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Slovakia : an unknown wine producing country



Even the most conscientious wine aficionado can be excused for pleading ignorance about Slovakia. When was the last time that any of its wines were here? When was the last time that any of us were there to try them? And just where are we talking about, anyway? Slovakia was the forgotten junior partner of Czechoslovakia until 1993, and the new country's identity, like its name, may be hard to distinguish from, say, Slovenia.

It doesn't bode well for building a reputation, and without that, how will little Slovakia keep its head above water in the increasingly competitive wine world of the 21st century?

Slovakia is among the several traditional European wine producing countries that import more wine than they export. Its tradition is old, too, dating back to Celtic times. But any historical propensity to cultivate the vine is overcome by geographical position. Slovakia is the northernmost of the Eastern European wine producing countries, and presses against the northern limits for wine growing, which is why its six winegrowing regions are clustered against the southern border with Hungary.
This geographical "confinement" limits annual wine output to around 10.6 million gallons (400,000 hectoliters) in an abundant year, whereas annual consumption of around 15.8 million gallons is covered by imports. In 2001, Slovakia imported 426,790 gallons, mostly from Italy, Austria, France and Hungary, while exporting 282,799 gallons, mostly to the Czech Republic, which meant net imports of 144,001 gallons.

As follows from the identity issue and export data, Slovakia has no "quality" image of any kind in the world at large. It comes as a surprise to learn that some wines from the foothills of the Little Carpathians, at the western end of Slovakia northeast of Vienna, were very well regarded two centuries ago--the red Raca Frankovka, for one, was appreciated by the Haps-burgs--and in the country's far eastern corner near Ukraine nestles the northernmost tip of Hungary's historical Tokaji wine region (see box on page 54). But what marketing value is there today in a "track record" proven in the distant past?

Brad Seiler and Vladimir Gecelovsky of Seiler Importing in Chicago are grappling with Slovakia's low profile in an effort to gradually introduce the country's wines in the U.S. market. They scoured Slovakia looking for quality wine and brought in a trial first shipment in November 2003. Predictably, they met resistance in trying to wedge minor Slovakia into the bulging country and region rosters of distributors, retailers and wine writers, although that is not deterring them from an expansion both in quantity and labels.

Although future imports of Slovakian wine into the U.S.--even in a good year--would be the proverbial drop in a bucket, the exports are potentially significant to Slovak producers. Just 14 years out of communism, the newly privatized wine firms have hardly had time to reorganize and refurbish, and now are faced by the prospect of a flood of cheap imports from southern Europe as a result of joining the European Union (EU) in 2004. This will tend to put downward pressure on the price of Slovak wines on the home market. Consequently, winery profitability will become more tied than ever before to exports of premium wines at lucrative prices to consumers in more affluent countries.

Slovak producers instinctively have thought almost exclusively in terms of exports to other European countries, rather than overseas. In fact, Seiler Importing found producers tended to be a bit incredulous that a U.S. importer would be serious about contracting, and were therefore reluctant to listen to all that Seiler and Gecelovsky wanted to convey. "It took us a while," Gecelovsky says, "to explain the complexity of the U.S. import process and BATF requirements, and that we would need much more information about their wines than their domestic buyers do. However, once they realized that we were really going to buy their wines, they were very responsive."

But, in contrast to the producer subsidies that kept export prices to Western countries very low in communist times, Seiler Importing was charged higher, so-called "export" prices compared to what a Slovak distributor or retail chain would pay. Retail prices for domestic consumers need to be kept as affordable as possible in the face of low average incomes, which is why exports loom as the route to the earnings that will pay for vineyard and winery enhancements. This means that an increasing share of premium wines, in particular, will be destined for export--or so it is hoped.

The Slovak wine industry in communist times was largely quantity-oriented, and economic plans routinely foresaw extension of vineyard land. This outlook was reversed during the late 1990s, after Slovakia had become independent of the Czech Republic and started focusing on becoming a member of the more quality-conscious EU. Productive vine area was cut from 48,165 acres in 1998 to 31,702 acres in 2001, while privatized wine firms undertook the amelioration of vineyards, or occasionally replacement with newly planted acreage on better but more expensively worked land that the communist regime had only hypothetically slated for future use.

The goal is to raise the average quality of wine, which in commercial terms means increasing the ratio of high-quality wine in the total output of bottled wine. Specifically, producers aim to reduce the share of table (stolove) and brand-name (znaskove) wine in favor of quality (akostne) wine, which encompasses varietal (odrodove), select (vyberove) and reserve (kabinetne) wines. In one especially ambitious case, CEO Ondrej Celling of Movino, in south-central Slovakia, is planning to shift from the current ratio of 85:10:5 for varietal, table/brand-name and select wines, to 70:30 varietal and select. In other words, eliminating table/brand-name wines from Movino's product list. But it is not clear how far, or when, the Slovak wine industry as a whole can move in that direction without jeopardizing its domestic customer base.

With Slovakia's appellation districts having virtually no name recognition value outside the country (and Czech Republic), the industry mostly has to count on Slovak consumers to carry it through the "reinvention" phase it has entered. Sales figures from recent years indicate that Slovak family budgets have some elasticity to accommodate higher priced domestic wine. Also, a core public of enophiles has been growing, as seen in the spread of specialized wine shops (enophiles were being groomed even in communist times, when around 1980, the state wine industry began offering a series of regionally specified, bottled-aged varietal wines at significantly higher prices).

But three facts suggest there is a ceiling for retail wine prices. First, average income in Slovakia remains low. Second, wine consumption habitually is low across the country's beer-and-brandy northern tier, just as it was during communist times when most wine prices were kept low. (The per capita national wine consumption figure of 2.93 gallons, or 11.1 liters, does not capture the significant extent to which wine consumption is regionally skewed.) Third, some consumers, irrespective of income level, prefer buying wine on tap at the licensed cellars of small growers, as they did in communist times.

Against this backdrop, Slovak wine firms will be watching anxiously to see what happens with imports and exports in this decade. Increased imports of bottled red wine from, for instance, Spain, do not pose a real threat to Slovak producers. Owing to the northerly location, red wine (mostly Svatovavrinecke/St. Laurent, Frankovka/ Limberger, and Cabernet Sauvignon) makes up less than 20% of domestic output. Inexpensive red wine was imported from western Europe even during the communist period, in bottle and also in bulk for blending with domestic red for brand-name wines. Further, until the French Paradox makes a greater impact on Slovak consumer consciousness, there is little likelihood of a large shift from white to red wine. For now, the best prospect for red is in the tourist sector, where foreigners' preferences influence buying by restaurants and hotels; and this should benefit sales of premium Slovak reds as much as pricey imports.

White wine is a different story. Slovak white wines (mostly Veltlinske zelene/Gruner Veltliner, Rizling vlassky/Italian Riesling, Muller-Thurgau, Rizling rynsky/Rhine Riesling, Tramin/Traminer) offer characteristics that domestic consumers are used to and may prefer, but this advantage of predisposition really holds only at the upper end of the market; and as yet there are not many upscale Slovak consumers who will ordinarily be able to afford the superior domestic white wines. This is especially true of wines marketed as "reserve" (kabinetne), and above all the "archival" (archivne) white wines from the best vintages, that are given years of bottle age and sell for 8-10 times the price of table and brand-name wines.

To put it another way, producers' planned increases in quality output, which will be mostly in white wine, are not likely to be met by gains in domestic sales, not even with the help of tourists intent on sampling the best local wines. It is this scenario that puts the spotlight on exports for Slovak producers.

In their initial imports from Slovakia, Seiler and Gecelovsky decided to test the U.S. market by importing two dry reds (a Svatovavrinecke and a Cabernet Sauvignon) and two dry whites (a Rizling rynsky and a Veltlinske zelene), plus a Tokaj sweet wine. The results were not too encouraging. Seiler explains, "Wine retailers told us that the wines were very good, but that they could get similar wines from other countries at a lower price." In fact, because of the small size of the first shipment and a high per-bottle shipping cost, the wines were only saleable by direct sale through Seiler Importing's Web site (slovakwine.com). Not surprisingly, this drew customers chiefly of Slovak and Czech ethnic background.

Mainstream (other-ethnic) consumers outside Slovakia may need to be presented with a very finely tuned list of Slovakian wines if the Slovak industry is to stand a chance in foreign markets. For although it may be true that "something similar" to Slovakian varietal wines can be found at lower prices from other countries, some of the wines would merit a premium from discerning enophiles. Slovakia's strong point in wine is accurately suggested by its northerly position: some of the most clearly defined fruit aromas to be found anywhere from the grape varieties that are able to receive sufficient warmth to ripen fully. This is especially true of premium wines from exceptional vintages. Slovakia recently had two such vintages, 2001 and 2003, and global warming promises more in the years ahead. These supply wines that answer the question, "Why bother with Slovakia?" They are also the wines that potentially can buoy the Slovak wine industry through this present period of change and uncertainty.

"Wine retailers told us that the wines were very good, but that they could get similar wines from other countries at a lower price."



Brad Seiler - oct 2004 -

Published on: 2006-03-30
[1970 reads]

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Colmar. Capital of alsacian vineyards.
Colmar. Capital of alsacian vineyards.

Colmar. Nice city.
Colmar. Nice city.



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Colmar. Nice city.


Colmar. Nice city.

Colmar. Capital of alsacian vineyards.


Colmar. Capital of alsacian vineyards.


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