Slovenian wine must fight for foreign markets

- Last updated on GMT

Related tags: Wine, European union

Slovenia's wine makers, buoyed by the news of EU funding for their
vineyards, face a long struggle if they are to conquer foreign
markets and compete effectively against the titans of the world
wine business - but one man is certainly determined to try, as
Chris Mercer discovered.

When the EU announced last week that it would give Slovenia around €3 million to improve the country's vineyards over the next year, it gave recognition to a little-known yet long-held tradition. Slovenia has been producing wine for more than 2,000 years, with the first vines thought to have been laid there by Roman invaders.

Dusan Brejc, managing director of the Commercial Union for Viticulture and Wine of Slovenia, believes it is time the world found out about Slovenian wine, and he is disappointed that the country did not work harder in its pre-accession years to secure more funding.

"I do think that we were not very successful in the years of approach,"​ said Brejc, who nevertheless now wants to use the EU money to increase exports of Slovenian wine from five per cent to 20 per cent of production in the next few years.

And he has highlighted the UK and Germany as key potential starting points: "We should be very focused on one or two locations. The UK is a market which lives by style and not primarily cost, and in Germany consumption is still growing. We have more of a chance if we enter a market which is still growing."

In order to do this, Brejc thinks that "we should restructure those vineyards that have potential internationally with an orientation towards a more international style of wine".

There is a base to work from; Slovenia already produces its own Merlot, mainly in the Koper area, and Sauvignon in the Podravje and Primorje regions.

But Anne Nugent, research manager at market analysts Euromonitor​, said that if any of the six wine producing countries among the new EU member states were to penetrate foreign markets then they would be at a much better advantage if they had a niche product.

Nugent named the Czech Republic's reputation for sparkling wine and Hungary's Tokaji wine as examples of why these two countries may have a head start on the rest.

The main problem is getting the wine into the shops. "It's all about marketing, they have to get that right,"​ said Nugent. "The UK has a lot of brands on the shelf, but if somebody comes in with something new and something different then it may be received well by consumers."

Indeed, there are many pitfalls for the wine-producing accession countries. They must meet strict EU standards in areas such as production quality and health and safety, whilst many of the vineyards are small, privately owned businesses, reducing their selling power except through trade associations.

In Slovenia, especially, there is also an unpredictable climate as a result of the country's position sandwiched between the southern slopes of the Alps and the Mediterranean coast. It is thought this may vary wine production by up to 50 per cent in the year.

"It will take time and effort. It's not that easy. Certain vineyards are getting older and older and need to be replaced,"​ said Brejc, adding that some of the bigger vineyards had made some good progress in modernising their cellars.

Conversely, Slovenia's wine growers could be under threat on their own territory. Outside competitors, particularly those pushing New World wines from places like Australia, Chile and South Africa, are circling countries like Slovenia, waiting for their chance to pounce, according to Nugent.

"Domestic consumption shows there is potential for good growth, though this will probably be a longer term trend. In the shorter term, there may be a shift towards imported varieties; a lot of companies are looking to eastern Europe,"​ she said.

Brejc acknowledged this, saying that imports were rising steadily. "The market for the big players is quite small so we're not expecting a lot of interest, but in a few years we might lose 20 per cent of our market share,"​ he said. Home-grown wine currently controls around 95 per cent of the Slovenian market.

The danger does not deter Brejc from focusing on exports, where some ground lost at home could be made up. Both he and Nugent said that in the UK, bottles priced at £4.99 (€7.20) would be a decent starting point, allowing Slovenia to assert itself as a quality wine producer while also competing with the New World brands.

Both also believe tourism has a crucial role to play. "We need to bring people to Slovenia. They need to visit the vineyards and taste our wine. They need to see that we understand what the EU standards are,"​ said Brejc.

Nugent said that the relatively large numbers of tourists going to the Czech Republic would be important for that country in building a growth trend in foreign markets.

Slovenia's main wine-producing regions are Podravje, Primorje and Posavje, with the total area of vineyards covering 21,500 hectares - roughly similar to that of the French Bordeaux region.

The six new EU members set to receive vineyard funding are: Hungary (€10 million), Slovenia (€2.9 million), Slovakia (€2.9 million), Czech Republic (€1.7 million), Cyprus (€2.4 million) and Malta (€171,000).

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