Lebanon’s long history of wine production dates back to 2,600 BC when the Phoenicians used to export the wines of Byblos to Egypt; many believe the story of Jesus Christ’s first miracle of converting water to wine at a wedding took place in Lebanon’s Qana. When the Ottoman Empire took control of Lebanon, wine production took a back seat only to be slightly revived with the French mandate, which brought with it France’s love for good wine. With the civil war, interest in wine making receded once again, and it is only in the last few years that the country has witnessed a rebirth of wine culture. Today, according to the Union Vinicole du Liban (UVL), the official association of Lebanese wine producers, Lebanon’s viticulture produces 6.5 to 7 million bottles of wine annually, with 2,000 hectares of land in the country dedicated to wine grapes. While this is but a drop in the ocean compared to other wine producing countries — such as France which produces 5 billion bottles of wine annually — interest in wine production is certainly on the increase as evident by the fact that Lebanon has around 40 wineries today.
A new bottle on the block
One of the most recent wineries to enter the Lebanese market is Ixsir, a company that was conceived in 2006, officially established at the end of 2008 and released its first wine in 2011. While most wineries in Lebanon are typically family owned and managed, Ixsir’s shareholders market themselves as “a group of friends with a passion for wine and for Lebanon.” The project started with Etienne Debbane, chairman of the Debbane-Seikaly group that owns Exotica, wine trading company Enoteca and Debbane agriculture, Hady Kahale, current general manager of Ixsir, and Spanish winemaker Gabriel Rivero.
As the three of them approached banks and would-be investors with their plans for Ixsir, they were informed that Carlos Ghosn, chairman and general manager of Nissan-Renault, was interested in investing in a Lebanese winery. Ghosn saw in the wine industry and its related grape harvesting an opportunity to support community development in Lebanon, and, after studying the available wine market, he was the second party to join Ixsir as a partner. Finally, key figures from the financial sector, such as Khalil Debs, Walid and Samer Hanna and Nabil Shaaya joined in as well. “Basically, we are three groups, the Debbane-Seikaly-Kahale group handling the management side, Carlos Ghosn’s group and the financial sector’s group,” explains Kahale, adding that all the partners are successful businessmen with an evident love for their country, otherwise they would have invested in projects abroad.
“Ixsir is the wine of the Lebanese mountains,” says Kahale, describing their product in one sentence. Unlike the majority of Lebanese wine which is produced in the Bekaa valley, Ixsir’s winery is in Basbina, a mountainous area above Batroun, North Lebanon. The grapes that comprise a bottle of Ixsir are gathered from six different hilly vineyards in Lebanon (Jezzine, Niha, Kib Elias, Deir El Ahmar, Ainata and Batroun) creating a diversity of taste rarely found in other wines. “Many people talk about the Bekaa valley, but plains never produced good wines because there is no water drainage there, something which is needed for good wine-making grapes,” elaborates Kahale, adding that many Lebanese wineries buy their grapes before the season, a move which does not usually produce good wine, as the only way to have quality wine is to have your own vineyards.
“With Ixsir, we are competing on quality and not on cost. Consumers want more than the usual local entry range prices wines, so we felt we could offer them something better at a slightly more expensive price and they will appreciate it,” says Kahale. The winery produces three ranges starting with Altitudes, which sets you back approximately $10, moving on to their second line Grand Reserve that is slightly more expensive and finally the just-launched El, their high-end wine, which costs $48.
On El, Kahale says: “For us, competition for El is from international wine, and therefore it has a good quality-cost ratio. Critics have given it the best grades given to a Lebanese wine in a long time.”
Getting out the product
Ixsir’s sole distributor is Enoteca, one of the first wine shops in the country with its own distribution arm, and a sister company owned by the Debbane-Seikaly group. Kahale explains this decision by saying: “We chose Enoteca, not just because it is a sister company, which helps of course, but they are also very good at retailing and already have their high-end restaurants and stores. Working with Enoteca also means we are almost totally hands on in distribution, which we prefer to having a strong bulldozer style distributor lacking the focus or precision you get from a smaller distributor. Our strategy is paying dividends already.” Ixsir currently produces 400,000 bottles annually, 55 percent of which are distributed locally with the rest internationally. In Lebanon, Ixsir is distributed to 350 stores, 150 of which are off-trade locations such as major supermarkets and delicacy shops. The remaining 200 are in on-trade locations such as high-end restaurants and pubs that have extensive wine lists. “Basically, we are anywhere a wine culture exists and the wine is respected,” summarizes Kahale.
Within a year of their launching, Ixsir has tapped into 11 international markets, the top three of which are England, France and Japan. “We have a different strategy for each country,” explains Kahale. “In Japan, we are the number one selling Lebanese wine because Carlos Ghosn is an icon there. In the UK, the UVL launched a strong generic campaign, which Ixsir was part of, and in France, we mainly distribute to some of the 400 Lebanese restaurants in Paris, in addition to several wine shops.”
Despite Ixsir being rapidly embraced by the public, Kahale believes that “the route to the market and to get to the consumer in Lebanon is not easy.” He explains that the Lebanese wine producers are not competing against each other but instead are working together, through fairs and promotional activities, to educate the consumer about wine, thereby increasing its consumption in the market that in turn will benefit all Lebanese wineries. According to Kahale, wine has the potential to be for Lebanon what silk was in the olden days, a major profit-making export. “The government financially supports olive tree products, but they have a sector that can make 10 times more profit. We are the only country in which generic campaigns for the industry are being paid from our own private pockets,” laments Kahale, attributing this mainly to religious concerns.
Making the market
In terms of Ixsir’s specific marketing strategy, mass campaigns are seen as unproductive and instead they reach the consumer at a personal level through targeted media and critics’ reviews. “Wine is not a fashion item. It will take time for your client to choose you, but once he does, it will also take time for him to let you go,” says Kahale, adding that a very important tool in their marketing strategy is the winery itself. The winery, designed by architect Rabih Abi Lama, won the CNN Greenest Buildings award for the year 2011 and understandably brought Ixsir a lot of publicity. The main purpose for building the winery underground was to produce the best wine possible while preserving the natural landscape and saving energy for future generations.
Costing more than $10 million, Ixsir is financed by private equity and shareholders, through capital and loans, with the shareholders expecting to start making profit in a few years. In conclusion Kahale says, “The wine business is a long-term one because you are creating value. If you are looking for quick profit and are not passionate about it, don’t go into the business.”