CHALLENGES WITHIN MOLDOVA’S WINE SECTOR
Updated: Jul 15, 2021
For a country whose national GDP relies on wine production (wine production represents 3.2 % of the Republic of Moldova’s (ROM) national (GDPi), ROM has been sluggish in making inroads into the competitive global wine market.
Most wineries do not have proper infrastructure in place relying on antiquated equipment which provides limited bandwidth for quality control. Still burdened by the legacy of the past characterized by collective agriculture ideology, Moldova’s search for new markets has been a challenge. An impediment for export expansion seems to be the quality of wines. Bulk wine production, specifically sweet wine produced for the typical Russian palate, is still Moldova’s primary focus in winemaking. Russia and China are Moldova’s top wine export destinations. With less emphasis on quality PDO and PGI bottlings, ROM has difficulties expanding its market presence westwards where consumers value premium wines at higher price points.
For the domestic market, bulk wine is Moldovan consumers’ wine of choice. These consumers have no level of involvement with premium wines and have difficulties understanding and defining wine quality because most families produce wine at home for personal consumption. Made from mediocre quality grapes, these wines are hobbled from a quality standpoint, but are good enough for families to enjoy. With no expectation of quality, out-of-home consumption equates to commercially produced wines similar in taste to their homemade counterparts. Moldovan bulk-wine buying pattern will remain unchanged due to local consumers wine drinking preferences, a function of low disposable income.
With current markets’ strong focus on international grape variety wines and bulk wine production, ROM is overlooking export categories such as organic, natural and biodynamic wines, which are increasingly gaining popularity globally, part of a broader trend of wellness promotion. Indigenous variety wines are also staggering, despite Moldova’s rich ancient grape heritage and western consumers’ demand of such exotic wine products. DIVIN, a local, ubiquitous, good quality brandy relative to international alternatives, lacks brand recognition in the West. Due to lack of marketing and efficient distribution, ROM has never been internationally acclaimed as a brandy producing country.
So far foreign investment in ROM’s wine sector is extremely low due to political instability, poor infrastructure, and lack of investment transparency. The political and economic volatility in ROM have caused a slump in foreign direct investments, with foreign investors hesitant to allocate capital on the premise of a turnaround story. Moldova has neglected throughout the years to establish a political and economic environment suitable for less risk averse foreign investors more prone to commit funding to an emerging market .
2020 has been one of the worst years for ROM’s wine industry. Due to curtailed export demand wineries are stuck with surplus stock and a spike in unemployment. Wine tourism has been impacted by global travel bans. As extreme droughts are plaguing the region, wine grape harvest is at its lowest levels in the past 10 years. With the closures of bars and restaurants, wine volume exports fell drastically. Since demand for wine has plummeted, wineries have been left with surplus supplies and shortage of storage for the 2020 harvest. This has affected the livelihoods of several producers and workers in rural areas whose only mean of income is dependent on the wine industry.
Despite Chisinau’s nomination in 2018 as the “world capital of wine tourism” by the UNWTO, ROM remains unknown as a wine destination to lots of travelers. This tiny, land-locked country has worked relentlessly for the last decade to bring its tourism industry on par with other world best known wine getaways, only for Covid-19 to halt this progress in its womb, making the poorest country in Europe, mostly reliant on this industry, heavily exposed to the disastrous shock of the pandemic.
i) The Business Year. “Moldovan Wine”. Accessed April 26, 2021