and founder of Vinul Cavalerului, Mihaela Tyrel de Poix considers that the specific market has been developed significantly in past years, both regarding production and consumer expectations. This is because of the access to European funds, offering the means for the development of new cellars, new equipment and technologies. Also, according to the investor, a major role is also played by the import increase, with the wines coming from "The New World" and Europe taking over the taste of local consumers.

"The main challenge comes - unfortunately - from us, the producers. Even if the wine quality is increasingly better and competitive, the Romanian producers failed at organizing themselves in order to promote and coherently communicate the local brands. A common voice would be a powerful tool to speak about quality, authenticity and tradition, especially within a competitive industry, with millions of potential ambassadors - the local consumers," de Poix says.

The local consumer, in the manager's opinion is just at the beginning of its road towards a maturity, who consumes occasionally and selects the products according to their price and awareness. "Through education and coherent promotion, the local consumer will be able to choose among local brands, which will gain his trust. He is defined by a great curiosity and offers loyalty to brands that are not disappointing. Furthermore, the consumers in countries with major production traditions are very proud of their local brands. Which reiterates what I have said before: It is in our power, as producers, to convince the consumers of the quality of local brands," de Poix adds.

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