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A look at Moldova’s wine industry

A look at Moldova’s wine industry

Gordon Feller

The political leadership of Moldova has recognized that its wine industry is a national treasure and has made a concerted effort – although many think with not enough focus or commitment yet – to attract foreign investment, to encourage local producers and to restructure the whole industry with an eye to making their products more competitive in the global market.

Foreign Investments Are Flowing Into The Moldovan Wine Industry

1. European Bank for Reconstruction and Development (EBRD) Investment. The EBRD was founded in October 1994. The EBRD granted a credit of $30 million to the Moldovan wine industry for a seven-year period with an interest rate of 9.0 to 11.75%. Six million dollars are for improving the quality and packaging of Moldovan wine. Another goal is to increase the volume of Moldovan wine exported to Europe.

The first stage of the EBRD-financed program which focused on modernization of nine selected Moldovan wineries and construction of a bottle plant has been completed, according to the technical director of “Vininvest”. The majority of equipment purchased for modernization of the wineries (1-2 lines for wine production for each enterprise) has been installed and is functioning. He stressed that the goal of the program is not just to increase the volume of wine produced, but mainly to increase quality.

Two groups of engineers and technical specialists from the Italian company “Velo” tested the equipment installed at the nine wineries. Testing has shown that juice produced on the new equipment is six times cleaner than before. The guarantee period for the installed equipment is 18 months, including services provided by the equipment producers. The second stage of the project will focus on the modernization of another 10 Moldovan wineries. The conditions and amount of the new investment are being negotiated at present.

2. World Bank Financing. At the end of September 1996, Bazil Kavalski, director of the World Bank’s Moldovan Department, visited Moldova to meet government leaders. At his press conference, Kavalski mentioned that the International Finance Corporation (IFC) is negotiating a $16 million investment in six of the most successful Moldovan wineries with good export records. The IFC, which is tied to the World Bank, is planning an equity participation with a 1 to 3 ratio. As soon as an enterprise achieves the necessary degree of profitability, IFC will sell the equity back to the winery. The lack of governmental guarantees presumes tough crediting conditions. Kavalski stressed that the results of the negotiation on the project would not depend on the outcome of the presidential election.

3. Information from the Moldovan Ministry of Agriculture, according to information provided by Gheorghe Kozub, general director of the Department of Viticulture of the Moldova Ministry of Agriculture, at the beginning of 1996, the World Bank granted a $5 million credit to the National Institute of Wine and Grapes.

The Ministry of Agriculture also is negotiating with the EBRD on a project for creating a wine investment fund with the EBRD, “Moldovan-Agroindbank, and the Australian company “Southern Wine Group” as founders.

International Exhibitions and Conferences

In 1995 a conference of winemaking and grapegrowing enterprises in the NIS countries took place in Yalta, Crimea, in the Ukraine. According to statistics presented by each participant country, Moldova was granted the highest mark for achievements in these sectors during the last two years. Moldova was the first NIS country that adopted a law on the wine industry and also the first to become a member of the International Organization for Grapes and Wine. The names of winemaking regions and sorts of wine were included in the official bulletin of the organization.

In 1996 Moldova for the first time exhibited its wines at the “Vinova” wine production show in Vienna in June. Nine Moldovan wineries took part in the show: “The Wine and Cognac Enterprise of Calaras” and the wineries “Vineria-Bardar,” “Cojusna”, “Moldova”, (Malie Milesti Village), “Vinui de Comrat”, “Zubresti”, “Caprineni”, “Vitis Moldova”, and “Orhei Vin”. All exhibited Moldovan wines and their producers were included in exhibitors’ catalogues of the “Vinova” show. At the show the Moldovan wineries negotiated with Austrian companies to establish a Moldovan trade mission to Austria and develop a commercial structure for advertising Moldovan wines on Austrian markets.

At present, one of the major problems of the Moldovan wine industry consists in the bad packaging of good quality wine.

1. The Moldovan glass industry is represented by four enterprises of which two produce wine bottles. One of them is the “Glass Enterprise of Chisinau”. It is the only enterprise in Moldova that produces bottles made of decolorized glass. “Glass Enterprise of Chisinau” produces a full range of wine and other bottles and is preparing to start production of bottles made of decolorized glass for champagne.

2. The “Cristall-Flor” Joint Stock Society was once the only enterprise in Moldova producing green wine bottles. In the Soviet period it held a monopoly on the local market for wine bottles. At present the majority of wineries with high exports import their bottles, mostly from Bulgaria and Romania.

3. In October 1994, the EBRD invested in the construction of a glass enterprise for production of western-standard wine bottles. It is supposed to start functioning in 1997 with a production capacity of 80 million bottles in 1997, with further increases planned. According to forecasts, in 1997 the enterprise will cover one third of local demand for western standard wine bottles.

According to information provided by the Ministry of Agriculture, the majority of Moldovan wineries exporting wine to western countries import bottles from Bulgaria, Romania, Hungary, and Chehia for $0.15 per wine bottle and $0.24 per champagne bottles delivered to Chisinau.

Note: In the past three years, several Moldovan wineries installed “Tetrapak” packaging lines for packaging of ordinary wines. Though the guarantee period is shorter, it is easier and cheaper to transport wine this way since the same quantity of wine takes up less space while being transported. Wine, thus packaged, sells successfully on the local and Russian markets.

There are 11 Moldovan wineries situated in Russia. Location of Moldovan property outside of Russia is a big problem that arose immediately after the Soviet Union collapsed. At present the problem is becoming more difficult due to the reorganization and property restructuring processes. Pursuing the idea of accelerating these processes, the Moldovan Ministry of Privatization, in collaboration with the State Administration of Viticulture and Winemaking of the Moldovan Ministry of Food and Agriculture, developed a strategy of activity for these enterprises. Its first step would be evaluation of the enterprises’ property. Next would follow stimulation of the production process with appropriate changes in Moldovan investment legislation.

The process of reorganization of these wineries into Moldo-Russian joint ventures, joint stock societies with 100% of Moldovan capital, or other forms of property is complicated by the local Russian authorities. Difficulties with Russians arise due to the wineries’ debt to local energy suppliers and government local budgets. On the other hand, the enterprises cannot pay their debts due to high excise taxes for raw wine and juice imported by the wineries from Moldova. A Russian delegation that visited Moldova at the end of September partially solved the problem of Moldovan energy debts to Russia by a restructuring deal. But the problem of excise tax rates still remains (as of 11/96).

New Technologies

In August 1996, the “Alfatek” French company proposed for use at 20 Moldovan wineries a new preparation called “Kuerkus”. This wine stabilizer has been successfully used in many countries with long winemaking traditions. The preparation is included in the registers of the International Organization for Wine and Winemaking. It has been successfully tested by the Moldovan Ministry of Health and the National Institute of Grapes and Wine, and is being tested at the Moldovan winery “Trifesti”. Local specialists have confirmed that the preparation is excellent for processing and cold-sterile filtration of wine and recommended it for use.

Moldovan Wine Exports

According to information provided by the Moldovan Department of Statistics, in 1995 wine exports accounted for 28% of total Moldovan exports.

According to information provided by Gheorghe Kozub, general director of the Department of Viticulture of the Moldovan Ministry of Agriculture, in 1995 Moldova exported six million decaliters (one decaliter = 10 liters) of wine to Russia, 400,000 to the Ukraine, 50,000 to Belarus, 30,000 to Kazakhstan, and 25,000 to Lithuania. He also said Moldova sold 750,000 decaliters to European countries, including 200,000 to Bulgaria, 243,000 to Ireland, and 300,000 to Switzerland. Further afield, in 1995 Moldova exported 40,000 decaliters to Canada, about 400,000 to Singapore, and 200,000 to Kenya.

Resource:

Mr. Kozub, general director, Wine-making and Viticulture, Moldovan Ministry of Agriculture, Stefan bel Mare Blvd., #162, Chisinau 2021, Moldova. Fax: 37 321 232237.

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The Livermore Valley winery – through its Mexican subsidiary, Wente Mexico, has formed a joint venture with Cuboro Mexico to produce and market a line of premium cigars made with Honduran tobacco under the trademark Cuboro. Initially, the cigars will be sold through duty-free shops.

The brand name, Cuboro, meaning Cubano Gold, was chosen to capitalize on the strong association between Cuba and fine cigars. Wente hopes to lay the foundation for a direct connection between its cigars and Cuba when the U.S. embargo on Cuban goods is lifted.

The cigars are made from 100% Cuban seed. The first crop from the 12-hectare (one ha = 2.47 acres) estate will be harvested this fall and the first cigars will be on the market in 1999. The cigars will be rolled by hand by Cuban torcedores in Cancun, Mexico.

RELATED ARTICLE: ANOTHER HEALTH PLUS FOR WINE?

The National Institute of Health and Scientific Research in France published a study which reported elderly persons who drink moderately are less inclined than non-drinkers to senility and Alzheimer’s disease. The study results were reported by Associated Press from Paris.

French researchers noted, however, that more research is needed to be done to confirm that wine caused the drop in such illnesses.

Since 1988, 3,777 people over 65 were studies. The findings were that moderate wine consumers were 80% less likely than abstainers to develop senile dementia and 75% less likely to develop Alzheimer’s.

An American physician specializing in Alzheimer’s Dr. Steven De Kosky of the University of Pittsburgh, said, worldwide, wine drinkers were not less likely to develop senility.

RELATED ARTICLE: ENTRIES DUE JUNE 27 FOR S.F. FAIR JUDGING

The judging at the San Francisco Fair International Wine Competition is set for July 12 and 13 at San Francisco’s Park Hyatt Hotel. Anthony Dias Blue is director of the competition. For information, contact the Fair at 3930 Washington St., San Francisco 94118. The phone is (415) 387-0828 and the fax is (415) 387-4455. A partial listing of 1997 judges includes Dan Berger, Andy Blue, Michael Dellar, Alan Goldfarb, Frank Prial, Ann and Larry Walker and Wilfred Wong.

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