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Turning blood into wine

by at 06/10/2011 22:20

Following a five-year absence from the Russian market, Georgian wines might finally about to be back on the menu.

Georgian wine and Borjomi mineral water were banned from Russia in 2006 as relations between the two countries began to disintegrate. Russian officials cited health and safety issues, but Georgia blames its former biggest wine importer of using trade sanctions as a political weapon.

Relations between the two countries sank to an all-time low in 2008 when they fought a five-day war over the breakaway Georgian republics of Abkhazia and South Ossetia. Things have remained frosty ever since.

Russia’s stubbornness over the reintroduction of Georgian imports has been a major stumbling block in discussion about Russia joining the World Trade Organization. Georgia, a member of the global body, is currently blocking Russia’s entry over the dispute.

Earlier this week Gennady Onishchenko, the head of Russian sanitary watchdog Rospotrebnadzor, said the main Georgian export products of wine and mineral water may return to the Russian market soon.

“Everything depends on Georgian producers, whether they are ready to adhere to the sanitary and quality rules, as well as Russian law,” Interfax quoted Onishchenko as saying.

Onishchenko said that Georgian businessmen had met officials from Rospotrebnadzor on their own initiative in order to finally get access to the Russian market.

The matter is of great importance to Georgian wine producers. Before the war, Russia made up some 90 percent of total Georgian wine exports.

Georgia is currently blocking Russia’s entry to the WTO over the wine dispute

© RIA Novosti.

Georgia is currently blocking Russia’s entry to the WTO over the wine dispute

“Georgian producers are more than interested in coming back to this market and have worked a lot on quality and new sorts of wine,” said Artur Sarkisyan, head of the Union of Russian Sommeliers and Experts. “The problem is to control all wine producers and not just Georgian, as Russian and Abkhazian producers have also been caught producing wine from Spanish raw wine material and selling these ‘wine drinks’ for 100 rubles.”

Although Georgian producers have had some success in diversifying into European and U.S. markets since the Russian ban, the country’s wine exports have fallen to 14 million bottles a year – just over a quarter of the pre-2006 figure.

The lifting of the ban will also have a significant effect on the Russian wine market, which was forced to diversify a large chunk of its sources after the good quality Georgian stuff stopped flowing in.

Before the ban came into force, Georgia was exporting about 50 million bottles of wine a year to Russia.

However not all producers are excited about the opportunities posed by a lifting of the ban.

“Our company has switched to French wine, as there is no longer a market for Georgian wine,” said Nukri, the boss of a wine distributing company who asked that his surname not be published, due to the sensitivity of the issue. “We are not sure if we will restart supplies again, as no one knows the real current situation and the future rules of the game.”


Wine and the WTO

 

The reintroduction of Georgian wine imports is largely dependent on Russia’s WTO entry negotiations.

Russia, the only G20 economy outside of the group, has been trying to enter the WTO for 15 years. President Dmitry Medvedev said in an interview with RT television in August that Russia was aiming to gain entry by year’s end.

Russia and Georgia are now entering their final round of talks on the issue, aimed at preventing Georgia from vetoing Russia’s bid.

Ultimately, it’s probably politics and not business on both sides that will decide the issue, say experts.

“Bringing Georgian wine back to Russian stores can be solved only by political means,” said Vadim Drobiz, director of the Tsifra analytical agency. “Despite the fact that Russia used to be the biggest market for Georgian producers, they won’t let themselves be humiliated to lift the ban.”

 

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