Ep. 1265 Ukraine Wine Market | wine2wine Business Forum 2021

Coming soon to a city near you, Vineita Lee Road Show. Have you ever wondered how to attend Vineita Lee for free? Are you a wine trade professional interested in a sponsored trip to Vienie to the International Academy, or Vien Italy, the wine and spirits exhibition. Coming soon to Princeton, New Jersey, Harlem, New York, and Chinatown in New York City, Cardiff in Wales, London, in England, and Roost in Austria. We'll be giving away our new textbook Italian Wine Unplug two point zero. Find out more about these exciting events, and for details on how to attend, go to liveshop. Vineitally dot com. Limited spots available. Sign up now. We'll see you soon. Italian wine podcast. A wine to wine business forum twenty twenty one media partner is proud to present A series of sessions highlighting the key themes and ideas from the two day event held on October the eighteenth and nineteenth twenty twenty one. This hybrid edition of the business forum was jam packed with the most informed speakers discussing some of the hottest topics in the wine industry today. For more information, please visit wine to wine dot net and tune in every Thursday at two pm Central European time for more episodes recorded during this latest edition of wine to wine business forum. Hello, everyone. Good afternoon. Good afternoon. I think we are ready. So thank you so much for being with us today. I see you would like to know about Ukrainian one market. So, let me introduce, Pado Glassaf. Pacaglaser has a legal background, but for more than twenty years, progressively developing his career in wine business in Ukraine. And he have so close of knowledge. You know, when we were preparing this presentation, some information we are planning to share today, you will not find it. So, we would like to start with a name. Yeah. Let me first, yeah, also introduce you, Veronica who is my moderator today in my, I'm in partner for this presentation. So Veronica, she also has the, Billorussian origin, you some of the Ukrainian blood. She's the, wine writer. She is the wine marketing manager. So working with some of the companies, and also right now, participates in this new wine travel award project, which we'll also maybe we'll talk a little bit about it today. Okay. Thank you, Carol. So, it it was a bad idea to choose his name, Ukraine, the treasure island of Europe. I believe, he will now share why. Why is the treasure? Yeah. Of course. Well, actually, well, the name Ukraine, Treasury of Iran, that was because the organizer for the event asked for some cute name, you know, so very impressive name. So that was the main reason. But, honestly speaking, really, Ukrainian market, it's quite interesting and unique. You know, it's really like, treasure island or El Dorada. I mean, you can win it all. You can lose it all. So not perfectly logical. So you sometimes you don't understand exactly what's happening. But, probably at the size of the price, it's quite big. So probably that's that's the main reason, I guess. Yeah. And, is this joke appears in my mind? You know, like, twenty years, it's pretty long career to draw their treasure map. Right? So, our first jobs are kind of it's about market over you. So probably we'll start. Yeah. Sure. Just one technical question. I I'm not sure. Is it okay if I'm sitting because Andrew see me? Good. Because if I will state, it will be good. Okay. So, let's talk a little bit about the Ukrainian market. And, you remember, I was telling you in the beginning that the Ukrainian market is not perfectly logical. Because when you first, you know, look to the figures that you see here, so it looks, well, let's say a little depressing because we have the country of population that goes down. So we used to have forty five millions. Now it's forty one Then if we talk about the one consumption, so it's zero point two liters per capita. I mean, if you will con compare it with Italian, which is four point five, four point six, it's almost nothing. Then if you take a look to the, you know, numbers of, inflation, evaluation, you know, it's like the heart attack, you know. So I mean, always going up, sometimes down, but usually up. So and, yeah, I mean, the consumption itself. Okay. It's the consumption of wine. It's small. Stable, but very small. And then the consumption of spirits actually is going down. And, yes, I mean, the the question of the normal, you know, person would be, why should I go to this market? You know, I mean, what to do there? But then, the logical part because when we see the imported wine trends, everything goes up. So when we talk about the steel imported wine, the volume grew up two times. I mean, last five years, quite easily. So right now, it's four point seven million nine liter cases. If we take a look to the imported sparkling wine, so then, it's actually more than five times. So starting from, five hundred, thousand nine liter cases, now it's three point four millions, nine liter cases. And that's all just in five years. And now the best, you know, probably news for Italian producers because it will switch to the Italian wines. Actually, Italian wines are the ones that are driving this trend. And, so for steel wines, it's more than two and a half times gross in last five years. For the sparkling wine, something happened that had never almost never happened before because, sparkling wine from Italy, now it's more than the local wine, which is something that actually in Ukraine Usually, that doesn't exist. I mean, if there is the local product, usually, you have it much more than the imported one. So only two exceptions, both with Italian products. So sparkling right now, and, yeah, for a long time, it was very much category. So which is named Martinez. So when And, yeah, so which means that for Italian wines, it really it's a huge growth. And, it's booming, and, actually, it's booming everywhere. Yeah. And, some almost like This is the information that is hard to find. So, like, why Italian wines? Why Ukrainian consumers prefer them more than any others? And, there is not much information on segmentation of Ukrainian consumers at all. So we can only base on bagel expertise during this twenty years, and also, like, the trends are changing a lot. So maybe Huddl could tell about it. Not at all. I mean, well, there was. Oh, no. I'll first tell, you know, answering about why italian. Actually, I will not be unique because pretty the same concept was, announced by our previous, lecture. So probably it's pretty the same in the Kazakhstan or any other, CIS markets. So, yeah, Italy for Ukrainian people. You know, this is the country of the best food of luxury products of, yes, the paradise on the earth. And, in terms of, understanding, you know. So people when people think about the Italian, something, Italian, this is something very good, very quality, very luxuries. So that's why it's not a question. And, yeah, again, like, the, Arzamb was mentioning previously, yeah. I mean, every second restaurant in Ukraine is the Italian restaurant. So that's why Italian food goes with Italian wines. And speaking about the consumers, really, we didn't have much of their searches for the last I would say five to ten years. Well, maybe due to the number of crises that we did have. But, what we can see, you know, just from the numbers. Yeah. I'm sorry. I don't have much of the pictures, you know, so more was more the grass on the numbers. It's that, the consumption is changing. So people are drinking more and more wines. And some of the reasons are, again, I've heard them today, from from from from previous, you know, lectures. That, people who are getting elder, they were drinking spirits. Now they have to drink less, so they have to switch to wines. But, the younger generation, we see it that they also go more and more for lighter, drinks, which actually are the wines, And, yeah, there is the trend flow, alcohol wise, for example. But then another, tendency that we see, and that is something that we see, between the youngsters is that, the young people, they prefer to drink less sometimes. Well, because they're still limited, you know, with the with the resources. But he preferred to drink less, but to drink some more quality products, which actually again, well, from my point of view, you know, gives their very, very high perspectives. Yeah. And now we are we will switch to distribution. I believe it's important here. Yeah. As I mentioned, I'm sorry. I mean, well, I will have a lot of numbers, graphs. So because well, I thought that we'll probably people who will come to to to this presentation will be the producer who will be interested how the market is operated. So, the majority of the market is still operated by the traditional importers, which is very simple. Actually, well, getting just back, you know, about the openness of the market. So I would say that the market is quite open. So we don't have, some troubles like, like, like, I don't know, expensive license or quotes or something. So the market itself is quite open. Still there are some, local, things that you have to adjust. Like, for example, text vendors, you have to adjust them and you have to adjust them before the goods will come to Ukraine. So which means that you will have to have the professional partner on the market. But now it's a little bit differentiating because now the traditional importers or distributors, who do the national distribution coverage. So it's just now just sixty five percent. And now we have the growing really huge tendency of the direct imports of the supermarkets or of the specialized retail. And, just for your, I mean, if you could see it on the picture, actually, there share of the specialized retail direct import is fifteen percent. That's a lot. So I would say that the biggest, sometimes, importers of the Italian wines are the specialized details and their direct import. So it's just, you know, a means for you if you will decide to come to the market really. That is the first decision that you will have to make. So either you will go for the traditional retail, traditional importer, and then you will get some national coverage. But it will take some time. Well, you know, the distribution system, or you can, you know, really find the very good professional, modern, retailer who will very easily find you some volumes, some good volumes, but, of course, you will be limited to this, retailer home. And, yeah, so just again, a little bit about the sales channels that we do have. So the majority again is the model to I'm sorry to introduce you, to interrupt you. Just one more thing. I think it's very important. Cancellation of, import duty in Ukraine. Yes. Yes. Yes. Sorry. Yeah. Yeah, indeed. This is something that was happening for the last five years, and, that is finishing this year. We have the now. We have the full free trade agreement with the European Union, which means that all the duties had been canceled. And especially that mattered a lot for the sparkling wines because we had the import duty of one point five, euro per liter. And, yeah, the difference is quite high. So but that was reducing for the five years in equal parts. And, honestly, speaking, for consumers, I would think from the beginning of the year, nothing will be changing because the majority of the operators already had adjusted their prices, on the shelves. So now they will just recover their margin. But you just have to keep in mind that, Italian wine, especially the sparkling wine will have the huge advantage, in front of, first of all, new world wines. So because, I mean, you have the advantage of one point five, euro per per per liter, you know, very easily. Yeah. And yeah. Sorry. Yeah. Yeah. Yeah. For the sales channels. So your modern trade is the biggest part, so including the direct import, but also the most well known names are distributed, you know, by their, traditional importance to their modern retail. The share of specialist trade is huge. I mean, it's thirty two percent for Italian wine. I'm sorry. I didn't mention it here. It's not for the imported wine, and that's for Italian wines. So a lot of Italian wines are sold in the specialized stores. And the Italian shelf is huge. So everything is present there. Then, Horaka, ten percent is recovering. It's growing, not as much. So again, I mean, for, like maybe in the other Eastern European countries, the share of Warwick is quite small. So but it's it's growing slowly but growing. Traditional trade, seven percent, but that's only the entry level wines. And then what is very important is the e commerce. So it's one point five percent, which is maybe small. But two years ago, it was nothing. And I think, well, up to the end of the year, it will be from one point five percent. It will grow to three to five percent. It grows hugely, especially, of course, I mean, the during the COVID era, I mean, during the last year, So that is something that is growing. And, from my point of view, it's not only even the matter of sales because the e commerce really becomes the great tools for promotion of the wine. For, advertising of the wines. So this is, you know, something that doesn't fit, you know, the classical, you know, understanding of, you know, separation of sales and marketing. So it's, you know, on this age, working both. So really terrific. And the it's expanding. You know, it's it's very good. Yeah. Yeah. Yeah. And our pilot mentioned, COVID crisis. We decided by purpose not to speak about it. We, I think, all in the same boat. Right? We've suffered for a little bit. But, considering two thousand twenty or, like, considering hard times, like, what future, Ukraine might have in terms of wine? Like, what positive things you could tell us? Well, plenty of positive things are happening in Galleria. I'm here, for example, now. So it's quite positive. And, but, you mean, Nick. Well, as an industry, honestly speaking with these and stuff very much. I mean, and, again, you see the slides. It's very simple to explain. Horrick is just ten percent. The rest is the off trade. And then off trade, probably you all know that that actually grew up during the COVID. So industry itself didn't suffer really. People did, but well, we just hope that, well, with the new, I mean, with the with the with the vaccinations, you know, with the this, new reality, the travels will recover again. That was something again that was missing, and that was also connected, of course, with the Italian and when import, people were coming here. People were trying wines, then they were going back. And then they were searching for the spine on the market. So that is something that is recovering. That's very important for sure. And, yeah, I mean, I know that your project, I mean, your last project also is connected with, with the struggles. Yes. Are you enjoying this podcast? There's so much more high quality wine content available for mama jumbo shrimp. Check out our new wine study maps. Our books on Italian wine, including Italian wine unplugged, the jumbo shrimp guy to Italian wine, Sanjay Lambrusco, and other stories, and much, much more. On our website, mama jumbo shrimp dot com. Now back to the show. Yeah. Yeah. I want to make some small introduction of a new project that was born just recently in Ukraine. And, it would be interesting for those of you who develop in wine tourism and is interesting. It may be in Eastern European market to develop, the tourist flows. So, the biggest, the most established media group in Ukraine, communication media group drinks USA with the support of lots of partners around the world. We really have very broad geography, United States, UK, Italy, Spain, really many countries. So we created this one travel the worst project and the idea is to bring lots of actors of wine industry, wine tourism industry, from big, established wineries to small micro influencers. And with the help of our network and with the help of the influencer base, we have to promote the, project within the website, supporting it with many events, which will be, for example, the final event would be in Italy in Maine. And, it's still a one year and, one year, one year advertising campaign, which will draw attention to the business. And, the judges, we're very, very proud of them. So today, there was a character who gave one of the speech. She's one of our judges. All you do, Sunela, many of you know her. She's one of them for with Morrison. So, I mean, please check one of the worst call. And if you have any questions, we can discuss it in our, discussion time. So now we're moving to, yeah. Yeah. Yeah. Resume the presentation. Yeah. Of course. Yeah. So couple of takeaways, you know, so well, as I told you, I mean, the Ukraine really, this is the market that is developing. And, honestly speaking, there is something that I realized, you know, just maybe within the couple of hours, you know, listening to the previous, presentations. Now I can say that Ukraine is quite developed market. So that's something that you should have in mind. So but still, the potential is you know, it's huge. So Italy has the best image of the wine producers. So Italian wines are driving the category. Italian wines are in fashion. So market is open. So all kinds of wines are developing. So entry level is developing premium developing. Seals sparkling. Everything goes up. Potentially seems to be very good. So just not very good news that a lot of producers are already on the market, which means that, I mean, if you're a producer and you're thinking about, coming to Ukraine, you have to stop thinking and probably to come because, well, it's booming, but well, it should, you know, have the top at some level. So but we're waiting for you. I mean, for wine producers from Italy, we're waiting for you in Ukraine. And, yep, thank you very much. So our contact details, you have them. And, yes. Yeah. Let's, now. We're waiting. We're waiting for your quick questions. Yes. Wish the discussion, please? Any questions? Wow. Everybody was so clear. Okay. So you have the contacts. Yep. What about? Natural one. Natural wines. Natural wines, they start to become some kind of a category in the Ukraine, so not as big as in, western Europe. So, Sometimes people are looking for the natural wines. Mostly, they're looking, of course, for the organic and natural, in foods, less, you know, wines. So I I would say that this is just the beginning. Probably, it will develop, but I would say that probably in the next five, ten years will do a lot more. Sometimes okay. It's a category now, but still a small one. So not the most important one. Any other questions? About the taste of the wine, which is the the feelings from your the customer from Ocrania. Which type they need the for, for example, about a CDC, about the suite, which is the most common that people are looking for. Okay. Yeah. Very good question. I have well, you know, there are good questions and interesting ones. So the good one is the one that I do know the answer for. So this is good. So, you know, both. Actually, so there are different. Okay. Traditionally, people go for more, sweeter wines. So fifteen years ago, I would say for you, these people would go for the semi sweet wines. But then ten years ago or something people started to read books, local people, and then they found out that the good ones should be the dry ones. And so that's why everybody tried to go to the dryer, but still probably in the mentality people were looking for something sweet. So that's why, you know, right now, primitiva is booming. For example, so this is the new tendency that we have. So primitiva, people are looking for the primitiva. So for that type, you know, of the sweeter ones. Well, still, when we talk about the specialist, so the who drink, or travel a lot to Europe. So then we find, people who go for the classical ones. So I would say everything will go. You know? And, still, you know, in majority, people will go just for the classical Italian oil. So they will go for the name, you know, for example. So even if they I would say probably will not like the taste, but they will go for the candy because they know that this candy, it's Italian, so I know for sure that it's interesting. And, in terms of whites, This is booming, by the way. So we didn't get much of the white wines previously. And now I think we have white wines more than red wines. And for this, people are looking for the light wines. So people are looking for the, let's say, accuracy of wines. For the easy wines. Pinong region. It's perfect, for example. So rather than to go for some powerful whites, so this is probably the, hardly anybody will understand in Ukraine. And sparkling, of course, I mean, sparkling has the appearance of wine, That's an interesting. I mean, in terms of taste, if you will do the blind tasting, people will go, for example, for Paseca extra dry. But if they will buy the bottle, they will buy brewed, you know. So it will be the best bottle will be when it will be brewed in brewed, but the taste will be extra dry. So like that or drive. Okay. So, the question is that, as far as import is concerned to your country, export to your country is, what is the the the portion of, the countries around you? This is what my question, like, Romania, Only good questions. If we talk about our neighbors who are our ex well, at US Park, New Republic, like Moldova or Georgia, then everybody thinks that these are the local wines. Still people think that these are the local wines, so they think about these wines as locals. That's why they're thinking about these wines as being the cheap wines. If we talk about the Eastern Europeans wines, so this is unfortunately, this is the bad news for Romania, Hungary, Slovakia and Bulgaria, unfortunately, in mentality still of the Ukrainian people, western European, wines are considered to be more quality wines, more quality products than the Eastern European. So which is the great news for Italy. I mean, we're in Italy right now. But for the Eastern European countries, so that is, well, we have wines, very small quantities, and it's extremely hard to sell them. I mean, okay, speaking about, I mean, our company, my company, I don't have any of these wines. We don't have any of those words, which is don't know how to sell them. Greece, same. People don't think about this country as the winemaking countries or even if they think about them making wine, they think that this wine should be cheaper, for example, much cheaper. Than French, Spanish, or Italian wine, which it doesn't happen. If you will allow me, I will just add as, I'm also from East Europe. The thing is that, people from there, they saw Europe, West Europe, you know, like, North America is something very desirable. Because of the Soviet Union being closed for so long. And this idea, it's still like a dream, you know, and why it's so much more than just a drink? Because, it's about traveling, it's about seeing new things. And this is with what our consumers associate wines. They don't want moldova. They want Italy. They want beautiful castle. They want people speaking other languages, and it's really true. It's what sells? More and more good news for retail and producers. Yep. Is press important, for the local markets? And if the press for media important, is it more local media or international. Like, they can't do ones before. For consumer, I would say probably not very important. Well, I don't think that they do read the specialized price. For for the industry. Yes. Of course, it is very important. So we have our local, press drinks plus. So that is the most important, wine magazine in New Ukraine. So do do the very good job, you know, in promoting the wines, and so that is really important for the industry. I'm not sure. Do we have some other magazines? We have now a new, electronical magazine. So it means the internet magazines. So, that's also quite important, and that's, well, what people people get the information? Yes. I'll I'll just finish from my perspective, but what, if we talk about the international press, then it does matter for for professional, like, for me, for example. I mean, this is the way how full we look for the new ones, for example, or for the new trends. So that's very specific. But, yeah, that does matter. Yeah. It's just, some collaboration with many media. This is really true that each nation, they trust their own leading magazines. This is what happens. That's why it's important also, like, buildings as collaboration with locals. Right? But, like, even felicity Carter today with her talk about bloggers, all these trends, they are global, you know. Now people receive so much information from bloggers, influencers. They became media in itself. And Ukraine, it's in a way also it's the same trend there. And this is one of the reasons why, many businesses want to cooperate with them. And to know local influencers, you also need to, you know, find this partner to touch them. Yep. Just let's start with a comment. So as an important, how is it important for you to have a partner in Italy, that does work very well also on the wine tourism and how you see this in the future for you to build brands and to support the sales of the wines. That helps, of course. Because when we think about the development of the brand, okay, there are classical stuff that we are doing on the market. So with the sales promotions, with advertising and whatever, but Of course, it's always good when we can tell to the customers that, if you're in Italy, when you are in Italy, you can come to the place and then you can see yourself where this mine is made. And, yeah, of course, that is the help. And, also, I mean, for me, as an importer, we, I mean, previous life before the COVID. We were doing the intensive trips for our clients, for our managers, for our agents, again, to to producer. So, of course, it's much better. It was much easier for us, you know, to work with the companies that could then take, you know, the group from the Ukraine. Yeah. Of course, very important. And, yeah. Yeah. Wine tourism brand always contributes because as I told, this is what Eastern European people search for. And even if you didn't build wine tourism, you need at least to collaborate with really good media photographers, you know, to present it as something desirable. You know, you need to, focus on the dream of the person. Because, I don't mention it, in general, that purchase and power of majority of Ukrainians are not very high. We have, like, yeah, luxury segments, like rich people, of course. But for many people, it's just dreams, you know, and we need to fix these dreams. Any other questions? Have a question about how much fragmented the market is and whether the now wine trade is mostly concentrated in the capital or it's more developed and also to the other parts of, the country. It changed. Again, ten years ago, I would say that, it's all concentrated only in Kiev, and on the other, we call the million year cities, which are, I mean, the big cities, so which are Odessa, Harkefliv, and April. But now it's became more diversified. And the main reason for that is speaking, honestly, we're getting back to the e commerce. And that was maybe something that was I don't know. Was it Maybe it's not very unique, but what we faced that, well, we have in in our country, we have Farzietta company, which is the analog probably of Amazon in United States. They managed very good solutions with their. So they deliver their goods everywhere. So you can, you know, buy online everything, and they will deliver, the bottle of good wine anywhere. And that actually changed the petrol. Because, in this smaller, towns, it was the problem previously that none of the distributors wanted, you know, to bring some small amounts of wines, you know, with a big assortment to some smaller cities or smaller villages. Now people can buy it through the internet. They got this wine delivered. And now we see that more and more of them good quality wine, premium wine. It's coming, not to the capital, but it goes directly, you know, to to to to people in the village. So I would say that now it gets more and more fragmented. But the reason for that, it's e commerce. So, another question. The commerce, so is it allowed through the importers? Also, the other companies can, can do their e commerce as well? How how's it does it work? It's, I mean, it's, it's not prohibited in your country and, that's It's not prohibited in our country, but where are the importance, for example, and we well, we do some of the e commerce. But the majority of the e commerce goes through the world Razietco, which is, I mean, like, Amazon, you know, so actually. So, I mean, then we'll work as importers, we'll work with this, e commerce platforms. So then, of course, every importer has its own e stores, So but, we have the specialized, you know, companies that are operating there. They're much more successful with. Do we still have time? Any questions? Well, in any case, I mean, yeah. So, well, thank you very much. It it truly was a pleasure. So I hope you got some information from from from me. Well, our contacts are there, and yes, we're not leaving immediately. So if you have any questions, I mean, please don't hesitate to ask. So thank you very much again. Thank you. Thank you so much. Listen to the Italian wine podcast wherever you get your podcasts. We're on SoundCloud, Apple Podcasts, Spotify, email ifm, and more. Don't forget to subscribe and break the show. If you enjoy listening, please consider donating through Italian wine podcast dot com. Any amount helps cover equipment, production, and publication costs. Until next time, teaching.