Drunk with success
20 years ago, when Israelis knew only sacramental wine, eight communities joined to found Golan Heights Winery.
In that not-so-distant era, most of the wine gracing Israeli tables was sacramental wine. Older Israelis will remember the miserable table wine that was available, especially the Carignan (red) and French Colombard (white). The best that can be said of these grape varieties is that they produce great quantities. Unfortunately, the quality is dismal.
The Golan farmers listened to the experts. They planted vineyards of sauvignon (white) grape, and sent the fruits of their labor to wineries in the center of the country, which produced highly-praised vintages. The farmers then installed their own press. The vintage was sent abroad, where it immediately won awards and praise. The result, exactly 20 years ago, in 1983, was the founding of Golan Heights Winery.
The romance and the business
Four kibbutzim (collective agricultural settlements), El-Rom, Ortal, Ein Zivan, and Geshur, and four moshavim Ramat Hamagshamim, Yonatan, Alonei Habashan, and Ramat Naftali, own Golan Heights Winery. The communities are scattered along 50 kms, as the crow flies, from Geshur in the south to El-Rom in the north. Their soils and climate vary widely, providing a range of beds for different grape varieties.
“We began growing high-quality classic grape varieties, dragging the commercial wineries in our wake. They, too, began to plant high-quality grapes,” says Golan Heights Winery CEO Shalom Blyer. In 1998, Blyer replaced Yerevam Segev, who had served in the post for ten years. For Blyer, a former member of Kibbutz El-Rom and now a resident of Katzrin, the winery was not an unknown business. Firstly, he had worked there as a member of El-Rom. Secondly, he was deeply involved in Golan Heights agriculture, including a stint as Israel Fruit Growers Association general manager. Thirdly, the winery is quintessentially kibbutz-family oriented, as is most Golan agriculture.
When Blyer talks about the Golan’s vineyards, his pleasure pours out. “Look at the peach flowers,” he bubbles in delight at the sight of the pink flowers blossoming on the trees awakening from their winter slumber. He displays the same emotion when standing before the terroir table of soil types that hangs on the wall in the winery visitors center, and when he explains the importance of the different soils at each vineyard and the selection of the most suitable grape to produce the best wine.
But romance does not make a business, certainly not a successful one. As Blyer dryly explains at every forum, “We were commercially successful in 2002, meeting all our targets.” Numerically, the target was NIS 95 million in sales.
Setting such a target during a severe recession was rather astonishing, especially for a sector that is export-oriented. The fall in exports, which has caused many business financial hardship, cost Golan Heights Winery over 30%.
“Israel’s struggle for a commercial place in the world has two facets,” says Blyer. “On one hand, Israeli products are removed from the shelves in places that detest us. Elsewhere, however, in places that have many Jewish consumers, such as the US and UK, customers demonstrate support for Israel by buying Israeli products.”
The result has been a doubling of wine exports to the US, taking advantage of the recent public tendency to boycott French products, while exports to European countries, such as Germany, have plummeted. “Our sales in Europe used to total €14 million, but have fallen by 15-20% a year,” says Blyer. The situation in Scandinavia is even worse. “We were told that in Scandinavia, children of Palestinian origin were putting stickers on Israeli grapes that read, ‘These grapes were irrigated with Palestinian blood’.”
Though he was born in Poland, little remains of Blyer’s accent, except for a guttural undertone as he catalogues the pro and anti-Israeli camps. “Consumers in the Far East and Central Europe don’t care about politics, and our sales there haven’t changed.”
An alcoholic-political blend
A glance at a map of Golan vineyards shows steady expansion, based on scientific tests of the ground and grape qualities. For example, most Chardonnay grapes have been uprooted, except at Ortal, Ein Zivan, El-Rom and Odem. “Fortunately, Chardonnay grapes need conditions that exist in the northern and higher parts of the Golan,” explains Blyer. Other grape varieties are grown in the southern Golan vineyards.
“For quite a few years, many people were surprised that the Golan communities decided to plant more and more vineyards, saying, ‘Why are you investing when we’re about to leave the Golan?’ If he had listened to the naysayers, we wouldn’t be making wine,” says Blyer. The prospect of withdrawal from the Golan has been on the horizon many times, and just as frequently it has disappeared.
When Golan Heights Winery entered into a partnership with Kibbutz Yiron in the Upper Galilee to found Galil Mountain Winery in 2000, quite a few cynics claimed they were preparing to leave the Golan. “I have just one answer for them: Ha!,” laughs Blyer. “We’re a winery that presses 6,000-7,000 tons of grapes, while Galil Mountain Winery presses only 1,000 tons.”
The investment in Galil Mountain Winery, managed by former Golan Heights Winery CEO Yerevam Segev, was based on scrupulous planning as part of the Golan Heights Winery’s development strategy. “Part our strategy included founding another winery. We considered buying a foreign winery and converting it into a kosher winery, but decided instead to build a new winery in the Galilee, in order to become dominant in that region, too,” says Blyer.
Today, with boutique wineries popping up across the country, you have to be an expert to keep track of all the Israeli wines filling the shelves, and it’s hard to remember that the Golan Heights Winery was launched into a local alcoholic vacuum. The winery immediately set new standards that jolted the entire sector to new levels of excellence.
“You should bear in mind that we entered the sector at the right time,” Blyer demurs. “Global wine consumption began to grow then, and the drinking of high-quality wines spread from its earlier preserve of the wealthy and aristocrats. Israelis also began traveling abroad at that time, and tasted new wines that they then sought back home.”
The Israeli restaurant industry also began to flourish simultaneously with the news that Golan wines were winning international awards. Nevertheless, it was hard to find Golan wines in Israel at first. “Our reputation was not established in Israel, but overseas. The Israeli market was too small and virginal. When prestigious journals like “Wine Spectator” began writing about Israeli wines, the articles were quoted here,” relates Blyer.
Independence and marketing
In order to further consolidate its overseas reputation and more effectively realize its market potential, Golan Heights Winery implemented another of its strategic goals: establishing an independent marketing distribution network in the US. “We first marketed our wine through a local importer, but we realized that while our production was steadily growing, our sales were flat for eight years,” says Blyer. In 2001, the winery founded a fully-owned subsidiary, Yarden Inc., and in 2002, US sales rose to $2.5 million. Golan Heights Winery predicts US sales will exceed $4 million within two years.
The winery simultaneously implemented another significant marketing change: establishing an Israeli distribution network. “Until 1999, we had no influence on the wine’s marketing after it left the winery’s gates,” explains Blyer. The wine is now marketed by the winery’s own independent distributors. “We had to sever relations with the distributors, because we realized we had to accompany the product all the way to the customer. The separation was amicable, because for 17 years, we hauled our crates on our own backs.”
The new policy led to an increase in the winery’s personnel from 60 to 107. “Unlike Segev, I work closely with our customers,” says Blyer. “We now distribute 30-35 types of wine. Some are easy to sell, some harder. For instance, it’s hard to sell the Gewurtztraminer. This is a white wine with an unpronounceable name. An external distributor wouldn’t bother to sell it, but we have a clear policy to promote sales of Gewurtztraminer wine. We started selling 800 crates, and now sell 3,000. Granted, we spilt a lot of wine on tastings, but that’s how you attract customers.”
Restaurants and supermarkets
Another facet of the winery’s distribution strategy was to more clearly brand its numerous labels. Not all the label’s were precisely branded. Blyer hired former Kibbutz El-Rom member Anat Rushansky, who had since moved to Karkum, as the winery’s marketing director. Rushansky built the winery’s advertising and public relations network, including label branding.
“In contrast to the past, wine consumers now recognize our brands, including Yarden, Gamla, and Golan,” says Blyer. At the pinnacle of the winery’s brands is the Katzrin label, followed by the Yarden label. “The Gamla label is also more precisely branded, and connoisseurs now recognize it. Gamla is a wine variety that costs less than the top Yarden label wines, but gives value for the money.”
The Gamla label is specifically positioned for the restaurant trade. “There is a Gamla Cabernet that costs NIS 60 a bottle, that better accompanies a meal than 1999 Yarden Cabernet that costs NIS 100. This is because the Yarden needs to age, whereas the Gamla should be consumed immediately,” explains Blyer. If you want to sip a really good Yarden during a meal, you should select a 1996 vintage, which is not always available, and always costs more.
The Golan label is positioned for sale to the wider public in supermarkets. The winery’s marketing campaign includes wine-tasting events at supermarkets. The work is far from over, because Israelis, unlike the French or Italians, do not casually consume wine with a meal, and has to be educated. One can frequently see a guy standing before the shelves of wine, and telling his wife, “I’d buy a bottle for dinner, but I don’t know which.”
It is people like these that cause Blyer to describe Israel as a “growth market”. It is also why he does not think that Israel is too small a market in terms of production. “It is true that some boutique wineries will close or merge, but the potential is still great. The average Israeli drinks 5-6 liters of wine a year, while the French drink 58 liters.”
Regrettably, there are no accurate figures on wine consumption in Israel. It is possible to collect the figures on supermarket and wine store sales, but that is only an estimate. The only known and unambiguous figure is the amount of wine grapes pressed by the wineries. “However, remember that the large wineries, in contrast to Golan Heights Wineries, make a great deal of Tirosh sacramental wine from these grapes,” notes Blyer.
Pioneering and excellence
Golan Heights Wineries is unquestionably one of Israel’s top three wineries, and no one can take away its leadership role in launching the Israeli wine revolution. 80% of the winery’s production now finds its way to Israeli tables, and only 20% is exported. The winery accounts for 38% of Israeli wine exports, and it is the pioneer in introducing Israelis to new wine varieties, including Pinot Noir, Sangiovese, and others.
“We don’t aim to be the biggest winery,” declared Blyer. “We want to be the dominant commercial winery in terms of quality, which is why we invest so much in excellence. Unlike boutique wineries, a commercial winery owns vineyards in many regions, and has the advantage of selecting the best harvest for each year’s vintage. Israelis are starting to believe that ‘small is good’. This isn’t always so. A small winery can have a great harvest of magnificent grapes, followed by a bad harvest of awful grapes. As a large winery, we have room for maneuver. That is the only way to ensure consistent quality. In order to survive, we must be consistently good.”
In order to be consistently good, Golan Heights Winery is working on a strategic quality-enhancement plan. “Strategic campaigns are conducted every 3-4 years,” Blyer relates. “You can’t rest on your laurels. Now that quality is the name of the game, you have to compete against scores of boutique wineries that produce good wines, as well as against imported wines. We have no inferiority complexes about imported wines. On the contrary, it’s good for us, because whereas only expensive products used to be imported, the whole world is now open to everyone now.
“The moment when the middle classes and students are exposed to wine, their minds are opened. We therefore don’t object to imports. On the contrary, let them drink, experiment, and learn. Then they’ll switch to higher quality wines. They will also discover that the high-quality imported wines cost much more than the high-quality domestic wines. We’ll be available everywhere with Mount Hermon Red for those prepared to pay NIS 30 a bottle, Gamla labels for those prepared to pay NIS 60, and Yarden labels for those prepared to pay NIS 100.”
And finally, there is the Katzrin labels, produced from especially fine harvests, whose price reflects both its quality and rarity.
Published by Globes [online] - www.globes.co.il - on April 30, 2003
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