Patrick Honnef: “We are very much concentrated because we believe – the wine tourism and event business, it’s a very important part for us and has a big potential”

Château Mukhrani is a name that is already known throughout the wine world. This is 102 hectares of Georgian and international grapes and practices organic viticulture, concentrating more on endemic and unique grape varieties such as Goruli Mtsvane, Chinuri, Tavkveri, Shavkapito, Château Mukhrani has won 200+ awards on the top international wine competitions. But at the same time, your winery is also a historical landmark and a tourist attraction of the most premium level. This is – XIX century renovated palace. This is a restaurant with a Michelin star, a cellar with a series of lectures and tastings, artistic events of stunning beauty. With CEO & Technical Director of Chateau Mukhrani Patrick Honnef we had the opportunity to discuss by a Zoom meeting the main points of wine and wine tourism business, the main export markets and trade channels as well as a distribution strategy. Mr Patrick Honnef gave us some advice, what the a priori must see, learn, and feel during the visit to Chateau Mukhrani.

We, as the organizers of the WTA award, in which you took part as a nominee this year and received a well-deserved victory in the nomination “The Visiting Card of the Country”, Must Visit category, are interested in how you evaluate these areas – wine production and wine tourism? Are these directions equal to you?

Today we are mainly a wine making company. Producing from 102-hectare vine. Ten years ago we started tourism and event activities from a very low, small level. For sure we have also a cut of two years with the Covid time, but to say in 2019 the tourism activity reached about 12% of our revenue. This is already interesting, but it is one of the objectives to increase it to up to half of our income, as the idea is to do more installation and to have more direct sales in Château Mukhrani. Thus wine tourism becomes significantly more important in our turnover business. So this is today – just an important growing part in our activity where we invest a lot because we are constructing an arena for projects. So if we decide to make a hotel for sure it will become perhaps 50/50 or more.

Nowadays wine is the main business, which plays 70% of the budget. But as we develop more and more wine tourism business and we have many upcoming projects, in future it will be 50/50.

By the way, our award is aimed at both trade marketing and how locations and judging by statistics, for many winemakers wine tourism is becoming the leading direction, income in some estates from tourists prevails over the wines selling. How do you see the future for Château Mukhrani? Especially considering the pandemic that has hit tourism, and the growing competition among wine producers in the export direction.

The future for sure will be with the strong increase of wine, tourism and event activities. I said that to get up to 30 to 40% of our income, minimum by wine, tourism, events and wine festivities in one place. So we are very much concentrated because we believe – the wine tourism and event business, it’s a very important part for us and has a big potential. This yeah, this is going to have a very positive outlook. I think we will be very strong and in Georgia we have talent competitively. Georgia is mostly our first market because we believe that a strong brand needs to be in a strong country. That’s why Georgia is important and it’s about diversification. We also try to spread our exports over more countries quite wide because we are quite high priced and prefer to have lower volumes in a lot of countries and huge volumes in some. And for sure. I mean when we talk about Russia and Ukraine, which are extremely important markets for Georgia, for us as well. See how the situation is and that gives us another need to more diversify to other countries.

As for the export of wine. Chateau Mukhrani, as a representative of Georgia, the cradle of winemaking, do you feel such intense competition in the world market? And with which wine regions does Georgian premium wine have to compete?

If you want to hear that we compete with other ex-Soviet, I would not say because here Georgia has the best position. I mean, we don’t have the same problems as Bulgaria and Romania or Moldavia. Armenia is just starting on a very low, low level. Among ex-Soviet, I think Georgia has the number one position. Let’s say Spain, Italy, France, they are on another level. We are very, very far behind. If I would like to compete, I have to say we have to compete with something like South Africa, New Zealand, Chile, Argentina, which are already as well developed as we are. But generally, I do not differentiate like this. I think it’s a worldwide wine market and we have to compete with everybody for top positions. We are the top leading countries and then we have a striving country and then we have a top leading old world and we have the established new world. What is Argentina, Chile, California, Australia and South Africa, New Zealand? Then we have abstracting countries where I would say Georgia is the strongest. You mean you tried, but tried us ten times bigger than Georgia. But it’s striving. Let’s say South Africa is coming up again because they had a big crisis and could put us with Syria or other Turkey or Armenia, all the same new coming countries today, which for sure are competing with us. Who comes up faster than the others.

Through which sales channels do you prefer selling: retail, HoReCa, duty free?

As we are still a very unknown wine country. We are still a hot drop on a little drop on the plate of the wine world, the volumes, because Georgian wine production is small for sure. We are not known and so trade is extremely important for us because here we have a possibility to explain Georgia. In ex-Soviet we can be very good in off trade because everybody knows about Georgia and has a very high image. But even in these countries that is not typical Georgia, because we are quite high priced and we are mostly dry wines. We have to create a new category of Georgia because we are not known. Georgia has an image about good price quality relation, quite cheap, never as expensive as from Spain, even if it’s high quality and it is very often semi-sweet what we are mostly not to as well on trade to explain, but we can make off trade in new markets like Western world or Asian world. It’s very important for us to be on trade because we need to be explained. We have to. If it is extending mostly in off trade to the market and you have a Spanish line or a French line next to us, people would always choose the Spanish or the French because they have no clue about Georgia and they are not excited about what is happening with them. But it’s on trade for sure, it is very important for us.

Searching the Internet, I came across information that in the USA you are represented, if I am not mistaken, by the niche importer Niche Imports Co. Brian Johnson. Is this part of the strategy – to work on such huge markets pointwise?

It’s one of our new key markets that we want to develop very much because the most complicated area for us is Europe, West Europe, because there are quite a high competitive markets, a lot of old world classical wine countries, I mean, France, Italy, Spain. And we cannot consider it as an important wine market for us. It can be an accessory for some specialists, but it is difficult. Scandinavia, it’s the monopole, it’s not easy to enter. And for sure England, Benelux, Germany, Austria, Switzerland are very interesting markets. But Germany is extremely price sensitive and very competitive. Switzerland, Austria, very small. England is extremely competitive. We want to make an interesting presence in England because people are more price ready as in Germany. So also we want to be there. But compared to the efforts that say we can achieve more in the USA because we have a small elite sized company, they have an unlimited marketing budget. So we are growing generically in Europe, in Germany, but we have very good, I think, potential in Poland because it has knowledge. But they are developing more of their wine interest in wine competence, they started with low level low price wines and they became more mature. I think this can be a very important future market for us, Poland, USA because just by the pure size of the country plus I would say the open mindedness of the US consumer to try new wines. But we are planning to sell about 25,000 bottles in this country and I would be happy about this. So we are very much looking for markets like the USA. China for sure is an already established market for us. Japan, Singapore, South Korea we are looking. And to find the right people in Great Britain, it’s very important for us as well.

What are your requirements for distributors and can you name your leading partners and top priority markets for the next couple of years?

So I prefer mostly a quality of price and placement over volume, especially in mentioned markets and engagement. The problem we have mostly that for sure especially if you go to reputable, famous distribution companies, we don’t get the attention because Georgia needs a lot of engagement, a lot of explanation to sell. If you are a bigger company with a sales pressure, budget pressure, you can sell two times or four times easier. To conclude, Top priority markets for me for new development – China, USA, Japan, Poland and Ukraine.

Let’s imagine that I’m going to visit Chateau Mukhrani. What exactly would you advise – of course, besides wine tasting, this is a priori must – to see, learn, feel during the visit?

First of all, besides the tasting, you have to enjoy the atmosphere and certainly to see our restaurant, the food that it can offer you and the palace and the wineries. Our park. But then the surroundings I mean we have interesting explorations of Roman Villa too so it’s a very tricky question you ask me how to answer this.

As a fairly experienced judge of international competitions, I sometimes had to taste 300 samples of wine at one event, so I am ready for the visit to Georgia. In Mukhrani, where the Chateau is located, as far as I know, unique varieties grow – which wines should I try, in your opinion, and without which wine cannot I leave the chateau?

For me as a winemaker, it’s difficult to prioritize one or two of our wines, but as a wine lover/professional who wants to taste something really unique, for sure we can give you the selection of our unique, rare, and endemic grape varieties from our, Kartli region, such as Goruli Mtsvane, Shavkapito, Tavkveri, which isn’t so popular from Georgia, but has all the noble characteristics to create finest wines.

Does Chateau Mukhrani have any new plans for tourism events (perhaps international events) for the next year? For example, for those who plan to use our recommendation and visit the WTA Must Visit winner, what should they know?

We have plans for international events. This year it was postponed. So we had interesting events beyond those not organized by us, this international community who wanted to hold events. We have different plans for national events. We are planning to run a wine festival in Georgia, which is a steamy international Italian. We are working, for example, on the Open Air Opera Festival. It could be international as well because the artists can come from other countries as well as the visitors. But before, we are acting more local today.

I wanted to remind you that Chateau Mukhrani became a nominee for next year’s edition. Maybe you would like to present exclusive tastings at our events? Maybe you are planning an event? 

For a mid-sized company with a limited budget of marketing, it is bringing people to our place sommeliers, influencers, bloggers, journalists, etc. People who have a reputation in the wine business and credibility towards the client and consumer. This is one of our key directions. I believe very much in smaller shows on smaller activities, because I think in a lot of wine fairs today, we don’t reach the target group because they are too busy, too big, especially Australia and China. Today we participate less because we have our importance. So I’m more interested in going to specific target groups to make masterclasses and more private dinners to support our distributors, importers in the countries and other markets like they are very still looking for more or for better importers for sure. Plus, to invite the right opinion leaders to our places.

Thank you Patrick for answering our questions!

Author: Olga Pinevich-Todoriuk