It’s all in the grape

This article is part of an Executive special report on beer, wine and arak. Read more stories as they’re published here, or pick up October’s issue at newsstands in Lebanon.

September was a busy month for Lebanon. From the Bekaa Valley to the hills of Batroun, from the mountains of the Chouf to Jezzine in the South, vineyards were abuzz with those harvesting grapes for this year’s wine vintages.

Wine making in Lebanon is enjoying a steady growth, with over 30 new wineries launched since 2000. This rapid growth and recognition at both the local and international levels — as many wineries export more than they distribute locally — has not been struggle-free for Lebanon’s wine producers and while this expansion is certainly welcome, it also presents risks.

A brief background

Wine production is part of Lebanon’s history, with many believing that Qana in South Lebanon is the setting of Jesus’ first miracle when he is said to have turned water into wine. Before the time of Christ, the Phoenicians traded wine across the Mediterranean and some parts of Europe. When the region fell under Ottoman rule, however, winemaking was forbidden except for religious purposes in monasteries. The sector was revived to some extent with the French Mandate over Lebanon, which brought with it the French’s demand for wine and their eye for quality land which could produce it, only to have the sector decline again with the onset of the Civil War in 1975.

Chateau St. Thomas

Emerging from the war and with local production at a near standstill, the five existing wineries (Château Ksara, Domaine des Tourelles, Château Musar, Château Kefraya and Château Nakad) began putting back together the pieces of their businesses. Zafer Chaoui, chairman and CEO of Ksara and current head of the Union Vinicole du Liban (UVL), recounts how Château Ksara struggled in the first few years after the war as it was in a location in the Bekaa which was still considered dangerous, and because the new board had not had the time to properly invest in the winery itself after having bought it from Jesuit priests shortly before the war. The first order of business, recalls Chaoui, was to invest in new modern equipment and high quality grapes imported from France.

The Birth of the UVL and its role in selling Lebanese wine abroad 

The structure of the wine sector improved in the 1990s with the establishment of seven new wineries and the creation of the UVL in 1997. “The idea for the UVL was to concentrate our efforts and cooperate with each other. Actually, at the beginning of the UVL’s life, we had the mission to negotiate with the government to protect our common interests but we didn’t have any common view on marketing,” notes Chaoui.

Some wine producers see the benefits of UVL membership as providing a platform for them to meet with fellow wine producers and raise issues of common interests, such as taxation, so that they don’t operate in isolation. This aside, common marketing rapidly became a main goal for the UVL after their experiences at international wine exhibitions convinced them that wines branded and unified in one pavilion under one country, such as Spanish wine or Argentine wine, had more impact than individual wineries.

“We were looking at this through a long term lens. We are there to market Lebanon’s name as a wine producing country. Once this is achieved, it becomes up to each individual winery to sell, depending on its quality. Many consumers abroad had not even heard of Lebanon so first we needed to take care of that in order to create a snowball effect,” says Faouzi Issa, co-owner and winemaker at Domaine des Tourelles, explaining the idea behind “Wines of Lebanon,” the brand name the UVL gave to their Lebanese wine promotional campaigns in the global market.

[pullquote]The younger generation, says Touma, is slowly becoming more aware and adventurous in selecting wine from the different Lebanese wineries[/pullquote]

Today, despite Lebanon producing only about 9 million bottles of wine annually in total — a drop in the ocean when compared with countries such as Greece, at more than 350 million bottles annually — it is becoming globally known. All the wineries Executive interviewed cited export markets in Europe, the United States or even Asia. “When we first started, people thought that there were only one or two wineries in Lebanon producing a certain type of wine. Now, they are more aware of the varieties of Lebanese wine,” says Joe Assad Touma, winemaker and co-owner at Château St. Thomas.

The challenge for Lebanese wine in the export market is to make the transition from Lebanese restaurants abroad into international venues and retailers. “Your export market starts with Lebanese restaurants, but the challenge is to get out of this niche market. The Lebanese expats are your first supporters,” says Aziz Wardy, general manager of Solifed, the company that produces Domaine Wardy.

The Lebanese wine boom captures the government’s interest 

The Lebanese wine sector has only truly blossomed in the last 10 years, with 23 new wineries marking their first vintage amid a growing local interest in wine. Wadih Riachi, manager of Vintage Wine Cellar, a well known wine retailer in Saifi Village, Beirut, says that, from his experience at Vintage, interest in wine in Lebanon has been growing at an annual rate of 5 percent for the past five years. Eventions, the company which organizes the annual wine festival Vinifest, recounts how when they first started in 2004 they had only nine participating wineries and attracted mainly the older generation, while today they have 30 participating wineries and 25,000 visitors of different age groups. 

Wineries have also noticed this growing local interest in wine, especially among the younger generation, which Touma says is slowly becoming more aware and adventurous in selecting wine from the different Lebanese wineries. However, more effort is still needed to discourage them from “sticking to only one wine which they know,” he notes.

Wardy agrees with Touma’s view and believes that tastings, wine tours, winery luncheons and local festivals such as Vinifest all help market Lebanese wine locally in an indirect way.

Chaoui attributes this growth in the local wine market to the competition among the now large number of wineries, which has encouraged the consumer to switch from heavy alcohol like arak or whiskey to wine. “Now we have a substantial increase in consumption per capita in Lebanon though we are still extremely far from the consumption in Europe and the US,” says Chaoui placing it at 5.6 million bottles annually between local and imported wine, i.e. less than 1.5 bottles per person.

Fueled by the efforts of the private sector, the wine industry gradually became one of the few that was performing well both locally and internationally and thus captured the interest and attention of the public sector, instead of the other way around. “We are supporting the winemaking sector because it is a highly qualified sector at the global level and because Lebanese winemakers have put in a lot of personal effort and investment to reach the required standards of quality,” says Louis Lahoud, the director general of the Ministry of Agriculture, adding that the governmental support is provided through the ministries of industry, economy and foreign affairs, each within its capacity, with “a main dynamo for action” which is the Ministry of Agriculture.

Domaine Wardy

Lebanese wine days

The first act of support by the government was the organization of the “Lebanese Wine Day” event which took place at the George V Hotel in Paris in 2013, at the Ritz Carlton in Berlin this year and with plans for New York in 2015.

Chaoui explains that this event typically involves 300 to 400 key people — journalists, restaurant owners and distributors — who are selected from the ministries and the wine producers’ contacts because they have an interest in Lebanese wine and could help with marketing and distribution.

Aside from seeing his winery’s participation in the event as a duty to Lebanon, Sandro Saade, co-owner at Château Marsyas along with his brother Karim, sees the benefit of Lebanese Wine Day as creating a long term positive image for the country and also as a venue to target clients interested specifically in the Lebanese market. This differs from international wine exhibitions, where visitors are there for all wineries and may happen across a stand for Lebanese wine.

While all wine producers Executive interviewed agreed that government support for their sector, however limited, is appreciated and that all exposure to international markets is good, many feel Lebanese Wine Day has got off to a slow start. Some say that the event’s allocated budget could have been spent more efficiently to produce a more successful event, and others feel that the international exhibitions they attend have a more direct impact on their business in terms of marketing and sales. “If the budget was bigger, we could attract more media to promote the event, we could invite more people or have more than one event per year,” says Chaoui. Lahoud says that the ministry, through its consultations with the private sector, is working on improving the event each time.

The National Wine Institute

Perhaps the government’s most important backing for the wine sector will be through its role in the National Wine Institute (NWI), a regulatory body whose main duties include researching the Lebanese territories and national grape varieties in order to set quality standards, modelled after the French appellation d’origine contrôlée, a certification which indicates the origin, quality and general style of wine.

[pullquote]The NWI is off to a slow start and so far, says Lahoud, “Nothing tangible has been achieved”[/pullquote]

Without such an appellation, explains Saade, all Lebanese wine is currently placed at the same level regardless of its quality or origin which is unfair to those who are investing more time and money to produce a distinguished drink.

In order to designate these appellations, the NWI’s first step would be to identify the different terroirs, or vinicultural landscapes, in Lebanon and create a geographic certification database. “Where does wine of Lebanon come from? Does it come from the Bekaa, Batroun or Jezzine? It is important to identify all of this, as it gives Lebanese wine more credibility,” says Riachi. 

Saade explains that some winemakers produce wine in one region but bring grapes from another. “This is not wrong at all but the consumer has the right to know where the grapes they are drinking come from. The most important thing for us is that the consumer is informed,” he says. 

Because of the extremely high price of land, many of the bigger Lebanese wineries own the majority of their vineyards but acquire more land through long term rental contracts with farmers who work under the wineries’ conditions and also sometimes buy grapes, especially for their arak production, explains Domaine des Tourelles’ Issa. “The disadvantages of owning the vineyard are that there are more responsibilities, and more work which would require a bigger team, hence more expenses. The advantage is that you have more control over the vine’s yield as a lighter yield produces better quality wine but independent farmers would tend to add to a vine’s capacity to make more money selling more grapes,” says Nathalie Touma, co-owner at Château St. Thomas.

Although some like the Saade brothers feel that setting geographic certifications and appellations should be solely the government’s job — with limited consultation from the private sector, as “control should come from above and not within” — the NWI, which was formed last year, has four representatives from the various Lebanese wineries and four from the related ministries.

As is, the institute is off to a slow start and so far, says Lahoud: “Nothing tangible has been achieved.”

“We were slow starting off because there was no government at the time [the NWI was created] and so there were needed signatures missing and no approved budget, but hopefully we’re slowly moving forward now,” says Joe Assad Touma, who is also a member of the institute.

Domaine Wardy

The future of Lebanese wine

Lebanese wineries have overcome many challenges, including marketing the country’s name abroad and continuing to produce wine in an unstable political climate where roads to the vineyards can sometimes close arbitrarily due to the political tension in the Bekaa region, home to many of the vineyards.

They have also put in major investments — the most commonly cited by the winemakers interviewed being land, electricity, marketing and imported items, essentially everything that goes into the bottle aside from the grapes — in a sector where returns are known to be slow due to the years it takes for the vines to mature and produce quality wine. 

Taking all this into consideration, it is no wonder Lebanese wine is expensive when compared to some other wines. “Already, the cheapest Lebanese wine bottle is more expensive than the Chilean or Argentine version,” says Wardy, explaining that land in these countries is cheaper and the equipment is available.

This is why what distinguishes Lebanese wine should be its quality and not the quantity produced, as quantity will not increase as long as land is limited and international markets are still relatively narrow. “All of Lebanon is a boutique winery and that should be our focus,” says Wardy.

Whatever the future focus of Lebanese wine, the fact is interest in this sector is rising considerably both locally and internationally and at the public and private level. After all, as Chaoui concludes, “Lebanese wine may be small in quantity, but it is one of the few products we have in this country which could be compared to the international level and you know, what could be more enjoyable than a good glass of wine?”