How to Turn Wine into a Serious Business in Serbia? – We Are Importing Half of Our Needs, Raising a Hectare of a Vineyard Costs EUR 25,000

September and the beginning of October mark the traditional time of the grape harvest and the suitable events throughout Serbia dedicated to grapes and wine. Again, traditionally, it is also a good time to draw the line and see “where Serbian viticulture and winemaking are now”. Some will say that it might be late to ask these questions only once the “wine party” has already started, but, “in wine, there is truth”, so let it “speak”.

According to an expert in this field, professor Dragoslav Ivanisevic of the Department for Viticulture at the Faculty of Agriculture in Novi Sad, the numbers seem a bit like a hangover after too much cheap wine, but there’s still “light at the bottom of the glass”.

As professor Ivanisevic says for eKapija, Serbia imports around 15 million more than it exports annually, and the number sometimes goes up to 20 million liters.

– We import around 50% of our wine needs, which means that there’s considerable room for the local market here – our interviewee says.

He adds that slightly under 7,000 ha is registered as land under vineyards for the production and sale of wine, legally, that is, listed in the wine register. It is assumed that there’s an additional 3,000 unregistered hectares, which means that Serbia has around ten hectares under vineyards at the most.

What’s the problem?

– The possibilities are, of course, much bigger, the production of wine is profitable and there’s no question there. The program of the development of this industry that the government adopted for the 2020-2030 period envisages reaching some 25-30,000 hectares. However, there are several obstacles – Ivanisevic says.

– The first is the long turnover period. If you are starting from scratch, it takes a year of preparation for the sowing of a vineyard, then waiting for three years for it to develop, then, in the third year, you have the zero yield, which is, say 30-50% of the full yield and, if everything goes right, beginning with the 4th year, you have a full yield. Then an investment in the winery follows – equipment, facilities. And then only after 5, 6, 7 years, you get your first wine. Also, the wine production cycle varies – some white wines can be ready in 7 months, whereas some more serious red wines require aging for up to two to 3 years. Then, of course, you can’t immediately sell all the quantities of the wine at the price you want. When you complete the investment, you are not done, you have only just started. You need to penetrate the market and invest in the marketing. You lose another year there, because wine marketing is specific and demanding – it’s not just the quality that matters, what also matters is the story. So, it is only in around ten years that you can expect your investment to pay off – the professor explains.

He adds that people often can’t handle it all, primarily in financial terms.

– Especially after all the price increases. Raising a hectare of a vineyard costs close to EUR 25,000 at the moment. Up till a year or two ago, it was between EUR 15,000 and 18,000. But, when the first 10 years pass, it is easier, provided that you possess the quality, because then you become somebody who dictates both the prices and the wine styles – our interviewee says.

That is perhaps the reason why, this year, you can find entire wineries up for sale in ads?

– That too, and it’s also because this year has been extremely challenging for viticulturists when it comes to the yield, and even the quality, of the grapes – the professor says.

Still, he says, the trend of opening new wineries is noticeable:

– New, so-called startup wineries are being opened constantly. In 2021, compared to 2020, around 60 new wineries were registered. The data from the beginning of this year is that 430 wineries are registered in Serbia, and we expect them to be a total of around 500 next year.

As another obstacle, professor Ivanisevic cites the problem created for winemakers by the unfair importing competition:

– These are primarily grapes which arrive to Serbia from North Macedonia, because they are significantly subsidized there as a strategic product. It is also a frequent case for wines from Italy or somewhere from the west to arrive to our country and end up being very cheap, and the reason is that big wineries have no time to sell the previous harvest and the new one is already coming and then very good wine series are sold at low prices.

Part of the solution, the professor says, would be to regulate the import of wine grapes, which, due to the CEFTA and other agreements, is now quite a bit easier:

– In that sense, getting closer to the EU works in our favor, because you can’t trade wine grapes there, you can’t buy grapes in Italy, and then make wine in France.

The interviewee of eKapija also points out that the trends in the world are such that the consumption of wine has been reduced in general, but at the same time, the turnover is increasing, which means that smaller quantities of more expensive, higher quality wine are consumed.

– People drink wine and always will, without any doubt. Furthermore, viticulture is very important for Serbia from the aspect of rural development, it cannot be separated from the rural tourism that we are striving for, and wine tourism is a branch of tourism which has had the biggest growth trend everywhere in Europe in the past year. So, winemaking is the future, but the focus should be placed on quality and indigenous varieties – the professor says.

He points out that the most frequent varieties in Serbia are Grasac, Merlot, Cabernet, Sauvignon, Chardonnay, Rhine Riesling, Prokupac and Tamjanika, which comprise 90% of the vineyards, but the aim is to have old, local, indigenous varieties, as well as those newly created, to reach a 20% share in the total range.

His advice to beginners in viticulture and winemaking is to get to know the production well, which “is very attractive and interesting, but also very demanding”.

– You need to count on a serious input of resources and time and aim at continuity and a family business. If you are ready for that, wine production will be pay off for you eventually.

Vrsac wine god

A good example of a successful family wine business is the Bahus winery from Gudurica, whose quality we made sure of at the recent Grozdjebal in Vrsac.

With a capacity of 35,000 liters and without, as he says himself, ambitions for entering retail, the owner Ivan Milanovic places focus on the HoReCa segment.

– Bahus is a small family winery, the good reputation of which is spread by word of mouth. That is why I believe that what Serbia lacks is the strengthening of the awareness of the importance of offering local wines in local bars. We lack that moment which is called “house wine”. And wine tourism is on the rise and people are coming with the express purpose of tasting local wines which they can only taste here. Hospitality owners need to understand that, by building the brand of local wine, food, beer…, they are also building their own brand, and not just to take care whether the bottle entry is 320 or 520 dinars – Milanovic says for eKapija and cites the discouraging data that, in Vrsac, an area famous precisely for its wine for six centuries now, you couldn’t taste local wine in bars until a couple of years ago.

The situation is a lot better now, he says, the renaissance of private winemaking in Vrsac is at its zenith, but the awareness of the importance of local wines needs to be raised, as well as of those who make, drink and offer wines, but also advertising a region as a complete tourist product.

– The time of state wineries is over, we are moving on to smaller series, people choose what they’ll drink and I see an opportunity for local wineries precisely in wine tourism – Milanovic says.

He points out that a good market niche is also the cooperation with companies which have recognized wine as a suitable gift for business partners, so special series and branded labels are produced on such occasions.

Talking about how he entered the wine business, Milanovic says that Bahus is “a result of life circumstances”, considering that he had no family connections with Gudurica and viticulture.

– My father, who produced rakija as a hobby, proposed some fifteen years ago for us to buy a vineyard and so, little by little, we reached 17 hectares. In 2010, I returned from Belgrade from my law studies and, in agreement with my future wife, I decided for winemaking to be our profession – says our interviewee, whose winery has existed under this brand since 2013.

Since then, there have been 13 harvests, and the road, he says, has not been easy and there are still challenges:

– So far, we have invested at least EUR 100,000. Investments are continuous, but you can’t make serious investments, like reconstructions, from the turnover, so you have to take out a loan or apply for subsidies with an investment return of 40-60%.

Two thirds of the Milanovic family’s vineyards feature white varieties – Italian Riesling, Rhine Riesling, white Burgundy, Sauvignon blanc and Gewurztraminer.



– All our wines are varietal, except for the coupage wine that we call Caberlot, which is 60% Cabernet and 40% Merlot. When it comes to white wines, we are best known for the Gewurztraminer, and the reason is that it is not that well represented. Of the red wines, I would highlight our Pinot noir and our coupage wine. Still, each harvest produces something special. Last year, at the Vrsac Wine Fest, we won medals for our Pinot blanc and Sauvignon blanc – says eKapija’s interviewee.

His advice to future winemakers, learned from experience, is not to expect overnight success.

– It takes time, dedication and patience. This business is not a trade in which there’s a turnover in six months. A vineyard requires year-round presence, plenty of investments and building your own brand. Don’t chase after sales, but quality – Milanovic concludes.

B. Petrovic

Poljoprivredni fakultet Novi Sad

IVAN MILANOVIĆ PR VINARIJA BAHUS

winery Bahus Gudurica

Dragoslav Ivanišević

Ivan Milanović

wine

winemaking

viticulture

wine production

winemaking profitability

indigenous Serbian grape varities

traminac

Gewurztraminer

HoReCa

local wines

price of raising a vineyard

Grožđebal