Advice on doing business in eastern Europe

Friday, 19. January 2018 - 10:45

David Sichel/Jean-Bernard Nadeau

David Sichel
partner, Maison Sichel, France

Maison Sichel began as a Bordeaux negociant and has expanded dramatically in the past 50 years. Today, the Sichel family own a winemaking facility and a bottling plan, as well as two wine estates and other assets. In Eastern Europe the company works in Bulgaria, Croatia, Czech Republic, Russia and Serbia.

Sichel first entered the Eastern European market back in 1998 and is now involved in most of the headline economies. The demand for Bordeaux wines across the region has been reasonably steady since we started doing business here, although the market hasn’t grown at the rate I expected. This is primarily because of the horrific burden of the administrative and bureaucratic hurdles you have to overcome, in addition to the inherently fragile demand for fine wine, not least due to the sometimes aggressive currency fluctuations.

Today Russia is by far the most important destination for our brands, although market and political instability remains a constant worry. Indeed, some days it seems like the rules change on a daily basis in this part of Europe. The result is that the major players and the people in charge also change all the time, so it’s difficult to keep up with who you are liaising with. More than anywhere else on the planet, the actors in this business and their hierarchy seems to change with greater frequency each year.

However, I have been most impressed with the professionalism of our partners in Eastern Europe – they work very hard and are quick to learn. They tend to focus on the on-trade initially, building a brand’s reputation before attempting to penetrate the retail sector, which today is far more important in terms of volume than in previous years. Concurrently, the level of consumer knowledge and interest in premium wine is growing fast, although the percentage of people in the market for imported labels remains small. It’s simply prohibitively expensive for most consumers, and the average salary is quite low in most Eastern European nations.

Ultimately, much depends on the future economic growth and stability of Eastern Europe, in terms of this market for fine wine expanding. All the cards are in order: a populace with a keen interest in learning and expanding their wine knowledge, a general perception of wine as a luxury product, and a high respect for the culture of wine. They know how to treat it, probably because several nations in the region have their own cultural history of wine production, and therefore they have a ready understanding of wine and a penchant for premium wines. It just now depends on whether wealth will continue to spread to the middle classes.

My final advice is simply to be patient and keep on trying – hardly earth-shattering, I realise. But that really is the key to unlocking the Eastern European markets, in addition to a substantial investment of time and resources. Getting to grips with this part of the world takes several years, and even today Sichel is still on a steep learning curve. Yet the risks are no greater than in other emerging economies, at least in my experience.
Interview by James Lawrence

This interview ran as part of the regular Perpectives series, in Issue 4, 2017. For more great content, subscribe to Meininger's Wine Business International.