Assessing Competitiveness In Moldova's Economy - Economic Growth

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Development Alternatives, Inc. Moldova Competitiveness Assessment: The Wine Cluster—Annex A compared to others. Some Moldovan brands try to look similar to French wines, with simple, less colorful labels. Importers’ Perspective Moldovan wine importers see demand for Moldovan wine as still very high and growing, but with demand coming mostly from the lower-price segment. In their view, the declining market share of Moldovan wine in Russia is explained by the introduction of new imported and Russian wines, not a decrease in demand for Moldovan wine. The Moldovan share in the wine market is viewed as declining for the same reason that the share of French wines in the world wine market is declining—taste is changing because of greater consumption and the availability of a huge variety of new products. Problems One opinion is that, traditionally, Moldovan wine producers were represented by large and medium-sized factories, but in the last couple of years many small producers started entering the market, focusing on producing large qualities of cheap wine, with little attention paid to quality. These producers target the lowest-end Russian consumer. This trend has had a negative effect on the overall image of Moldovan wine on the Russian market. Moldovan producers often took traditional proximity and success on the Russian market for granted. Low-quality, cheap Moldovan wine flooded the Russian market. At that time Russian consumers were not very demanding. Many Moldovan producers assumed that Russian consumers would continue to buy cheap Moldovan wine and tended to give little thought to the emerging competition in the Russian market. They did not see a need to improve production or promote the good image of Moldovan wines in Russia. In recent years, with increased competition, the quality of Moldovan wines may have improved somewhat, but there continues to be a traditional lack of promotion. As a result, even knowledgeable people in Russia are often not aware of the qualities and potential of Moldovan wine. High-quality Moldovan wines are available, but current image is poor and it is hard to win back the Russian high-end consumer. Marketing of Moldovan wines is poor and often nonexistent. Moldovan wines are also poorly represented at exhibitions, a very competitive area on the Russian wine market. Promotion requires a sufficient financial commitment, and importers of Moldovan wine are reluctant to make that commitment and fund marketing campaigns, hoping that since the wine is cheap it will sell anyway. There is a tendency for growth in the share of higher quality Moldovan wines on the Russian market. However, in 2002 there were 60 importers of Moldovan wines and still only 15 of them focused on high quality wine. They held 40 percent of the market, with 60 percent going to the low quality Moldovan wine. Recommendations July 2004 • DRAFT Page 22
Development Alternatives, Inc. Moldova Competitiveness Assessment: The Wine Cluster—Annex A A marketing effort is needed that would promote a strong Moldovan brand, with a focus on old winemaking traditions and history. Promotion of a good quality standard is also needed in order to improve the image of Moldovan wines and to reintroduce Russian consumers to their qualities. Promotion campaigns could target restaurants, bars, and nightclubs, in particular. Some suggest that Moldovan producers need to market their wines as high quality and move to the premium price category. Others think it would be better to target the medium-price segment, offering consistently good quality wine for a reasonable price. Crimean wine is cited as an example of a high-end category wine, priced at about RUB 500 a bottle, which has not become very popular or sold very well. One Russian producer/importer of Moldovan wines has been successful in offering good quality wine for middle segment and creating a positive image of its brands. Sources Importers Luding (wine importer, including Moldovan wines). MGB - Impax, Vlada Zaiko (high-end importer, working with individual clients; do not import Moldovan wines; focus on Italian, French, New World, and some Georgian). Garling (Meginkom CB), Michail Manatov (importer of Moldovan and other wines). Dionis-Club, Ivan Bubnov (importer/producer of Moldovan and Georgian wines; has a reputation for good quality wine; owns factories in Moldova and Georgia). GB Holding Vin (one of the largest importers from Moldova). American Chamber of Commerce in Russia, Marina Popova. National Alcohol Association. Trade Representative (U.S. Embassy), Olga Tajbahtina. BISNIS representative in Russia, Alla Mavrina. Distributors Aromatnij Mir (specialized wine store; direct distribution chain for Aroma; one of the major importing companies). Supermarkets Perekrestok Sedjmoj Kontinent Pamstor July 2004 • DRAFT Page 23
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Assessing Competitiveness In Moldova's Economy - Economic Growth

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