“Austerity” is a word used to describe a young wine which, despite showing unpleasant characteristics, possesses great potential for long-term development. Greek winemakers living through the unfolding European debt crisis can only hope that the definition may apply to their industry. Like the nation’s finances, the wine sector in Greece is in crisis, despite the fact the country has been producing wine for at least 3,500 years.
Greece’s only Master of Wine, Konstantinos Lazarakis, reckons it almost impossible to say how badly national wine sales have been affected by the economic and political turmoil. His guess is that retail turnover has dropped a third during the crisis, and anecdotal evidence puts the fall in wholesalers’ business at twice that. With 90 percent of Greek wine traditionally sold on the domestic market, the industry is being forced to make tough decisions about its future.
Markus Stolz, a German wine-export consultant who lives with his family in Athens, talks of “chaos” in the local wine trade: “Wineries have struggled for many months to collect money owed to them by their distributors.” Cash-flow problems started to materialize about a year ago, in Stolz's assessment. Now, government efforts to increase taxes and slash costs, combined with a liquidity crisis, are hitting Greeks hard.
Wine is described as one of the “five primary elements of the Greek diet” by the Greek Wine Federation, an independent non-profit organization established in 1995 (the others being water, salt, oil and cereals). “Either as the complement of a meal, as a sedative or as a drug, wine is closely connected to the Greek culture and religion," the federation states. Lazarakis agrees that wine is a staple in most Greek households. However, people’s ability to pay for it has severely diminished.
As a result retail prices are plummeting, “while the consumer demand continues to shift hard and fast towards bulk wine,” says Stolz. He observes that in some cases wine is being sold well below cost, as retailers seek to get at least some return on their investment.
But despite the rock-bottom prices, many Greeks are turning to what Lazarakis calls “undeclared vineyards." He explains that most Greeks will know someone producing homemade wine. These “backyard” winemakers cultivate small parcels of land in the countryside and produce unlabeled wine, often at local co-operatives. The wine is generally stored in steel or concrete vats and sold to customers in reusable 30–40L plastic containers.
With backyard wine typically selling for around $2 a liter, it’s easy to see the appeal to the cash-strapped. The phenomenon is one example of paraoikonomia – the Greek shadow economy.
While some producers are “rushing to produce cheaper wines to meet demand,” says Stolz, others are looking to exports for salvation. However, there's a hitch: "Many small, family owned wineries have limited knowledge of what it means to export their wines."
In the past, more than half of the production that found its way abroad came from the three largest wine producers: Tsantali, Boutari and Greek Wine Cellars (formerly Kourtaki). So even before the debt crisis, many in the Greek wine industry didn't fully grasp the exporting business. Stolz also believes that winemakers who did export were not always advancing full throttle.
“Generally speaking I think one of the major problems for the export market has been that the Greeks have not really been exporting. In many cases they were shipping their Greek wines to Greek importers, who distributed it to the Greek community abroad.” In the United States alone, that community is three million strong, according to the U.S. State Department.
Dalamaras blames “old mentalities” for the tardiness in moving with the times. “The average age of the rest of the winemakers is quite high . . . They don’t have the direct contact that we younger people have with the market." Many older winemakers don’t speak English or have access to the internet and Dalamaras fears they are out of touch with consumer expectations.
In 2000, the National Interprofessional Organization of Vine and Wine (EDOAO) was tasked with furthering the export ambitions of Greek's wine industry. Established as a partnership of the Greek Wine Federation and the Central Union of Vine and Wine Producing Co-operative Organizations of Greece, its job was to promote Greek wine on the international stage. For a decade, the EDOAO did just that, but in April 2011 it derailed itself in an internecine dispute to do with government loans.
The EDOAO is still in operation, though it has lost much of its oomph in the dispute's wake. The Dalamaras Winery is a member and, in general, believes the organization's impact has been positive. One example is the development of new international markets, such as Norway, where the state-owned liquor board has continued to support Greece throughout the debt crisis.
Lazarakis notes that immediately before the crisis, Greek wine exports had actually increased (by 4.5 percent in 2010). Stolz, too, cites the growth in foreign sales – in the American and Asian markets, in particular. His own company has recently struck deals with two importers (WineWise in California and Frederick Wildman & Sons in New York/New Jersey) – the result, he says, of Greek wine becoming more fashionable among Americans. Many of the wineries included in the deals are first-time exporters to the U.S. “This will potentially change the landscape for the Greek wine industry," says Stolz.
The German market – traditionally the biggest importer of Greek wine – is looking less rosy because of resentment about the cost of the Greek bail out. Stolz reports that one German wine merchant asked him: “OK, Markus, you just have to tell me – how can I sell a Greek wine to a German now?” That sort of backlash has prompted a group of leading Greek business people to launch a campaign with the John Lennon-inspired slogan: “All we are saying is give Greece a chance.” Backed by Aegean Airlines, Coca-Cola Hellenic and Hellenic Petroleum, the Greece is Changing campaign wants to break down “unfair” stereotypes. Campaigners have pointed to the grim reality: their country is entering its fifth year of recession – “with a dramatic impact on the life of every Greek.”
In the wine industry, export hopes have, naturally, turned to the burgeoning Chinese market and some success has been reported. A large wine-growers’ co-operative in the Greek Macedonian region, VAENI-Naoussa, recently signed a deal to export 300 containers of red wine a year to China over the next decade.
VAENI-Naoussa prides itself on its deep-red, full-bodied wines made from Xinomavro – the native Greek grape variety that, along with Agiorgitiko, is garnering international praise. Xinomavro (meaning “acid black”) is difficult to cultivate, but its reputation as a challenger to the great wines of Bordeaux and Barolo has wine connoisseurs excited. The indigenous grape is perhaps quintessentially Greek; expressive, temperamental and rarely found without food. Some believe the time is ripe to exploit the growing interest in the grape, to help the wine industry out of its current crisis.
“We do something that cannot be found elsewhere,” says Dalamaras, who has developed his own slogan: “The time for Xinomavro is now.”