But a drive for quality means the crisis may be a blessing in disguise.

By Helen Popper, Politico

PYRGOS, Greece — Under a blazing midday sun last week, laborers stretched their arms between twisted vines with sharp clippers. Labis Kanellakopoulos sat in the winery’s old stone house, worried about more than the sugar content in the plump clumps of grapes.

 

The family-run Mercouri Estate has done backflips to buy enough bottles, corks and barrels to produce this year’s vintage before capital controls were slapped on the country in late June. He even asked one overseas buyer to send a payment directly to a supplier to sidestep the domestic restrictions.

“Many wineries are considering the possibility of not buying barrels this year,” said Kanellakopoulos, the export manager. “It’s an unusual harvest, in many aspects.”

The capital controls imposed by the government since June 29 are starving many Greek industries of cash to pay for vital equipment and supplies. While the tourniquet has been loosened and banks are approving import applications more quickly, restrictions on cross-border payments still threaten to dent exports and further erode the battered local economy.

Although official numbers are still weeks away, Greek imports in July are estimated to have plunged by as much as 50 percent.

“For manufacturers, it’s very difficult because they don’t have the raw materials they need. August is a quiet month, but we’ll face some difficulties in September,” said Vassilis Korkidis, president of the National Confederation of Hellenic Commerce.

Greek industry is dependent on imported machinery and supplies. About 80 percent of intermediate goods are imported, largely because domestic manufacturing collapsed during years of acute economic crisis and austerity measures.

Wineries are a mere drop in the glass of the Greek economy. Industries across the board are suffering and looking for creative solutions.

For example, with school starting up again in September “there are some difficulties with school equipment because most of the products are made in China,” said Korkidis, adding that some companies have sought to establish bases in Bulgaria or Cyprus to skirt the restrictions.

Winemakers rely on bottles and additives from Italy, oak barrels from France and corks from Portugal. Even cardboard wine boxes are imported.

“That’s the problem with globalization. We used to have two or three bottle makers in Greece but they moved to Bulgaria, went out of business or started importing from Italy,” said George Skouras, president of the Greek Wine Federation, who estimated at least 50 percent of wineries are having difficulties with supplies.

Some exporting wineries opened bank accounts abroad as a way to facilitate foreign purchases, he said. Importers and supplies have done the same.

Others anticipated problems and stocked up.

Home market dries up

“Many are saying they can hold out for two or three months, but then they will need to buy bottles. The [import] process is very bureaucratic so the wineries are in a wait-and-see mood,” said Markus Stolz, who blogs about Greek wine and works with 10 of the country’s wineries to sell into the U.S.

At the Mercouri Estate, where verdant olive groves and 150-year-old vineyards fringe the turquoise Ionian Sea, it is a race against time to have enough bottles and corks on hand when the first white wines are drained from the fermentation tanks in early December in time for Christmas.

The estate produces about 120,000 bottles of wines a year, cultivating Greek grapes including Mavrodaphne and Asyrtiko and better-known international varieties such as Viognier and Refosco.

In a languid village on the other side of the city of Pyrgos, the Stavropoulos family winery got lucky. They took delivery of an order of French oak barrels in May, before the capital controls.

Oak barrels cost up to €800 each and the need to change them every three or four years adds up for small wineries like Stavropoulos, which has an annual production of 30,000 bottles.

Because of that spring delivery of barrels, the capital controls have not caused much trouble so far, said Menelaos Stavropoulos, standing in the cool cellar.

“For us the biggest problem is the domestic market, it doesn’t exist at the moment. If you want to be in Greece right now, you have to be in places with tourism,” he added.

Greeks drink a lot of wine — about 27 liters per person in 2013 compared with 11 liters in the U.S., but well below France’s 43 liters per capita, according to the Wine Institute.

Consumption dropped when the crisis started to bite in 2010. Sales of pricier wines took the biggest hit as budget-conscious consumers reached for boxed wines or pitchers of cheap house wine.

“It’s not so much the per capita consumption that’s changed in Greece but the fact that bottled wines have become very hard to sell,” Stolz said.

Slumping sales drove wineries to look abroad. More are exporting high-end wines, which could help change Greek wine’s unflattering association with poor-quality Retsina.

At the Stavropoulos winery, exports used to represent 10 percent of total sales. Now they account for almost a third and an eventual target is 50 percent.

“We need to get Greece on the map of world wine,” Stavropoulos said. “The problem with Greece is that we’re not organized politically.”

Blessing in disguise

Efforts to promote Greek wine abroad have started to bear fruit. Export sales rose 5 percent to €63 million last year, according to the official ELSTAT statistics agency.

The government allocated €16 million last year for promotional activities through 2018, including trade fairs and advertising campaigns in the U.S., Canada, Russia, China, and Switzerland.

Winemakers have become savvier at marketing their libations, using eye-catching labels and teaming up. They sometimes share transportation costs or co-sponsor stands at international trade fairs.

“The crisis is the best thing that could have happened to the Greek wine industry,” said veteran Greek wine writer Nico Manessis.

Renewed interest in Greece’s roughly 300 indigenous grape varieties has also contributed to improvements in the quality of the country’s wines.

“There has been a revolution in Greek wine. The quality has changed beyond recognition,” Manessis said, adding that the capital controls have forced wineries to plan ahead more than usual.

Despite the obstacles posed by the restrictions, which many businesses fear will last until at least the end of the year, Kanellakopoulos is guardedly optimistic.

“Up until now, the crops are looking very good,” he said. “Hopefully things will settle down now because you can’t always be innovative in this industry.”