Georgia on the Vine : Revived Interest in the Grape Helping Ex-Soviet Republic Return From Brink

The romance of wine has enchanted the people of Georgia from time immemorial. Luscious bunches of grapes are carved into the walls of their tall stone churches. Vineyards stretch from the snowy mountains on the Russian border to the subtropical coast.

But freedom from Soviet Moscow in 1991 virtually destroyed the winemaking industry that was once the tiny republic’s main source of wealth. Civil war, regional wars and internal anarchy drove terrified peasants from the vineyards and closed the roads north into Georgia’s main market, Russia.

Only now--helped by the arrival of some well-known Californians and the anxious patronage of Georgian President Eduard A. Shevardnadze, the former Soviet foreign minister--is the business at last clawing back from the abyss as the country recovers its confidence and economic well-being.

“Lots of investors are coming to Georgia,” said Albert P. Werner, general director of the Californian-Georgian joint venture Chalice Wines, who has been based in the capital, Tbilisi, since a few weeks after the company was set up in the summer of 1994. “I think competition is starting to heat up, and that is a very positive sign for the Georgian wine industry.”

The wars--in the regions of South Ossetia, then Abkhazia, and then over the Russian border in Chechnya--are now all but over. Shevardnadze has dispersed the semi-legal private armies that prowled his capital until two years ago.

Georgia’s economy expanded 2.4% in 1995, with agriculture accounting for half the country’s gross domestic product. Deputy Economy Minister Nodar Ulumberashvili expects the GDP to rise not less than 10% in the second half of 1996 after an astonishing 16.6% rise in the first half of the year.

A state anticrisis program designed to revive key industries is forcing up production in wine and tea. For the first time in three years, Georgia’s government managed to find $5 million to fund the grape harvest, ensuring buyers for the crop and kick-starting autumn wine production. But there is still a long way to go.

The harvest in the last Soviet year, 1991, was 450,000 tons. It dropped dramatically to just 13,000 tons three years later. Zurab Sturua, vice chairman of Samtresti, the Georgian state corporation for grape and wine production, says he expects a harvest this year of 70,000 tons.

Chalice Wines is a $1-million-a-side partnership between California’s Georgian Wines LLC and the Georgian wine factory Sameba. The California partner is divided among three interests--Eric Wente of Wente Bros. vintners; a group of private investors that includes Shevardnadze’s one-time fellow negotiator, former Secretary of State George Schultz; and Chalice Investments, the brainchild of Stanford University professor and Silicon Valley venture capitalist Robert Medearis.

With a new emphasis on quality, rather than Soviet quantity, Chalice Wines is beginning to revamp the winery it has taken over from the Georgian state.

New, high-quality bottles of standard international 0.75 liter size are being brought in from Turkey. Labels are printed in Finland. Real corks, not the plastic stoppers of days before, are imported from Portugal. One of the four production lines in the factory in Kakhetia, eastern Georgia, is clanking back to life.

The aim of the biggest joint venture outside Georgia’s energy sector is to win back for Georgia its old pride of place in the vast market of Russia, many of whose 150 million people are now relatively prosperous after nearly five years of a shift to the market.

About 95% of Chalice Wines’ 3-million-bottle annual output--which Werner estimates as 20% to 30% of Georgian wine exports--goes to Russia.

But wealthy Russians, who can now buy the wines of the capitalist world, have grown snobbishly shy of the Georgian wines that were once praised throughout their Communist homeland.

Not without reason. Georgia’s years of anarchy have given rise to a whole shadow industry of low-quality wine produced with false labels and peddled at fire-sale prices in the kiosks of Moscow as genuine Georgian produce. Wines are named for their region of origin, with no capitalist-style brands.

“My concern was that these generic wines that anyone can manufacture are of such poor quality, or falsified, or cheaply packaged, that they hurt our image in terms of trying to brand build. So I’ve initiated a brand-building program, with a corporate logo by which to identify our high-quality products,” Werner said.

He is already selling his wines at an average price of $1.40 a bottle in top Russian supermarkets. Chief Finance Officer Geoff Cleasby said the Sameba winery is working at only a quarter to a third of capacity, and production could be stepped up.

But first, a solution has to be found to the other legacy of war: crippling transportation problems. Only one road remains open into Russia, and shakedowns are rampant on it.

Werner has been experimenting with complicated shipping routes over the Black Sea to southern Russian ports and up to Moscow and beyond by truck, as well as with rail links east to Kazakhstan and from there back into Russia.

“It’s not good for commerce. It makes this bit of the world just that bit less competitive than wines from the Crimea, Bulgaria or Moldova,” Werner said.

“A lot of progress has been made but things are still just very, very difficult,” he said, adding that Chalice Wines hoped to break even this year and make a “sizable profit” by next year.

But business is worse for other Georgian vintners without foreign partners. The country’s Wine Factory No. 1 is so cash-strapped it wants to sell the booze collection of Georgia’s most notorious son, Josef Stalin.

Condensation drips down the cellar walls and a thick feathering of mold obscures the labels of the bottles laid down by the Soviet Union’s most feared dictator, still revered here by many compatriots as a local boy who made good in the cutthroat world of Moscow politics.

The collection--mostly liquor given to Stalin as gifts--briefly aroused the interest of the British auction house Sotheby’s but the auctioneers later backed off, factory director Levan Demetradze said wistfully.

Even those who, out of love for the vine, are still growing their own grapes are far from sure they are doing the right thing, said Babulia Otiashvili, 55, a grandmother harvesting in giant wicker baskets the last of the grapes on her two-acre private plot.

“Things were bad for us during the war, and they’re no less bad now,” she said, feet planted firmly in the thick clay next to her pony cart. “Nothing has changed since the war, except that then we couldn’t find any bread to buy, and now there is bread on sale but we can’t afford to buy it.”