Government Policy In The Georgian Wine Sector

Georgia boasts an impressive 8000-year-old winemaking tradition, positioning itself as the world's first known location for grape winemaking. This article delves into the intricacies of the Georgian wine sector, shedding light on government policies, the historical significance of winemaking in Georgia, and the outcomes of these policies.

The roots of Georgian winemaking run deep, with an 8000-year-old tradition that makes the country a pioneer in grape winemaking. Central to this tradition is 'Rtveli,' the grape harvest, commencing in September and continuing throughout autumn. This period is marked by festive celebrations, adding a cultural dimension to the winemaking process. The National Wine Agency reports an annual grape production averaging 223.6 thousand tons over the last decade, primarily processed into wine.

Georgian wine holds a significant position in the country's economy, constituting 21% of the total agricultural export value in 2021. Over the past decade, wine exports have seen a steady rise, growing by 21% in quantitative terms and 22% in value. The main export destinations include the Commonwealth of Independent States (CIS) countries, with Russia, Ukraine, and China leading the charts. However, the Russian embargo in 2006 prompted diversification, decreasing Russia's share from 87% in 2005 to 55% in 2021.

With more than 400 indigenous grape varieties, Georgia's winemaking landscape is diverse. However, commercialization is primarily centered around a few key varieties, including Rkatsiteli, Mtsvane, Kisi, and Saperavi. This strategic focus aids in the production of wines that resonate with both domestic and international markets.

The Government of Georgia (GoG) actively supports the wine sector through the National Wine Agency, established in 2012 under the Ministry of Environmental Protection and Agriculture. The NWA plays a pivotal role in implementing viticulture support programs, encompassing quality control, knowledge dissemination, export promotion, research and development, vineyard registry creation, and the promotion of organized vintage (Rtveli).

From 2014 to 2016, GoG's spending on the wine sector, including grape subsidies and promotional campaigns, amounted to 63 million GEL (22.8 million USD). Notably, 40-50% of this expenditure was allocated to grape subsidies. The subsidy landscape underwent changes in 2017, with a temporary abandonment of the scheme. However, the economic challenges post-Covid-19 led to a resurgence in 2020, with spending reaching 113.4 million GEL (41 million USD) in 2020 and a continued increase in 2021.

In 2022, GoG persisted in subsidizing the grape harvest, allocating about 150 million GEL (54.2 million USD) to grape subsidies. Specific conditions were set for wine companies to receive subsidies during Rtveli 2022, emphasizing the purchase and processing of specific grape varieties from the Kakheti region.

While subsidies have played a crucial role in the sector's revival, concerns arise about the disproportionate allocation of funds. The majority of the National Wine Agency's funds are directed towards subsidies, leaving other essential areas like quality control, market diversification, and research and development with insufficient funding.

To ensure the sustainable development of the sector, it is recommended to reconsider the subsidy approach. Direct state subsidies could be replaced with targeted support addressing systemic challenges related to the research and development of indigenous grape varieties. Additionally, further promotion of Georgian wine on international markets, adherence to food safety standards, digitalization, and support for innovation are proposed to enhance the sector's long-term competitiveness.