Wine: Government wary of temptations of Bacchus
FInancial Times, UK
Nov 25 2009
Although home to one of the world’s earliest wine-producing regions –
dating back 4,000 years – Turkey’s wine offerings were low on variety
and uninspiring until just a few years ago.
A state-run alcohol monopoly and two companies – Kavaklidere and
Doluca, founded at the same time as the republic in the 1920s –
dominated a lacklustre market. Then there were a handful of lesser
brands, known colloquially as `dog-killers’. Vintage year or grape
variety were little-known details and hardly mattered.
Those days are receding. A combination of industry liberalisation, a
slew of wealthy executives investing in boutique vineyards and
innovation by the US-educated scions of established wine-makers is
helping to revitalise an ancient tradition.
Turks can now count a number of homegrown grape varieties, such as the
dark, tannic Bogazkere, fruity red Kalecik Karasi or delicate Narince,
technology has improved and international buyers are taking note.
`What I saw in vineyards and cellars suggests it will not be long
before Turkey produces something truly exceptional,’ said well-known
wine critic Jancis Robinson, who writes for the FT, after a recent
visit.
After all, the Turkish wine industry would appear to have huge
potential: the country is the world’s fourth-largest grape grower, it
has favourable climate and soil conditions, nearly 1,000 indigenous
grape varieties and a large, youthful population – more than half of
70m are under the age of 35 – with rapidly urbanising palates. Alcohol
sales rose by 19.5 per cent to more than 1.1bn litres last year.
Yet businesses are faltering. Wine producers accuse the government of
failing to support the nascent industry, chiefly through a tax levied
since 2002, which is among the steepest in the world when measured
against per capita income.
Wine taxes now amount to 0.80 per litre, compared with a European
average of 0.48 per litre. `The tax has made wine very expensive,
which has reduced consumption and brought the 12-15 per cent annual
sectoral growth we saw in the early 2000s to a standstill,’ says Sibel
Kutman, a member of the board at Doluca.
More recently, an advertising ban took effect in July making it
illegal to promote alcohol in association with food, Turkish cultural
or historic values, or – in vague wording – in a way that might appeal
to youth.
`The government has adopted an attitude of passive resistance,’ says
Resit Soley, a prominent architect-turned-vintner who owns the
up-market Corvus label. `It doesn’t kill you, but it saps your
strength. It is an exhausting constant struggle.’
Due to Muslim prohibition, under Ottoman rule, wine-making was
traditionally the province of the empire’s Christian Greek and
Armenian subjects. When the Empire collapsed in the 1920s, most of its
non-Muslim minorities left, taking their expertise with them.
It was the plight of abandoned vineyards on the Aegean island of
Bozcaada that prompted Mr Soley to turn to wine-making. `I’ve had a
house on the island for 20 years,’ he says. `I could see a tradition
dying out and I wanted to save it.’ His Corvus label produces about
300,000 bottles a year, several of which have won international
awards. He began exporting last year to counter a slowdown in domestic
sales he attributes to high taxes. `My goal now is to sell nine out of
10 bottles abroad,’ he says. `That’s the only way to circumvent the
tax dilemma here.’
The republic’s westernising founder Mustafa Kemal Ataturk famously
enjoyed a tipple and kept a wine cellar. But some 80 years later, his
successor, Prime Minister Recep Tayyip Erdogan, a devout Muslim,
abstains, as do most members of his cabinet. AKP mayors in various
municipalities have tried periodically to ban alcohol sales.
`The official attitude is less than friendly,’ says Mr Kutman. `For a
country on the road to EU membership, there is no desire to officially
promote Turkish wine or to see wine as a national product.’
The market was liberalised in 2001 when a state monopoly on alcoholic
beverages was lifted and private sector wine imports freed up. A
market watchdog, TAPDK, was established in 2002 to regulate the
industry. A private consumption tax was introduced the same year, at a
rate of 48.7 per cent on fresh grape wine. Over the next three years,
it was raised to 63.3 per cent. Imports are taxed further – 50 per
cent on European products, 70 per cent for other countries.
About half the sector’s revenues are paid out in tax – more than TL3bn
($1.9bn) last year.
`All I’m asking for is fairness,’ says Mr Soley. `As it stands, I have
to pay tax on my product two weeks after I’ve invoiced it. But I get
paid by supermarkets and suppliers weeks, even months after they
receive an order.’
As Turkish wines make their mark abroad, foreign investors such as
Piero Antinori and Frescobaldi have visited to look into vineyards.
`On one level it is a great market,’ says Mr Kutman. `Both in terms of
its vineyard opportunities and a large, youthful consumer population.
`But there is a big question mark over the political attitude. That
makes investors wary.’