Chateau Grona, a wine produced by the Agroyug family winery in Odesa Oblast, is entering the Dutch market next year.
Ukraine’s association agreement with the European Union, which includes a free trade zone coming into effect in 2016, is a huge catalyst for the company’s plans to take advantage of an end to customs duties. Ukrainian producers have already been benefitting from the EU’s zero-tariff policy on more than 80 percent of agriculture goods since April.
Vlad Bliumberg, 46, a co-owner and chief executive officer for Agroyug, says his plans are to export as much as a third of company’s 2,000-3,000 tons of output to the EU through contracts expected to be signed in 2015.
Agroyug wine’s key advantage is price – 1.25 euros per bottle on average, against 3-4 euros for Chilean wine, which is popular in the Netherlands.
Western European customers are very sensitive about pricing amid overall slowdown of the EU economic growth, says Hans Ramaekers, a leader of the Netherlands Business Club in Kyiv and a consultant for Agroyug.
The unbottled wine will be sold in bulk, therefore in bigger amounts, with a markup not exceeding 10 percent, while bottled wine will go with up to a 50 percent markup.
“It will be time, money and effort-consuming. I wouldn’t count on any serious profits in the first year, but I am sure this decision is strategically right,” Bliumberg told the Kyiv Post in a Skype interview from the Netherlands. “Costs are especially high in the beginning. They find our offer attractive,” Bliumberg said after meeting Dutch clients at a wine exhibition in Amsterdam.
The Netherlands, with 16 million people, is more open to new products than most Western European nations, says the Agroyug CEO. And there are advantages to gaining this foothold. “Once you get there, it makes it easier to enter the markets of their neighbors,” he said, noting the company is eying expansion to the Czech Republic, Germany, Poland and Slovakia.
“The taste for wine in Western Europe is very different from the taste in this country,” Ramaekers of Netherlands Business Club explains. “I once tried to help export the unlabeled Inkerman wine to the Netherlands, but they didn’t like it. For instance, Agroyug’s Chardonnay is not suitable for the Dutch market, but their Cabernet Sauvignon is perfect.”
He says branding is important too. The label should be bright to attract customers, which is why it would be good to add a Ukrainian flag to the image of grapes on the bottles. A minimalist-looking bottle remains unnoticed on shelves containing as many as 60 brands, Raemekers says.
Labeling should also be in the English language, mention that the wine contains no sulfates and tell an exact percentage of alcohol, not “between 12 and 15 percent,” like it’s done in Ukraine. Moreover, Agroyug had also to redesign their “terribly looking” website to become more attractive for Dutch retailers, Raemekers says.
Agroyug is obtaining all documents needed for exporting goods to the
28-nation bloc. The hryvnia’s 50 percent devaluation this year makes
any exporting activity more profitable as exporters get hard foreign
cash, while paying the salaries in cheap local currency.
The company
used to work actively with Crimea, previously home to half of Ukrainian
vineyards, and Russia, but has now found other partners.
Bliumberg’s
intention to expand to the Netherlands arose after the Dutch Embassy
mission came to Odesa to meet the local business community in October.
He met Ramaekers of the Netherlands Business Club, who offered advice,
contacts and legal assistance. The only prerequisite was membership in
the club with a $500 annual fee.
However, Dmytro Sydorenko, head of
Ukraine’s Sommelier Association, is skeptical about the Chateau Grona’s
performance on new markets as he has never even heard of the company
before. “If someone is not known on the local market, what are their
chances of conquering the new ones?” he asks.
A big fan of Guliev and
Prince Trubetskoy wines from Kherson Oblast, Sydorenko thinks local
producers have much to improve to win the tastes of EU consumers.
Kyiv Post staff writer Olena Gordiienko can be reached at [email protected].
