Austerity, currency controls, impossible debt levels and riots. You name a manifestation of economic catastrophe, and Greece is enduring it. There seems no end to the economic drama unfolding in Greece, whether it’s bank closures or the sight of European leaders publicly insulting each other while discussing bailouts.
And yet while citizens riot in Athens and leaders discuss whether Greece should remain inside or outside of the Eurozone, some members of the wine trade are reporting a silver lining to the crisis.
“Greece being on the front page is a kind of publicity,” says Stellios Boutaris, managing director of Kir-Yianni winery in Naoussa. “People are looking for good Greek stories. Wine is one of them.”
Rising exports
Since the crisis erupted in 2009 and domestic consumption plummeted, Greece’s wineries have turned their attention to the export markets. Overall exports increased by 2% from the beginning of 2014 to November, to a total of $83m. International reaction to the wines has been positive, with major media outlets such as the New York Times and Forbes giving glowing reviews.
Boutaris says exports from his winery have almost doubled in the past three years, as more people try Greek wines. “Many are positively surprised, because people haven’t realized there’s been a quality revolution. It’s a great opportunity to show them the wines have become so much better.
Periklis Drakos, export director of Tsantali Vineyards and Wineries, agrees, saying the company saw an 8% growth in exports last year. “The same momentum keeps going this year,” he said, adding that exports have grown another 5%. “Despite the bad news, our customers abroad keep buying wines, looking for Greek wine and authenticity.”
Payment problems
But the capital controls that were imposed in June 2015 have created challenges, because they make it difficult to pay suppliers for necessities such as bottles, barrels and corks. “Everything comes into Greece and nothing is produced inside,” says George Zacharis, commercial director of Domaine Costa Lazaridis, which exports 50% of its production.
The bigger wineries report that they are able to negotiate with suppliers, because of longstanding relationships. Others privately say that things have become very difficult, particularly in light of last weekend’s tense negotiations over a bailout for Greece. “[Suppliers] are really inelastic,” said one export manager. “There’s no discussion – either payment is upfront or nothing will be loaded, even from people we have worked with for many years.”
Boutaris says that while his suppliers “are OK for two or three months, what happens after that is the question mark. Little by little, every day a bit more, all suppliers ask for prepayments.”
But he believes that a way for businesses to work with the capital controls will be devised. “If it happens like Cyprus, what will happen is the banks will set up committees and we will have to apply to the banks to make payments outside of Greece. This will be OK.”
Greek consumption down
What is more of an issue is the domestic market. “The new measures – the VAT increases – will influence consumption,” says Zacharis, adding that as Greek customers trade down, it will be more difficult for producers of premium products to maintain their market share.
“A lot of distributors have stopped selling,” says Boutaris. “However, the tourist business is very strong, so we haven’t really felt anything yet, but cross your fingers.”
Although producers with recognised brands are hanging on in the domestic market, restaurateurs are having a hard time, not least because of the restrictions on how much money Greeks can take from the bank at any time. Grigoris Michailos, a wine educator and occasional contributor to Meininger’s Wine Business International, is the owner of the Wine Restaurant Paradiso in Athens. “People are afraid to go out,” he says. “They have a limit of what they can take out of the bank, so even when they have money, they’re not spending it.” He says that some of the city’s top restaurants are closed at the moment, while they wait to see what happens, although wine bars are still thriving. “People go for a glass of wine as a relief from the stress, but for a restaurant it’s difficult.”
Michailos says he does everything he can to support the Greek wine industry, so 90% of his wine list is Greek. However, because of the bank controls, he can only buy what’s strictly necessary for business. He, too, sees the export market as the saviour of the wine business, having just come back from a positive trade visit to Australia. “We took 25 producers and visited Melbourne and Sydney, and they welcomed the wines.”
Michailos says, however, that he may have to close the doors of his 38-year-old family business if things don’t improve locally.
Unfortunately, there may be even worse to come for Greece’s domestic wine trade, particularly those who are less exposed to the export market.
“We were lucky that this [latest crisis] happened in summer, because in summer people have less expenses with schools closed and because they don’t have to pay for heating,” says one producer. “But next October we will be facing winter and the new measures will be in effect… oh God.”
Boutaris says that because the economy expanded late last year, it gave him the confidence to start building a new cellar and restaurant. “How am I going to continue now that the banks are closed?” he asks rhetorically. “I will go ahead and do my best – just a bit slower.”
This article was first published at wine-business-international.com, the website of Meininger’s Wine Business International, the world’s only English language, global wine trade magazine.
