The main finding of the study is that the main players on the wine market are individuals connected with the ruling party and Bidzina Ivanishvili in particular. At the same time, the companies connected with these individuals derive the most benefit from the increasing dependence of Georgian wine on the Russian market. On the one hand, these companies receive tens of millions of lari from the country’s budget in the form of subsidies and various state programs, and, one the other hand, their owners make large donations to the ruling party.

• In the years 2017-2023, wine-producing companies received a funding of GEL 169 million from state agro-projects, GEL 74 million of which was distributed to those companies whose owners and/or managers have donated money to the Georgian Dream. They have donated a total of GEL 6.1 million to the Georgian Dream;
• Of the 20 wine companies that received the highest amount of subsidies from the state (GEL 64 million in total), 15 companies are donors of the Georgian Dream. Among these, 2 companies whose owners are Bidzina Ivanishvili’s brother, Aleksandre Ivanishvili, and MP Zaal Dugladze, received GEL 11.5 million. The owner of 4 companies that received a total of GEL 19.4 million is Vakhtang Karichashvili, a business partner of Bidzina Ivanishvili’s cousin, Ucha Mamatsashvili;   
• In the years 2022-2023, 126 companies received state funding as part of the subsidy program for the grape harvest; the owners of 52 of these companies are donors and/or managers of the Georgian Dream;
• 8 of the 10 companies that exported the most wine to Russia in 2023 are donors of the Georgian Dream. At the same time, the owners of 2 companies are Bidzina Ivanishvili’s brother, Aleksandre Ivanishvili, and a member of the Parliament of Georgia from the Georgian Dream, Zaal Dugladze. The owner of 2 companies is Vakhtang Karichashvili, a business partner of Bidzina Ivanishvili’s cousin, Ucha Mamatsashvili;
• In 2023, 221,000 tons of grapes were harvested in Georgia, which is 23% less than the figure for 2022. However, the grape harvest has increased by 28% in the past 10 years;
• Despite the fact that the market (nominal) price of grapes tends to increase, its real price (adjusted to inflation) is decreasing;
• For the past 10 years, the wine exports have had a clear tendency of growth, which was mainly due to the Russian market;
• In 2023, the share of Russia in wine exports was 65%, which is the highest figure since 2006. Russia is followed by the EU with 12%;    
• In 2023, Georgia exported wine to 66 countries, among which Russia ranks the 61^st with the average price of 1 liter of wine (USD 2.7). From the large markets, the average price of 1 liter of Georgian wine is the highest in the U.S. – USD 6.2;   
• In the past 10 years, the average price of the exported Georgian wine (in USD) has decreased by 26%. From the large export markets, a tendency of growth is only observed in the U.S.

Introduction                            

Wine production in Georgia is not only an economic activity. It has great historical, traditional and cultural function. After Georgia gained independence, Georgian wine also acquired political significance. Due to the systemic structure of the Soviet Union, the main export market for Georgian wine was Russia. After the dissolution of the Soviet Union, this approach was maintained, which became a tool for political pressure and blackmail in the hands of Russia. When Georgia’s political direction becomes unacceptable for Russia, it threatens with stopping the wine export as a first response. In 2006, it actually acted on this threat.   

In addition to the political function, wine production in Georgia also has a considerable economic importance. Vine-growing and winemaking are important sources of income for the population of Kakheti. Therefore, problems related to the sales of grapes and wine cause the most damage to the population of Kakheti. In addition, Georgian wine is a product for which Georgia has an advantage in relation to other countries and can receive considerable income from wine export. In 2023, Georgia ranked the 19^th in the world with wine exports. Therefore, it is interesting to know the trends in the production of grapes and wine in Georgia, the dynamics of the change of the price of Georgian wine, and the extent to which the export market of wine is diversified.   

Studies by TI Georgia and other organizations published in recent years show that large businesses close to the authorities are the main actors involved in wine production. Therefore, we have studied which companies receive subsidies allocated by the government for the winemaking sector, which amount to at least GEL 100 million per year.

1. Grape Harvest and Grape Price

According to the 2020 data of the National Statistics Office of Georgia (Geostat), vineyards were cultivated on 42.1 thousand hectares in Georgia, which exceeds the figure for 2017 by 14%.^[1]

In 2023, 221,000 tons of grapes were harvested in Georgia, which is 23% less than the figure for 2022. The record figure for the grape harvest – 317,000 tons – was recorded in 2020. In general, grape harvest is related to the weather in important ways and varies accordingly, although it tends to increase in the long run; in 2019-2023, the average annual harvest was 278,000 tons, while in 2014-2018 this figure had equaled 197,000 tons.

Figure 1. Grape harvest in Georgia, in thousand tons

In the years 2014-2023, 74% of the grapes produced in Georgia was grown in Kakheti. In 2023, 79% of the grapes harvested was grown in Kakheti, 10% – in Imereti, 3% – in Shida Kartli, and 8% – in the remaining regions. Despite the fact that in 2023 the grape harvest in Kakheti decreased by 21%, Kakheti is the only region with a clear trend of increasing grape harvest over the past 10 years.   

Figure 2. Grape harvest by region, in thousand tons

Geostat publishes information on the price of 1 kg of grapes at the farm door, i.e., the average price at which grapes are purchased from farmers. In the past 10 years, the average price of 1 kg of grapes at the farm door was GEL 1.09. In 2014, 1 kg of grapes cost GEL 1.25 on average. In the following year, the price of grapes fell by 38%, which was mainly caused by a considerable decrease in the wine exports. Since 2016, the market price of grapes has tended to increase, and in 2023 1 kg of grapes cost GEL 1.28 on average.

Despite the fact that the market (nominal) price of grapes tends to increase, its real price is decreasing. The real price is the market price minus the level of inflation, which provides a good measure of the purchasing power of money. This means that GEL 1.28 received for 1 kg of grapes in 2023 is, in real terms, less than GEL 1.04 received in 2020. Accordingly, if a farmer does not sell more grapes, the price only increases their nominal income, while in reality their income decreases. GEL 1,040 received for 1 ton of grapes in 2020 had more purchasing power than GEL 1,280 received for 1 ton of grapes in 2023.

Figure 3. The price of 1 kg of grapes in Georgia, at the farm door

Wine Exports

Natural grape wine is one of the main export goods of Georgia. In 2023, Georgian wine worth USD 259 million was exported. Its share in Georgia’s total exports (excluding re-exports) was 9.2%, trailing only behind copper ores and concentrates.

In the past 10 years, wine exports have had a clearly demonstrated tendency to grow – they have increased by 45%. Wine exports also increased in the years 2010-2012, but they increased significantly in 2013-2014, when Russia lifted the embargo imposed on Georgian wine. In 2015-2016, the total amount of Georgian wine exports dropped by 37% due to economic crisis in Russia. From 2017, the exports resumed the tendency of growth and reached the maximum level – USD 259 million – in 2023. However, the exports reached a record volume of 102,000 tons in 2022. Despite the fact that the total value of the wine exports increased by 2.6% in 2023, the volume decreased by 12% and equaled 90,000 tons. The increase in the total value in parallel with the decrease in the volume was due to selling the wine at higher prices.

Russia ranks first in terms of the wine exports. In 2023, wine worth USD 168 million was exported to Russia, which exceeds the figure of 2022 by 4.6%. Until 2006, the Russian market held a 80% share in the exports of Georgian wine. In March 2006, Russia prohibited the import of Georgian wine. In the years 2006-2007, wine exports decreased threefold, although in the following years they started to rise, and in 2012, they lagged behind the figure of 2005 by 20%. In 2012, Georgian wine was not exported to Russia, and almost half of the exported wine was sold in Ukraine.

From 2013, when the Russian embargo was lifted from Georgian wine, the exports to the Russian market increased quickly. In the same year of 2013, they amounted to 44% of the total exports, and in 2014 they reached 62%. In the following years, the share of the Russian market decreased by 7%, although from 2022, it increased again and reached its maximum level, 65%, in 2023. The increase in the share of the Russian market was also due to a considerable decrease in the exports to Ukraine.

From May 1, 2024, Russia increased the excise tax on imported wine threefold (from USD 0.4 to USD 1.2). The expected increase of the tax had been known since the beginning of the year, so the Georgian wine exporters tried to create stocks in Russia until May. As a result, in January-April, the wine exports to Russia increased almost twofold compared to January-April 2023, while they decreased threefold in May. Russia increased the tax in order to protect the local production and intends to continue this policy in the future, which is going to decrease demand for Georgian wine. 

The EU, with a 12% share, ranks second in wine exports after Russia. The exports of Georgian wine to the EU tend to grow; over the past 10 years, they have increased almost threefold and reached USD 31 million in 2023. With the exception of Russia, the EU and Ukraine, the share of other countries in the wine exports is 18%. For the sake of comparison, in 2012, the share of other countries was 44%, which indicated more diversification of the wine export market.

Along with the volume of exports, the average price of the exported wine is also important. In 2023, Georgia exported wine to 66 countries, and the largest market of Georgian wine, Russia, ranked 61^st with the average price of 1 liter. In 2023, Georgia sold 1 liter of wine in Russia for an average price of USD 2.7. Georgian wine was sold at the highest price, USD 33 per liter, in Singapore, where 11 tons of wine was exported in 2023, followed by Iceland, where the average price of 1 liter was USD 13, and Taiwan, where the average price was USD 12. Georgian wine was sold at the cheapest prices in two countries of Africa, Nigeria and Niger, at USD 1.9 and USD 2.3, respectively. A total of 20 tons of Georgian wine was exported to these two countries in 2023.

From the relatively large markets, we should mention the U.S., where 907 tons of Georgian wine was sold in 2023, with an average price per liter amounting to USD 6.2. The U.S. is the largest wine import market in the world. In 2022, wine worth USD 7.7 billion was imported to the U.S. For the sake of comparison, in the same year, Russia imported nine times as little wine with a total value of USD 887 million. However, the Russian market is a close and traditional market for Georgia, where Georgian wine is well known.  

As for the EU, the average price of 1 liter of Georgian wine in EU countries was USD 3.1 in 2023. The prices of Georgian wine differ considerably among the EU countries. The lowest average price is in Poland – USD 2.5 per liter, while the highest one is in Ireland – up to USD 11. At the same time, Poland accounts for 60% of the Georgian wine exported to the EU and, accordingly, the prices in Poland considerably decrease the average price of Georgian wine in the EU. In 2023, Georgia sold the most wine after Poland in Latvia – 1,147 tons (average price per liter – USD 3.6) and Germany – 991 tons (average price per liter – USD 4.7).

The tendencies of prices of Georgian wine on large export markets are no less interesting than the prices observed in 2023. In 2023, the average price of 1 liter of exported Georgian wine increased by 16% compared to 2022 and amounted to USD 2.9, although the average price has decreased by 26% over the past 10 years. In 2014, the average price of Georgian wine was USD 3.9. The decrease in the price was due to the depreciation of the lari and the increased share of exports to countries (such as Russia) where Georgian wine is relatively inexpensive.  

The only large export market where the price has tended to increase during the past 10 years is the U.S. Since 2014, the price of 1 liter of Georgian wine in the U.S. has risen by 23%. On all the other large markets, the price of Georgian wine in USD has decreased by an average of 26%. However, the price in lari remains stable due to the increase in the exchange rate of the lari.  

Geostat has provided us with information on those companies that export the most wine to Russia. However, the specific information on their revenues in USD from selling wine in Russia is confidential. Of the 10 companies that exported the most wine to Russia in 2023, 8 companies are donors of the Georgan Dream. The owners and managers of the companies have donated GEL 1.8 million to the ruling party. At the same time, the owners of 2 companies are Bidzina Ivanishvili’s brother, Aleksandre Ivanishvili, and a member of the Parliament of Georgia from the Georgan Dream, Zaal Dugladze. The owner of 2 companies is Vakhtang Karichashvili, a business partner of Bidzina Ivanishvili’s cousin, Ucha Mamatsashvili.

In 2021-2022 too, factually the same companies were the largest exporters of Georgian wine to Russia. The only difference is that in 2021-2022, the 10 largest exporters included Georgian Wine House LLC and in 2021 – Marniskari LLC. The owners of Georgian Wine House LLC have donated GEL 163,000 to the Georgian Dream, and those of Marniskari LLC have donated GEL 437,000.

Table 1. Companies that exported Georgian wine with the highest value to Russia in 2023

Subsidization of Grape Harvest

In the years 2014-2023, up to GEL 500 million was spent on subsidizing the grape harvest. The government finances wine-producing companies, so that they accept grapes at prices higher than the market price. In recent years, the subsidy for 1 kg of grapes has ranged between 20 tetri and 35 tetri. For example, in 2023, the subsidy for 1 kg of Rkatsiteli and Kakhuri Mtsvane varieties was 20 tetri. To receive the subsidy, a company had to purchase at least 100 tons of grapes at a minimum price of 90 tetri.

In April 2022, TI Georgia published a study about the subsidy program for the grape harvest of 2021, which made it evident that the companies who donated to the ruling party and were linked with high-ranking officials received preferential treatment. This time, we have studied which companies received amounts of money as part of the subsidy program for the grape harvest of 2022 and 2023.

In 2022, 105 companies received state funding in the framework of the grape harvest subsidy program. The total amount of the subsidy equaled GEL 96 million. The owners and/or managers of 50 of the 105 companies are donors of the Georgian Dream. They have donated GEL 6 million to the Georgian Dream.

Of the GEL 96 million allocated for the subsidization, GEL 62 million was received by a state-owned company, Harvest Management Company LLC, and GEL 24 million went to companies that donate to the Georgian Dream.

Harvest Management Company LLC is a company responsible for organizing the grape harvest, which awards simplified procurement contracts to companies for rendering various services. Harvest Management Company LLC mainly awarded large contracts to companies connected with donors of the Georgan Dream, such as Universal Spirits LLC, Kvareli Cellar LLC, Kakhetian Traditional Winemaking LLC, Rock Logistics LLC, Kachreti Winery LLC, Chateau Mukuzani LLC, and Tsinandali – Best Wines of XXI Century LLC.

Table 2. 10 companies that received the largest amounts of money as part of the grape harvest subsidy program in 2022, GEL

In 2023, 91 companies received state funding as part of the grape harvest subsidy program. The total amount of the subsidy reached GEL 25 million. The owners and/or managers of 40 of the 91 companies are donors of the Georgian Dream. They have donated GEL 5.5 million to the Georgian Dream.

In 2023, GEL 8.8 million of the GEL 25 million allocated for the subsidy was received by the state company, Harvest Management Company LLC, while GEL 10.2 million went to companies that donate to the Georgian Dream.  

Harvest Management Company LLC once again primarily awarded large simplified procurement contracts to companies connected with donors of the Georgian Dream.

Table 3. 10 companies that received the largest amounts of money as part of the grape harvest subsidy program in 2023, GEL

State Programs

In addition to the grape harvest subsidy program, wine-producing companies also receive financial resources from the state through various budget-funded programs. The main provider of funding is the Ministry of Environment Protection and Agriculture. The Ministry of Agriculture manages the Program for the Development of Viticulture and Winemaking, the main goal of which is to popularize Georgian wine and to contribute to the sales of grapes. In 2024, GEL 54 million has been allocated for the Program for the Development of Viticulture and Winemaking, while in 2017-2023, GEL 470 million was spent on it.

The Ministry of Agriculture also manages the Unified Agroproject program. This program includes Preferential Agrocredit Project, Agroinsurance, Plant the Future, Co-financing of Processing and Storage Enterprises, Co-financing Program for Harvesting Agricultural Machinery, and other subprograms. In 2024, GEL 342 million has been allocated for this program, while in the years 2017-2023, up to GEL 1.6 billion was spent on it. However, unlike the Program for the Development of Viticulture and Winemaking, the Unified Agroproject program does not only include the funding of winemaking; it covers all sectors of agriculture.

N(N)LE Rural Development Agency has provided us with information on the companies that received funding from the Unified Agroproject program in the years 2017-2023. By means of the Business Register of Geostat, we identified the companies whose main activity is wine production.    

From the GEL 1.6 billion spent from the Unified Agroproject program in 2017-2023, wine-producing companies received a funding of GEL 169 million. Of the GEL 169 million, GEL 74 million went to the companies whose owners and/or managers have donated money to the Georgian Dream. Individuals connected with these companies have donated GEL 6.1 million in total to the Georgian Dream.

Of the GEL 169 million given to wine-producing companies form the Unified Agroproject program, GEL 64 million went to 20 companies (Table 4). Fourteen of these 20 companies are donors of the Georgian Dream. Of these, 2 companies that are owned by Bidzina Ivanishvili’s brother, Aleksandre Ivanishvili, and MP from the Georgian Dream, Zaal Dugladze, received GEL 11.5 million. The owner of 4 companies (which received a total of GEL 19.4 million) is Vakhtang Karichashvili, a business partner of Bidzina Ivanishvili’s cousin, Ucha Mamatsashvili.   

Table 4. 20 companies that received the largest amounts of money from the Unified Agroproject program in the years 2017-2023