Ep. 1274 Understanding The Belarusian Market | wine2wine Business Forum 2021

By now, you've all heard of Italian wine Unplugged two point o. The latest book published by Mamma jumbo shrimp. It's more than just another wine book. The fully updated second edition was inspired by students of the Vineitelli International Academy and painstakingly reviewed and revised by an expert panel of certified Italian wine ambassadors from across the globe. The book also includes an addition by professor Atilio Shenza. Italy's leading vine geneticist. The benchmark producers feature is a particularly important aspect of this revised edition. The selection makes it easier for our readers to get their hands on a bottle of wine that truly represents a particular grape or region to pick up a copy, just head to Amazon dot com, or visit us at mama jumbo shrimp dot com. 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 This is foreign. So thank you so much for being here. Bell Russians, very happy as so as that, you would like to know some details about our country and specific And, let me introduce our speaker for today. Maria Zuznak. Maria, is a wine expert for the biggest retail retailer in Belarus. As well as she's consultant of which name is Euretor, Euretor, as well as she's a consultant for a UN spirits chain that called seven Friday. And moreover, she is a distributor of boutique winery products to the Russian Horica. So let me introduce my moderator, Veronica Busil. She's born in Belarus, but, for the time being she's living in Portugal. And, she's working as a marketer for the wine travel awards. So, so I will start with a a market overview. And, I hope you understand why this market is very particular and why it's called the dark market. Just a few words about the country. So we are not the big one. Current population is about ten million. Minsk is a capital and also we have a five regional city. Regardless economic situation, it's not just double ones. There are several reasons for that. They're firstly, a week wide zero demand from Russia. And that depends, dependence increased since last, political crisis. Also, not stable currency, a decrease in household income, negative, forecast from standard course and immigration for sure had an impact. As for political situation, you might heard of, it doesn't seems to be soon resolved, because, they're unbelievable label of violence and repressions. Our country faced during last year resulted in a total destruction of our lost system and left a huge trauma I think, even for the next generation, for the time being there are eight hundred people who are officially recognized as a political prisoner, and, almost NGO are closed during this year, and as well as independent media, and some journalists are present as well, unfortunately. But, let's have conversation about the wines. Just a few figures in order to give you an idea about capacity and the category shares as you could see there may be a dispute market traditionally. So, local wines generated the main volume while imported. It seems to be faster growing than domestic ones. When we are talking about split by the countries, we have to say that Italian violence is on the first place just after the historical key region for our country, a small dover in Georgia, with incredible growth up to sixty percent during five plus years. So you could see that the belarusian, the belarusian consumer, in love with, Italian wines and that are approved by the figures. So, by surprise events, almost all categories excluding entry level are important ones. And, as it happens in all the market which face some difficulty, some difficulty, some difficulty time, premium and ultra premium category is growing up while, local, while, low price segment is also, growing. And from the imports price, of, from the, imports, points of you become more and more visible. By the color division, red wines is prevailing quite traditionally while remains in niche category, is growing really fast in the percentage. And, have a prospect of a further growth spartan. So his as well, local wines generated the main volume, but Italian wines is on the first plane among all other imported company. Countries of this, share about thirty percent. So there are all possibilities to conquer the market. Legislation restrictions and the rules, as you could see, it's not an easy task, So first of all, our country is strictly regulated through the quarters. And for the time being, it is about forty company who have a special license from the government. But only twelve of them are working on the inputs only focused on inputs only. Mainly, and the last, mainly, the companies with, government share or government company. And, quite often, they are not really involved in this import business, but they are able to give a possibility for those who are wanted to have a quarters, but not able to receive them, to give a possibility to work through them. So, So we receive a so called secondary market for quarters or such called technical quarters, quite complicated system. Excise them, it's also strictly regulated and with a difficult account. And and besides, it is very, really short terms of validity, which could pinpoint as a difficulties, certification rules. First of all, the old documents from European country, as well as from the notes, America, for example, are not recognized by our authorities, so we'll have to do it again. Then, sentiments is forbidden, even if it's noble one. So, such, we received a situation when to bring, the aged wines like, specific or brilliant HV to our markets is unsolvable problem. That's why that's not as a category forbidden as well. Also, cons wines are not allowed, not because of the sediment reason, but just because it suggested not the healthy, not the healthy, not for our domestic consumer. So labels restrictions, what could be there? Images of people or animals on the bottle are not allowed until it is a part of registered trademarks. So once you deliver some nice wine with huge pitch code on the label, just be prepared that you have to, deliver official letter that, this hedgehog is a part of your trade mark since, fifteen centuries. So yeah. That's Yeah. Yeah. I'm still answering to about dark market. Just a small commentary. Like, The thing is that all analytics, it's strictly hidden. It's just in between companies. That's why it's very important to meet real experts and please ask us more question in a discussion time. And I would like to say that samples to send the samples, it also forbidden until you have a signature contract and specification. So once you go through all these long part of negotiation, you're only then able to send the samples, and you could understand it then the the seller could realize that they don't want this wine, unfortunately. So let's go in Rosa for the, and let's particular looking for the level of representation in the Italian region So it's it's established almost in all east European country. The prevalence of consumers, following these piedmont, Venice, South Africa, New York City, then we have a list of regions which are not sufficiently represented, and some of them are not presented at all. So as you explained to see, some regions with advantage of novelty and actually opportunity for us. I would like to focus your attention on some particular donations, which from my personal point of view could be interested as usable for our consumer. For sure sweet clients remain the very niche category while starting this growing, and we will discuss it later. And still wants, really have a space in the markets to be to be there. Yeah. So this is the most important part of the presentation. It's about how distribution works. So please make Talking about this split in between Harka and Retail. We will start from the Harka channel. About fifty percent of wines, above six euro, distributed through the Horica channel and sales through the Horica channel, short sales. And it is already considered as a middle segment for all markets. So strong position of cocktails bars. As we are mainly spirit company, it's not so difficult to find the followers, for the cocktail based on it. And, besides main spirit company, international spirits company, working really, successfully with our garment society in order to promote the culture. Democratic wine bars are trendy. It's become more, more designed to spend the time with a glass while, and some trendy bars are capable to generate the volume comparable with really good average retail account. Besides, it is a key place to spread and notes about the new style on your wine region. So, some of the opposition is rare at our markets, even for the top places. Unfortunately, restaurant owner are not ready to understand that a similar position as important as chef. Besides we have no domestic schools for similar and, education abroad is not always affordable for everyone. So that's to provide a tasting, to lead workshops is really important for the domestic wine society and could be a really good tool to to to work through. Sparkling Rosera, by the Virgin, and under wines become more more fashionable. And, creating a huge interest from the consumer, the remaining still a very niche category, closures due to COVID and political reason. So, first of all, there were no quarantine at all in our country. Thus, it was no support from the government's side, but bars and restaurants were empty because of the social distance measures were implemented voluntarily by peoples themselves, and it was like difficult time for them. Besides, last autumn, almost all key Corrica account decided to take a part in, general strike, again, the violence. They were closed only for one day, but then almost all participants were closed because of, manufacturing drones. Some of them were able to make a reopening within a few months. Some of them even fashion, trendy, or on historical value were closed forever. That's the real situation. So specialized shocks mainly belong to the distributors and almost always they are focused on their own portfolio. So for those distributor who doesn't have their, an attack or wine boutique, it's quite easy, but difficult task to find a way on the shelf. Gross of competence among committees. Unlike restaurant owner, big companies, big distribution companies already understand that it is quite important to educate, cubists. So each company has their own coach, and we have no competitions for the summer year, but we have such an event, such an event for the harvest. Thus to implement special program for the cubists is really a workable scheme for promotion. It's our market. Going for the new specialized chain focused on middle and middle minus segment, It is a new direction at our market. The price position lies in between standard retail and, wines boutique, and that gives an opportunity for the final consumer to meet their needs from the price point of view. Besides it gives to the producer, to the seller, to present the category of those wines, which were not suitable for the standard retail before. And when we are talking about retail, since a few years, retailer start to receive their own quotas, and that changed the market significantly. Because, in entry level category, I mean. Are you enjoying this podcast? There's so much more high quality wine content available from mama jumbo shrimp. Check out our new wine study maps. Our books on Italian wine, including Italian wine unplugged, the jumbo shrimp guide to Italian wine, Sanjay Vazil, and other stories, and much much more. On our website, mama jumbo shrimp dot com. Now back to the show. Ritela, Resideo possibility to create their own unique shell with unique assortment. And from another sites, the distributor who were focused on entry levels, entry level segment. Now they faced a huge difficulties, but for the producer and for the seller, It is a new client, and it is a new opportunity of communication. Price sensitive consumer is really clear because because of the economical reason I mentioned above. The only channel to create a volume, because once you meet your needs, especially from the price point of view, the volume could, grow significantly. And sometimes we face the situation when the supplier is not able to cover the needs. And when he solves this issue, the quarters could be spent in another direction. Thus, potentially, interesting brands would disappear, actually, from the market. About eighty percent of wines distributed through the retail are below two euro. It is another point of limitation. And, because, you know, not all the region, I have a wines in the search price category. Yeah. And, you know, the Russians are compared with Russians with Ukrainians. What is the specifics of consumers and borrowers? I would say that it's quite, European consumers, and we will this, I would try to describe it shortly in the, topic of fashion and main tendencies. Actually, like everywhere, bio, organic, biodynamic wines, become more and more trendy. But lowers are mostly the consumer from the generation zed and y. And new searchers who are always looking for something new. But as I told, it is still a really niche category, then bright, unusual, easy to remember labels. Consumers are buying with the eyes, especially inexperienced ones, So taking in mind all restrictions about the labels in our country, I could say that such a eye catchingable labels, are not really often because of that regulation, but almost always successful. Then growing interest for all starting category, for sure, able, as we saw from the figures, the starting is growing as everywhere. As Lambrusco, in entry level segments, sweet Lambrusco, it is a point to switch the young consumer from the beer. Dry land brewska presented almost in all key Horica accounts. Prasecca is growing everywhere, including your exact category, as well as Cartif sent by the French is not presented sufficiently, and strength is not presented at all. But one, once it will arise, I I think it will find the way to the hurt of the consumer. So, and growing interest for unknown region. Actually, part of consumer already understood that Italian wines may give an experience of fascinating journey and, novelty often gets rapidly popular. So some distinctive features from neighboring markets following your question. We have quarter limitation and for sure this restrictions is influenced strongly at our market. Thus, we have a lot in trends about two, three year compared to our neighboring markets, but the It is somehow an advantage as well because we are able to see how these of their direction are growing and filling, in the nearest area. Small community of wine enthusiasts, really small. And they have a deal with a difficult, topic of market development. So any help from their, seller sites, from their producer sites, would be a key element of the market's, strategy to to to go to, to come to the market. Less technical possibilities to spread the information, and that's probably what we could discuss right now. Marketing and main promotional channel. Advertising is forbidden. Outdoor advertising is forbidden, unfortunately as well. So we have only two magazines who are allowed to print a photo of the bottles and also to make the descriptions of the wine. Investigations, social networks, and influence, and blogger start to play a main role for sure, and to find a proper influencer who will be capable to bring your idea of values in the best or in the right, correct way. It is really sensitive and important question because it not always happens like this, unfortunately. So, we hope that, version, association of Somelier and, Kavík, which is not fully molded yet, will take a proper role in the market's development. Mhmm. I think we are moving. Right? Yeah. Yeah. For that, and taste in Andina as a main way for promotion, It is, to meet a final consumer. It is most efficient too in each market. In our case, it's, start to play really important role. So to find a good promoter, which is capable to organize such an event in the best way. It's really a must that's why it's placed both ASL and BTL. So regarding the BTL, no possibility to organize across cross promo, while cultural or sports events. Unfortunately, you are not able to be a part of, Oprahites or cinema nights. You are not able to present your party during the horse racing because all activities should be left only in place, which have an alcohol license and as one restrictions. So, and special price activities. To show the percentage of discount, it is forbidden. To underline some promo items using color highlighting. It is forbidden as well. But being restricted from all sites, a marketer creates a great idea to highlight such an items with warning talks. And, okay, it is a really brilliant idea. Wine testicles, neck hammers, leaflets are also common using tools. Yeah. And as Maria told at the beginning, twenty twenty was a crazy year for Belarus, while all the world suffer from but the via Belarus suffer double. So but anyway, we think there are positive things that might have on them next years. Right? Yes. I see that we still have a perspectives of market development. First of all, the right possibility of unification in translation with Russia and Kazakhstan market. It is a long time of negotiation about this. And once it happens, it may significantly simplify the entrance to the market as well as all certification procedure and logistic question. Evolution of the quarters. It is a gold dream of all importers that once the institutes of quarters will be removed. And those produces who will be able to enter to the market before, they will have an advantage for sure. Small society brings the quick spread of information. That means that if you will find a golden key to the hot of just a few wine influencer or wine specialist. Be sure that very soon all involved in this peer audience will have an idea about your wines for sure. Also the market the difficult, but the market is empty. There are huge quantity of not sufficient sufficiently represented reasons. There is no tough competitions. And thus, those those break ones who dare to stand to start conquering the market will be for sure rewarded. It's a political situation. We are sure that it might not last forever. And once the situation has changed, it will be a really perfect opportunities of really significant drops of the market because the market buys himself is able to to grow in further and grow in fast. So, actually, that's it. Thank you very much. So I thank you very much for being with us today. I would love to answer your question if there are some. So how big sites a successful important wine brand? Do you have any idea for sure. It is a different figures in the spirits and wine category. For sure. When we are talking about, the figures, particular figures, it is it is could be about forty thousand hectoliters, for example, they're one brand. Can you repeat the question? How many bottles would you have seen in those for a successful brand, up until now of wine, not not spirits. Yeah. When we're talking about it, wine, it is about forty thousand hectoliters, like just average, amount for quite successful brand because of the limitation of the quota as well. Because sometimes we have, like, the the quarters is fixed and, the brand could do more and small turnover, but, because of these restrictions, they're limited. And, you have to spread your waters in between, several directions. For example, you are not able to place all your waters on one branch. Otherwise, all other will disappear. So even if you want to promote some successful brand person, you have to think that's okay. You have to play some some space for another players. Any other question? I have a question regarding certification. Is it a bit similar like in Russia or more complicated? You know, I'm not so I I don't have precise information regards to the procedure of certification on Russian market. But as far as I know, it's more difficult because, all new delivery have to go through certification procedure. As far as I know in Russian market, you can just make it once per year, for example, or if vintage is changed. Also, there are several restrictions, as I mentioned, with the labels, with the sediments, and, yeah, I think it's it's more complicated. Yeah. Hello? And then if I give you my email address, would you be able to enable me later the name of the twelve importers? I'm sorry. I'm so straightforward. Thank you. Okay. Just the name then. Actually, I'm also important. So in case you are interested in, we could discuss it further later on And as Maria mentioned, there is technical quarters. And it's more important to be experts in this market. You will find the way to get them. You said the price is generally under two euros ex sellers for selling in volume in, bottles for the big successful brands. Are you guessing at a price of one fifty or one eighty? Do you know the sort of price that is the target for a successful brand in, below the symbolic. He's a price. Actually, as I mentioned, there, it is mainly for for retail because there, the almost all volume that's created. It's, wines under or about two euro. And, okay, one fifty, one eighty is absolutely a suitable price, but, its main brand, work's main brand is, like, proposed that kind of, price category. For sure, we have a price about one year or even below in case of staying category or when we're talking about moldovan binds. But mostly it is about two year, but not, offering over them. Thank you. Any other question? So hi. Considering also taxes and exercise is more or less how much is the multiply the price, ex works price, becoming a retail price in, in your market. It depends, on, if you use technical quarters on your own, for sure, because for technical quarters, you have to pay additionally. Also, it depends on the volume because, when you ask for the quarters, you have to pay for each custom quote. And in case it is like minor quantity, the the the pressure become, bigger. And if it is like a truck, respond, custom quote, it's easier. But usually, it's multiplied of twice time. And the e commerce is pro is forbidden, I guess. Right? E commerce is forbidden at all. So we are quite, successful in e commerce when we are talking about the food, but unfortunately, wines is forbidden. A category of e commerce. Okay. Thank you so much. Thank you. Listen to the Italian wine podcast wherever you get your podcasts. We're on SoundCloud, Apple Podcasts, spotify, email ISM, and more. Don't forget to subscribe and rate 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.