Wine Industry Report

Will they contribute to the wine lake or will they succumb to competition from the established producers?

Until 1989, viticulture in the Eastern Bloc was collectivised and the emphasis was on quantity rather than quality. Most wine was consumed locally and exports went to other Eastern Bloc countries.

Most wineries were run as cooperatives with hundreds of grape-growing members, but have since been corporatised. But communism affected the wine industry in less expected ways.

‘During communism we could only buy Russian tractors with wide wheel spacings,’ said István Turóczi, General Manager, Royal Tokaji Wine Company in Mád, Hungary. The result was wide row spacing and about 2,500 vines/ha. ‘We are replanting our vineyards at 7,000 vines/ha.’ Suitable terroir in the Tokay region is limited.

‘The communists turned one 1st class terroir vineyard into a quarry for pottery-making clay,’ said Turóczi in disgust. The Tokay region, which straddles the border between Hungary and Slovakia, has a long-standing tradition of making superb dessert wines.

‘Royal Tokay’s policy is to concentrate on producing the highest quality wine. The 2000 vintage is still in the barrel. Originally we aimed to export all our expensive wine, but since 1994 the local market has begun to develop.’ Some Tokay is also produced in a small 900 ha area of south-eastern Slovakia close to the Hungarian border.

Recently the price of wine in Slovakia has skyrocketed, so winemakers are doing well, but grape growers are facing hard times.

‘Yields are very low and the price per kg of grapes has been unchanged for 15 years at around 10-22 Slovak crowns (R1.20-2.60),’ said Matus Vdovjak, Marketing Manager of J & J Ostrozovic in Slovakia. Most of the wine output is sold locally. The domestic wine market is developing, with an average consumption of 15 litres per capita.

But while Tokay may be a special case, a lot of conventional wines are produced in central Europe. Lásló Eke is Managing Director of Vinitor, a company that provides marketing services for one of the largest Hungarian producers, Szölöskert Rt. of Nagyrede, 80km northwest of Budapest. The company has long-term grape supply contracts with 1000 growers whose vineyards average 1.5 ha in size. Hungary holds fifth place in Europe as a wine consumer, at 33 litres/capita.

‘There is not a big difference in price between quality and table wine in Hungary. Hungary taxes wine on the basis of percentage alcohol,’ said Eke.

‘The EU is not paradise but it will be a good thing in the long run. We must produce what the market wants. Hungarian wine is competitive on quality and price and we make sure that clients get value for money,’ said Eke. Most Slovak wine production takes place near Bratislava in the west of the country. The major producer is Vitis Pezinok. General Manager Milo Seveik said the company has its own 200ha vineyard in the Small Carpathians, but buys most of its grapes from independent growers. ‘We are trying to establish a reputation for quality. We’re not aiming for too expensive wines, just a middle way.’

Pezinok exports around 15 percent of production, mostly to the Czech Republic and Poland. ‘At present we are accepting lower prices to establish an export market,’ said Seveik. While the Slovak and Hungarian wine industry is characterized by an enthusiasm to improve and export wines, the prevailing mood in the Czech Republic is complacency. ‘Imported wines are cheap and often nasty,’ said Prague wine consultant, John Baker. ‘You can buy Chilean wine for 50 crowns (R12) a bottle. Similar local wine sells for 100 crowns (R24).’

Nevertheless, the Czech industry cannot produce enough wine to meet demand because patriotism makes Czechs drink local wine.

‘The local industry is expanding at good prices. If they have unsold backlogs they are not saying so.’ Helena Baker’s Guidebook, which is printed every other year, lists 150 Czech wineries ranging in size from 5 to 20ha. The three central European wine producers are unlikely to make a major impact on the EU wine supply situation. Particularly as they are balanced by the accession of Poland and the Baltic states, which are enthusiastically turning from vodka to wine.

The crunch will come when major volume producers Romania and Bulgaria are admitted tot he EU, probably in the next five years. Then, unless the EU takes decisive measures, the wine lake will be in danger of bursting its banks.

by Frank Smith
[source: wine.co.za]