Can Armenia Become a Country of Fine Wine? The Clue is in Branding.

By Tamara Karapetyan | October, 2014

When it comes to wine and winemaking, the country of origin plays a pivotal role in defining the image of the product and, often, its success in the market. In other words, it is all about country branding. Western Europe and, particularly, France, Spain and Italy have traditionally been countries associated with fine wine and lasting viticulture traditions, dominating the global winemaking industry. Things, however, have been changing recently with the emergence of new winemaking powers such as Chile and Australia and attempts of other, smaller country producers, such as Macedonia and Georgia to establish a presence in international wine markets. Can Armenia enter the global market place and capture a niche among winemaking countries?

The global winemaking industry has gone through significant transitions during the last two decades. While the traditional “Old World” producers, mainly, France, Spain and Italy still lead the list of largest wine producing countries, their combined share has been steadily declining and “New World” winemaking countries have emerged. Among them Chile, South Africa and Australia have achieved notable results, skyrocketing wine exports and building strong country brands in international markets in only one or two decades.  Small, East-European countries such as Macedonia, Moldova and Georgia have attempted to establish themselves on international markets. China is emerging as a major producer, though, so far mostly focused on its local market.

The shifts in global wine production are paralleled and, often, predetermined by changes in consumption patterns. While Europe remains the continent with the highest per capita wine consumption, it has been showing a stagnating trend.  China and Russia have very low, yet rapidly growing wine consumption, offering a vast potential for wine market growth.  Consumers in both mature and emerging markets want more diversity and are eager to try and explore new wines and new tastes from exotic countries. 

The changing landscape in the global winemaking industry offers numerous opportunities for new, smaller countries to gain their niche and establish themselves on global markets as winemaking countries. Armenia has the natural potential to become such a country, due to its geography and climate. Historical evidence indicates that viticulture and viniculture have been practiced in the territory of the South Caucuses since the fifth millennium BC, making Armenia one of the cradles of winemaking. Armenia possesses unique indigenous grape varieties unknown outside the country and the Caucasian region. Despite its natural endowment and historical legacy, the modern Armenian winemaking industry has been facing numerous challenges. Among them poor viticulture practices resulting in a low quality of cultivated grapes, use of outdated technology and lack of adequately trained specialists. Despite stable growth of exports since the beginning of 2000s, the quality of exported wine is mostly below international standards. 

In 2011, winemaking was included in the Industrial Policy by the Government as a priority sector for Armenia. A sector strategy and action plans were developed and the Government pledged its support to the sector to address the main existing challenges. Furthermore, a few private initiatives, mostly by Diaspora representatives, have established several successful, modern winemaking ventures in Armenia introducing new, high-quality wines to the market. Some of these ventures are export-oriented, marketing Armenian wine in Europe, North America and the CIS countries. While the quantity of wine produced and exported by these companies is still tiny, they set an example and pave the way for other local producers, showing that it is possible to produce high quality fine wine in Armenia. With pending government support and a few success stories, Armenian winemakers have the chance to reinvent Armenian wine, creating a new reasonable product to compete on international markets. Continuous improvement of the quality of grapes and upgrade of technology are necessary to create high-quality wine.

 The quality product, however, is not enough. Wine needs branding. Quality wine must be supported by an adequate marketing strategy. The key element of that strategy is creating the story and the myth of the country. Without the story no marketing campaign can be complete and successful. All “New World” countries achieved success by completing their marketing tasks. This is where Armenia can build its credentials positioning itself as one of the cradles of winemaking and possessing singular local varieties. Only by creating a strong umbrella country brand with a unique Armenian story is there a chance to capture place on global wine markets.