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Interview with Natalia Kazakova - Executive Director of Vinprom Rousse.
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1.What is impact on Bulgaria of the removed ban on the import of Moldovan wines into Russia?
We expected this ban to be lifted. The Russian wine market will definitely shrink for us. At the same time, however, Moldova will not be able to export the quantities it had before March 2006 on the Russian market. I expect that the Moldavians will return with about 40 percent of their previous sales, which will have an impact on our presence there. Moldovan winemakers will not be able to export to Russia their cheap wines. Many of there products in this price range are banned for import and the quality control is very strict.
2. What was the share of these wines before the ban and what was the increase of Bulgarian exports during the period of the moratorium?
It will not be easy for Moldova to restore its positions on the Russian wine market. They had some 60 percent of the branch markets in Russia before the restrictions were introduced.
The share of Bulgarian wines in Russia rose steeply by some 40 percent between 2002 and 2006, because of the increased demand after the ban on Moldovan and Georgian wines due to their poor quality. This opened a void on the Russian market, which Bulgaria failed to exploit in full due to insufficient production. Nevertheless, Bulgaria emerged as the largest wine importer in Russia with 33 percent of the total quantity due to the low prices and the already established image of Bulgarian wines. Bulgaria is followed by France with 17 percent and Spain with 11 percent of the market in terms of volume; France and Spain however fare better than Bulgaria in terms of the value of the produce imported in Russia.
3. Is there any danger for reducing Bulgaria’s exports, and if so, would the higher prices of Bulgarian wine be the main reason for this?
It is not a coincidence that that control authorities on wine in Russia, for instance Mr. H. Onishchenko, advised Russians to switch to beverages with a higher alcohol contents and dry wines. Until now, dry wines amounted to a token 20 percent of all Bulgarian wines imported to Russia; for comparison, 90 percent of the wines sold in Bulgaria are dry wines. These are wines of a higher quality, fully compliant with European standards – and more expensive. Russian consumers persist in looking for low-price products. We expect that by the end of 2008 Russia will pass a new law on wine, which will comply with European norms – and this will also have an impact on our exports. First, volumes most probably will decrease, as wines will have a higher cost and this will redirect the Russian clients to other suppliers. Second, we shall be able to reduce our large reserves of high-quality wines, but I would not rely on high volumes. Most probably the change in legislation will cost us one more reduction of the market by another 15 to 20 percent. Technologically, we shall be relieved, as the wines will be checked against the same criteria, which are controlled in Bulgaria during the production process; currently, there are cases when methods and monitored criteria are different.
4. Have the winemakers managed to draft projects for subsidies from the European programs, which were launched at the beginning of this year?
For the time being, the National Vineyard and Winery Complex has managed to propose a single project for the promotion and advertising of Bulgarian wine in third countries outside the EU. We selected Russia, the USA and Canada, and the value of the project was estimated at about EUR 840,000 – the deadline for submitting proposals was March 31, 2008, and all details have to be worked out by June 1. Most probably we shall apply for subsidies for one more project, this time for promotion in Europe, most probably in the states, where Bulgarian wine will be advertised – Germany and Great Britain.
5. Are there any problems, related to applying for subsidies?
We still cannot comment on problems, the project was submitted barely days ago. We apply as a branch organization, the National Vineyard and Winery Complex, as this is required by the EU. It is not possible for each and every company to ask for money and submit projects. I think that, on the background of the corruption scandals with European funds, winemakers simply cannot be involved – no lobbying is allowed for a specific company and therefore the companies will not be racketeered in order to have specific projects approved.
6. Dou you have data about the production of wine from the 2007 harvest?
According to an old Bulgarian saying, the fine wine comes from a fine vineyard. The climatic conditions in 2007 had a positive impact on grape, which ripened earlier and had exquisite taste qualities. The 2007 harvest will make Bulgaria's wine sector even more profitable – this could be seen even now. And the Vinaria 2008 in Plovdiv provided proof for this forecast. Many of the wines, which were dominated for awards, were made from the 2007 harvest. The Pristis Perfect wine, produced by Vinprom Rousse, is a genuine masterpiece – it was awarded a golden medal together with four other wines and the Old Rousse Muscat Brandy.
7. What is the strategy for 2008 – in terms of new markets and sales on the domestic market?
Vinprom Rousse presented to numerous partners and friends its new Pristis wine series late last month, at the Lozenets Residence in Sofia - Pristis Premium, Pristis Elegant and Pristis Perfect, and the new Rose Rousse.
Increasing competition on the Bulgarian market forced us to develop a new market strategy for Vinprom Rousse, in which the emphasis is placed on improving marketing at a local level. The strategy is set entirely in line with the findings from constant marketing surveys, and we always try to meet the expectations and the preferences of consumers. Our advertising policy is also subject to marketing data.
The company aims at a comprehensive improvement and upgrading of the production. The total amount of investments made by Vinprom Rousse is estimated at about EUR 1.25 million, with EUR 635,000 invested in 2007 alone. Vinprom Rousse invests in its own vineyards, however our production volumes are too high. This implies that we have to secure additional quantities of raw material, which we buy exclusively in Bulgaria.
As far as exports are concerned, our goal is to increase the number of Russian clients, as Russia remains a priority market for us, while individual clients are expected not to increase and even to reduce their volumes – hence we need more clients. We are trying to preserve all existing export destinations and for that purpose we are engaged in talks with clients in Ukraine and Turkey. If successful, these two countries will be the new locations on our sales map.
Vinprom Rousse will start importing the Russian Flagman vodka, which is a new development on the domestic market.
8. What is the danger, for you as winemakers, arising out of the competition of South American wines?
Regrettably, we are losing a share from the Western market, but to a much lower extend than European producers like Italy, Spain and France. This is due mainly to the competition of New Zealand, South Africa, and California. These producers are actually taking Europe over by means of an aggressive marketing policy. The Winery and vineyard sector in these states is well regulated, which makes it competitive in Europe. It is the emergence of these producers on the markets on the Old Continent that imposed a change in the common European policy.
The export of Bulgarian wines to Western Europe dropped by 65 percent over the last three years. There are many reasons for this: insufficient quantities of raw material and low quality of the raw material sold at high prices, which results in an uncompetitive costs and the need for expensive additional processing, which however is not sufficient to compensate for natural sugars and the ripeness of grape in Chile, Argentine and Australia. These countries presented in Europe some new varieties, which virtually unknown and their tastes are seen as somewhat exotic, while we are still in the process of returning to Bulgarian varieties: Mavrud, Dimyat, Gamza, and other, which represent a definite interest for British oenologists. We hope we shall succeed but the chances are low and we shall have to negotiate some serious problems.
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