Georgia’s wine industry is heavily dependent on export to CIS countries, especially Russia. Two main short-run risks associated with the Russian market presently affect Georgian wine exports: The possibility that Russia might cancel its free trade agreement with Georgia, and the economic slowdown in Russia which could lead to reduced demand for Georgian wine. These short-run risks are substantial, albeit manageable as they will reduce Georgian wine exports in total by only USD 28.5 m or 17%.
In the long run, the Russian wine market is likely to stagnate or even decline as the Russian population shrinks and ages. Therefore, steps should be taken to reduce the dependence on this market and diversify exports. We recommend several measures to expand exports to non-CIS markets:
1. A strict quality control and certification system should be established.
2. The National Wine Agency’s international marketing activities should continue to increase the brand recognition of Georgian wines in new export markets.
3. A more cohesive vertical integration strategy between wine producers and grape growers would make for a more efficient production process, used in tandem with a consolidation of vineyards.
Since September 2014, the ISET Policy Institute has been working with the German Economic Team (GET). In May 2015 ISET-PI and GET extended their partnership and began working on a variety of policy briefs for Georgia's industrial development. These briefs will simultaneously advance research in the sector and provide the Georgian government a set of guidelines for the development of its own policy, exploring where Georgia's comparative advantages lie. The German Economic Team is a consulting group that provides advisory services to the Georgian government on economic policy and is supported by the German Federal Ministry for Economic Affairs and Energy.