Advice on doing business in eastern Europe

What’s it like doing business in Eastern Europe? James Lawrence asks experts with local knowledge.

Miron Radić, Vincent Lensveldt, David Sichel
Miron Radić, Vincent Lensveldt, David Sichel

Miron Radić

managing director, Liliac winery, Romania
Market: Romania

Liliac launched its first wine onto the Romanian market in 2012, at a time when overall wine consumption was declining and the market was stagnating somewhat – not helped by the growing number of competitors fighting for recognition. Yet, conversely, the demand for premium brands has grown significantly over the past two years, as Romanian Millennials look beyond mass-produced wines made in formerly state-owned wineries. The price is low, but then again so is the quality.

Today there is clearly a heightened focus on quality wines; consumers are more willing to pay a higher price for quality than, say, five years ago. Also there is a strong trend for rosé and sparkling wines, and most wineries have launched a sparkling wine style onto the market over the last two years. The large producers, who still control the majority of the market, are struggling more and more to keep up with the demands of the emerging consumers, especially Millennials.

In terms of distribution channels, retail continues to dominate the Romanian market, accounting for over 90% of total sales. However, with the shift to higher-quality wines and the opening of many new restaurants, especially in urban areas, on-trade sales are gradually becoming more important. Visitors to these venues usually favour local wines, although wines from the Republic of Moldova are getting more and more popular, while wines from the traditional wine countries like Italy and Spain are losing turf. The New World has yet to make a big impression in Romania. Bucharest is Romania’s beating heart, accounting for more than half of the total market for wine. However, coastal resorts are also key growth areas – albeit seasonal markets by definition – as are smaller urban centres across the country. In rural areas, most people enjoy homemade wine, and are not in the market for premium brands – certainly not imported labels.

But overall I feel that this market is very dynamic and fast-paced. Lots of new players are arriving and others are disappearing all the time. The key disadvantage is a lack of brand loyalty evident in the market – consumers will quickly ignore your brand if something more exciting or newer comes along. It is a very lifestyle-orientated market. Due to the lack of an established tradition of consumers enjoying premium wines, brands and their image are more important than the people who stand behind the wines. There is a change in this behaviour, but building a luxury image is the key to generating sales.

To achieve this, you will of course need to find a good partner – easier said than done in Romania. One of the main problems is that Romania has a large number of distributors who only work on a regional level. There is not one single wine distributor who works in the whole country, so wineries are forced to work with a larger number of businesses if they want to see their wine spread in all parts of the nation. Good personal relationships are sometimes more important than having the right product in this part of the world.


Vincent Lensveldt  

European market manager, Villa Maria, New Zealand
Key Markets: The Baltics, Bulgaria, Czech Republic, Poland, Slovakia

Villa Maria started to become active in Eastern Europe in 2005, although we initially explored doing business in Bulgaria back in 2003. Since that time, wine consumption has grown in Eastern Europe, particularly the consumption of premium wines. This growth is at the expense of beer and spirits, which still overall dominate alcohol consumption in the region. In addition, some of these markets also produce large quantities of domestic wine, ensuring that Villa Maria has a challenge on its hands as a premium New Zealand brand. Moreover, average incomes are still fairly low for the majority of the population, a fact exacerbated by taxation regimes which often ensure that Villa Maria costs more in Eastern Europe than in the UK, for example.

Nonetheless, I’m still very positive about Villa Maria’s future in this part of the world. For a start, Eastern Europe is a much more dynamic and business-friendly environment than in the past – consumers want to learn and Millennials are particularly curious about imported/different wine styles. As I like to say: “They have a nose for quality and they’re also willing to pay for it.” Brand loyalty has also increased over the years, which is a very positive sign.

Sales channels, of course, vary from country to country. In wine-producing nations like Romania, the off-trade is highly dominated by domestic brands, while the on-trade is a better place to start if you represent an imported label. Yet in other markets where local wine isn’t high on the agenda, the share can be 50/50. Moreover, wine bars are becoming increasingly popular in Eastern Europe, which is naturally good for the premium wine category. The Balkan states in particular have shown good growth over the past few years, in addition to Slovakia, Czech Republic, and Bulgaria.

That said, patience is an essential prerequisite for doing business in Eastern Europe. The bureaucratic hurdles to doing business here are immense (such as extensive certification, analysis, etc.) and could test the patience of a saint. Also, don’t make the mistake of simply focusing on the potentially saturated large urban centres – there are still plenty of supermarkets, restaurants, and wine stores that are not located in Eastern Europe’s main cities.

The secret to cracking this market is, as always, to harness the expertise of people on the ground (distributors, agents, etc.) and go for a long-term strategy. Don’t expect huge volumes in the first years, as it takes time to build a brand in these markets. But once people get to know your brand, you will be surprised about the opportunities Eastern Europe can offer.


David Sichel

partner, Maison Sichel, France
Key Markets: Bulgaria, Croatia, Czech Republic, Russia, Serbia

Sichel first entered the Eastern European market back in 1998 and is now involved in most of the headline economies. The demand for Bordeaux wines across the region has been reasonably steady since we started doing business here, although the market hasn’t grown at the rate I expected. This is primarily because of the horrific burden of the administrative and bureaucratic hurdles you have to overcome, in addition to the inherently fragile demand for fine wine, not least due to the sometimes aggressive currency fluctuations.

Today Russia is by far the most important destination for our brands, although market and political instability remains a constant worry. Indeed, some days it seems like the rules change on a daily basis in this part of Europe. The result is that the major players and the people in charge also change all the time, so it’s difficult to keep up with who you are liaising with. More than anywhere else on the planet, the actors in this business and their hierarchy seems to change with greater frequency each year.

However, I have been most impressed with the professionalism of our partners in Eastern Europe – they work very hard and are quick to learn. They tend to focus on the on-trade initially, building a brand’s reputation before attempting to penetrate the retail sector, which today is far more important in terms of volume than in previous years. Concurrently, the level of consumer knowledge and interest in premium wine is growing fast, although the percentage of people in the market for imported labels remains small. It’s simply prohibitively expensive for most consumers, and the average salary is quite low in most Eastern European nations.

Ultimately, much depends on the future economic growth and stability of Eastern Europe, in terms of this market for fine wine expanding. All the cards are in order: a populace with a keen interest in learning and expanding their wine knowledge, a general perception of wine as a luxury product, and a high respect for the culture of wine. They know how to treat it, probably because several nations in the region have their own cultural history of wine production, and therefore they have a ready understanding of wine and a penchant for premium wines. It just now depends on whether wealth will continue to spread to the middle classes.

My final advice is simply to be patient and keep on trying – hardly earth-shattering, I realise. But that really is the key to unlocking the Eastern European markets, in addition to a substantial investment of time and resources. Getting to grips with this part of the world takes several years, and even today Sichel is still on a steep learning curve. Yet the risks are no greater than in other emerging economies, at least in my experience.



The term ‘Eastern Europe’ covers a multitude of countries, typically those of the former Soviet Union. In the recent past, there were high hopes for economic growth – as economies such as Poland and Latvia made that and reform a priority – and a number of countries joined the EU. By late 2016, however, growth had generally stalled, with only three economies – Bulgaria, Romania, and Slovakia – on pace to exceed 3% of GDP growth, according to the Peterson Institute for International Economics. The major reason, according to the same report, is because of demographics: the working age population has declined, exacerbated by emigration. This trend is set to continue because of falling birth rates. Analysts believe, however, that these trends could be reversed somewhat if more women participated in the labour force, as they do elsewhere. FC



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