- Tourism has long been the most important distribution channel for wines sales. As a consequence, the sales rate fell during the pandemic.
- The number of licensed Turkish producers has more than tripled since 2004 to 184 wineries in 2021 with estimated production volumes of 60 to 80ml.
- The domestic market, however, is difficult: Consumption is low (1l per capita). A decline in tourism due to the pandemic, unclear prospects due the Russian war on the one hand well as regulatory restrictions such as an advertising ban and high taxes on the other hand provide new challenges.
- Conditions in Turkey are pushing winery to concentrate on export sales, which, however, have barely grown over the past decade. It accounts for less than 10% of sales and has barely moved from the $10m mark.
- Most important export markets are Germany, Belgium, and Britain. In Britain, Turkish wine sales have increased in the past two years thanks to greater market exposure from new Turkish restaurants and retailers.
- New wine styles and indigenous grape varieties evolve. New winemakers push a modern spirit and evolution of quality Turkish wines.
With the main tourism season underway in Turkey, the world’s sixth biggest destination country in 2019 and fourth in 2021, wine producers are hoping to obtain a rebound in sales, which fell during the pandemic. Playing the tourism card in Turkey has long been the focus of sales for big companies like Doluca, one of Turkey oldest and biggest wine producers.
New Importance of the Export Market
If understandable, this sales policy was a big strategic mistake, says Nicolas Brun, former global exports manager at Doluca, who after five years, quit his role earlier this year, partly in frustration over the company's export policy.
“I managed to increase exports mainly in the on-trade in numerous countries, including China, Japan, Canada, the US, and Europe, but after two or three years, I hit a wall,” says Brun. A deal with a US supermarket fell through, he says. “Margins were bigger in the domestic market than in exports, which had greater costs and involved marketing and adjusting production (including labels) to international markets which Doluca was not prepared to do.”
Turkish players Doluca, Diren and Kavaklidere, which owns 687 hectares of vineyards, declined to comment on sales and exports. Indeed, perhaps in fear of the Erdogan regime, many Turkish wine companies refuse to communicate. Yet there are signs that a reluctance to export bigger volumes is beginning to change.
Challenging Domestic Market
The number of licensed, Turkish wine producers has more than tripled since 2004 from 50 to 184 in 2021 with annual production now estimated to be between 60 and 80 million litres.
Punitive government measures adopted against wine producers this year, have prompted them to focus more on exports as way out of domestic doldrums and the uncertainty over the return of high tourism levels, due to Russia’s invasion of Ukraine.
If a government ban on the advertising and promotion of alcohol in 2013, including online sales, wasn’t harsh enough, Turkish winemakers are grappling with this year an almost 50% increase in the government's ‘special alcohol consumption’ tax together with what they describe as already ‘sky high’, VAT and excise duty. “It is as if we the government has cut our legs off,” says one producer, regarding the crippling impact of taxation.
- Cultivation area: In 2021, Turkey had the world’s fifth largest vineyard area with 419,000 ha of vineyards according to the OIV, that’s despite losing 84,000 ha vineyard area since 2014.
- Number of licensed producers: 184. Turkey is thought to be home to several hundred producers. The Turkish government says that as well as big producers, who have invested in winery technology, there are almost 300 small producers.
- Production volume (estimated): n 60 to 70ml (according to the Tobacco and Alcohol Department of Turkey’s Ministry of Agriculture and Forestry (TADB), however, 79ml of wine and sparkling wine was produced in Turkey before the pandemic: 76ml for the domestic market and 3ml for exports. Turkey imports around 2.5ml of wine and sparkling wine while its production capacity totals 120ml.
- Production value (estimated): more than $200m
- Export value: $10m
Difficult Export Conditions
“Conditions in Turkey are pushing us to export more,” says Alp Toruner, owner of Buyulubag, a producer who has been making wine on the island of Avsa on the Marmara Sea, near Istanbul since 2005. “We’re becoming more competitive in exports,” he adds.
The Turkish Lira has continued to slide against the dollar this year having fallen by 44% last year. The plunge in currency value may help tourism. But inflation in Turkey, where wine consumption per capita is low and hovers around 1 litre according to the OIV, increased to a staggering 61% in March.
It has not, so far, served as a major catalyst for more exports which have barely grown over the past decade; several producers for instance bemoan the high costs of importing production material to Turkey and transport costs of exports.
Together with extortionate domestic taxation, Turkish wine producers operate with a further disadvantage. Unlike competitors in neighbouring Georgia and the EU, they receive no state aid to promote wine sales. Toruner adds that producers have not yet found a way to collectively promote their wines in any durable way, internationally.
Beyond the Turkish Diaspora
Mustafa Camlica, owner of acclaimed producer Chamlija, who produces about 350,000 bottles of wine a year says the pre-pandemic 2019, Chamlija managed in increase its export ration to 20 to 25% of exports up 10 to 15%. His high-end wines sell ex cellar for more than €50, in export markets like Taiwan. Vinkara which produces a million bottles a year too has reported increased exports over the past decade.
Other than Northern Cyprus, Turkish wine is exported principally to Germany, Belgium, and Britain, where wine wholesaler and distributor Hallgarten & Novum says Turkish wine sales have increased by 44% in the past two years.
With Turkish restaurants opening almost every month across Britain, Turkish wines are gaining greater exposure and they’re gradually spreading into the wider retail sector says Mark Hopkins, owner of TasteTurkey.net an online retailer.
“We have seen demand grow from across the wine industry – both in the hospitality and retail sectors.”
“The decision to introduce wines from Turkish producer Kayra into our portfolio in 2016, was originally fuelled by the appetite for the wines in Turkish and Mediterranean-style restaurants, however, we have since seen demand grow from across the wine industry – both in the hospitality and retail sectors,” says Steve Daniel, wine buyer at wholesaler, Hallgarten & Novum.
Daniel attributes, the rise in demand for Turkish wines to development of quality winemaking and a growing interest in Turkey’s dazzling plethora of indigenous grape varieties which have unique aromatic profiles, diverse flavours and are now made in a myriad of styles.
Wine Styles Evolve
High Quality Wines from Native Grapes
For reds, like the island’s native Ada Karasi (island black) variety, Buyulubag uses slow maceration, gentle extraction, no enzymes, and often wild yeasts. When making fresh and fruity white wines from native grapes, Toruner says he uses no oak to allow their unique flavours and aromatic profile to shine. Over the past 20 years, Turkey’s tale is one of quiet evolution, with smaller boutique wineries increasingly orientated towards quality production.
Turkish wine has much to tell. Home to the fifth largest vineyard area in the world, Turkey is thought to be home not only to between 600 and 1,200 native grape varieties, but also among the ancient origins of winemaking. Ampelography expert, José Vouillamoz, reckons some of the world’s first wine making started in Eastern Anatolia between 8 and 9,000 years ago. Paradoxically, Turkey remains a young wine country, with no appellation system. That said, its younger and older generation of winemakers, who first made wine almost a century ago mainly with international varieties following the creation of the Republic of Turkey, have made vast strides in improving wine production techniques and increasingly showcasing the exceptional appeal of the country’s recovered native grape varieties.
- Dozens of Boutique producers have emerged over the past decade with production orientated towards quality and native grapes with women playing an increasing role in management and winemaking. Bigger producers who once predominately made wines from international grape varieties or blend with native grapes, have developed ranges of wines made uniquely from indigenous grape varieties.
- Sales are centred on tourism. According to World tourism organisation, UNWTO, Turkey was the world’s fourth most visited country in the world in 2021, with 29.9 million tourists. In 2019, Turkey was the world’s sixth most visited country with 52 million tourists generating $35 billion for the economy.
- More tourists, higher value-added agriculture, and efficient employment in the agricultural sector, increased production value added exports with higher grape price and promotion would improve exports
- Exports which overall account for less than 10% of sales have barely moved from the $10 million mark over the past decade. The increase in quality production, means Turkey could increase in exports by at least 50-fold with the support of a long-term programme says Turkey’s Wine Producer’s Association.
- Taxation and lack of government support and limited data has hampered the international development of Turkish wines.
Further OIV info here.