Scott HOCKLANDER: "I've never seen so little money make so much"
Interview by InfoMarket Agency
Since 2005, the United States Agency for International Development (USAID) has invested about $15 million in the wine industry of Moldova through such projects as CEED I, CEED II, MCP, HVAA and ACSA Wine Registry. The USAID program for Moldova on direct support of the country’s wine sector will end in September 2021. Scott Hocklander, USAID Moldova Mission Director, spoke in an interview with InfoMarket about the changes that occurred in the Moldovan winemaking sector over the past 15 years, about new programs and prospects for further development.
InfoMarket: A decade and a half is a long period of time, and a lot has changed. Can you identify the main progress made by the Moldovan wine industry with the support of USAID?
Scott HOCKLANDER: The wine sector is very important for Moldova - for its history, culture and economy, and I am glad that USAID (USA) along with SIDA (Sweden) helps to render it more competitive and ensure sustainable development. Over the years of collaboration, the wine industry has undergone an incredible transformation. In 2005, the entire sector subsisted by selling bulk wine mainly to the Russian market, and in March 2006, an embargo burst out ... Today we are witnessing producers’ reorientation towards selling bottled wines, as such products have more added value, and we register an annual increase in the exports of bottled wines to a wide variety of markets - the European Union, Asia, America ... A lot has been achieved especially over the past 10 years: in 2012, Moldovan authorities amended the legislation, which allowed wineries to develop; the National Vine and Wine Office (ONVV) is operating, being an excellent example of public-private partnership; a single brand has been created for export - Wine of Moldova, which allows, among other things, small producers to sell more products abroad under a single "umbrella."
InfoMarket: Moldova’s small wineries’ products are relatively expensive on export markets, compared to Chile’s or Australia’s products, for example. These countries produce wine in huge industrial volumes, which allows the price for their wine products to be cheaper. How, then, shall our Moldovan companies sell their products abroad?
Scott HOCKLANDER: There are different markets; some wines are successful in some markets, other wines – in other markets. But it is obvious that against the background of tourism development and the growing recognizability among consumers, Moldovan wines are unique. They are of high quality, which I personally appreciate: I have never tried anything like this before. The history of winemaking is also unique, which Chile cannot boast of. Moldova is looking for its niche. The number of consumers already familiar with Moldovan wines is constantly growing, they are also versed in the geographical areas of winemaking, and the price is not always the determining factor. Consumers choose wine at different times. There is wine worth $3 a bottle, but consumers are also willing to pay $10-12, even $20 for a bottle of wine from a specific, unusual place. They buy a special experience, taste, history. Moldovan producers must continue working on their development, reduce costs through the introduction of new technologies, ensure sustainable development and work on marketing as well.
InfoMarket: The last year hit the Moldovan winemaking hard not only because of the production and trade difficulties associated with the pandemic, but also because of an unprecedented drought. How do you assess the prospects for overcoming this crisis?
Scott HOCKLANDER: It was a difficult year not only for Moldova, but for the whole world. But I was pleasantly surprised to discover that, in part, due to our support provided in recent years, many companies have been able to resist the challenges steadily. In 2020, the Moldovan wines received more than 950 medals at prestigious international wine competitions. Despite the pandemic, the export of Moldovan bottled wines continued to grow - by 9% during 2020, including to neighboring Romania. Moldovan wines are in demand in the region, in Romania, in particular. The business continues. Today USAID seeks to help expand the portfolio of Moldovan brands, develop e-commerce in accordance with the national conditions of different countries and find answers to the question of what can be done in such a period, how strong Moldovan wines are and how they can compete in the future.
InfoMarket: For most companies, the main reference point is export sales. What has been done in recent years and what else can be done to secure our wines on the shelves of other countries?
Scott HOCKLANDER: There is still a lot of work to be done and there is really a lot of competition in the market. We could, first of all, gain a foothold in the neighboring markets - Romania, Poland, and Ukraine. Consolidate efforts, even in the pandemic, to become ambassadors in these markets, to accustom their consumers to Moldovan wines. In my opinion, there is great potential in the Scandinavian countries. These are mature and diversified wine markets looking for new destinations for winemaking and premium organic wines with good value for money that Moldova could offer. These markets are very conscientious consumers with a strong focus on producer responsibility. Moldova is well placed to keep up with this trend; the sector is ready to embark on the path of sustainable wine production within the framework of its new Country Strategy “Wine of Moldova - 2030”. It makes sense to continue gaining a foothold in Asia and even Africa. It is necessary to consolidate the Moldovan share in the markets where wines are already sold. It will be difficult, especially since promotion in some markets, for example, Great Britain, requires considerable investments. But I think that this is the future.
InfoMarket: In 2012, the National Vine and Wine Office (ONVV) was established. How do you assess the ONVV activity and what do you think the ONVV should focus on in the near future?
Scott HOCKLANDER: The National Vine and Wine Office is a good example of a strong public-private partnership. The ONVV allows developing the wine industry, promote reform, improve the business environment, and determine the direction for the export of Moldovan wines. Winemaking companies are united under the “umbrella” of the ONVV; promotion to foreign markets is carried out as if by a single community, and not in isolation. The sector is registering annual growth, thanks in part to the ONVV activity. The key collaboration between the government and the private sector must continue. In the current environment, the ONVV needs to focus on strategy, collect and provide the sector with information about the markets, show the most favorable directions, and ensure market confidence in its activity. It is important to realize that the ONVV is supporting the entire wine industry; it is taking note of the business opinion and is advancing regulatory reforms. And the most important task is to consolidate the market, revive after the pandemic and enhance the promotion of Moldovan wines in new conditions.
InfoMarket: This year, due to the crisis, the budget of the IMF was significantly cut, but the promotion of wines abroad requires large expenses.
Scott HOCKLANDER: That's a challenge too! It is important for the Moldovan wine-producers to use the resources that they have, as well as to be able to rightly decide how to use them. And it is necessary to preserve the growth of the wine industry, to secure the future. This is a partnership where a group comes together to determine the next steps to keep the market going. In the post-pandemic recovery period, smart and strategic thinking is required to do the best possible using existing resources.
InfoMarket: Do you consider the competition among Moldovan winemakers healthy? Is there real cooperation in the domestic or perhaps foreign markets?
Scott HOCKLANDER: Wineries operate in different segments and their markets are different. First of all, they have individual brands. Of course, it is difficult to compare large and small winemakers. There are nuances in the culture of winemaking and there is some fierce competition among small businesses. But everyone should understand that small wineries are needed by the wine industry on a par with large ones.
USAID is expanding support for small wineries by helping to re-equip production facilities through small grants and create local brands. As the last year showed, the small business’ e-commerce market is another opportunity to gain market share.
In dealing with small winemakers, we have noted that they understand their need to join marketing activities; they express readiness and willingness to work under the Wine of Moldova brand, share their successes and exchange experiences. I have witnessed how success is shared in the wine sector of Moldova, and this is how the Moldovan wine brand is created.
InfoMarket: At the annual Wine Conference in April this year, you have mentioned that by the end of 2022, USAID assistance to the wine sector will be provided through the USAID High Value Agriculture Activity in Moldova (USAID / HVAA) Project. Can you tell us in more detail what is at stake?
Scott HOCKLANDER: Supporting the wine industry is one of USAID's priorities, and we have been doing this for a long time. But the direct project to help the sector ends in September 2021. We want to maintain support, and our new benchmarks are activities with increased added value. We must move on. Winemaking is developing and, like all industries, should strive to increase added value, generate more income, enter new markets and develop e-commerce. Through the High Value Agriculture Activity in Moldova (USAID / HVAA) Project, USAID will continue to support the resilience of the wine industry in the post-COVID-19 era, with a focus on market strategies based on sustainable viticulture, quality wines, climate change adaptation and continued diversification of export markets. USAID will continue cooperation with the wine sector to support the sector’s new strategy, “Wine of Moldova-2030,” which is currently being elaborated and is expected to be approved by the end of this year.
InfoMarket: For 15 years, you have granted the wine sector of Moldova assistance worth a total of $15 million, that is, approximately $1 million a year. What is the budget for the USAID / HVAA Project?
Scott HOCKLANDER: I can't say for sure, but it will be comparable to previous projects, when we worked with small wineries, helped in the marketing, strategy and development of the ONVV. Previous USAID / MCP Wine Quality Programs supported a total of 75 Moldovan wineries, which account for 35% of total wine production. With USAID support, over 60 wine brands have been developed over the past six years for wine export leaders and small wine producers as well. As a result, we are witnessing higher levels of export market penetration and portfolio diversification. In 2016-2021, USAID along with SIDA (Sweden) provided $1.4 million in grants for technological renovation. But most importantly, thanks to our help, the beneficiary enterprises attracted additional private investments totaling $5.2 million. That is, we don’t only grant money, but with our impetus they themselves attract additional investments. And this not only increases the export potential, but also contributes to socio-economic development: stable jobs are created, seasonal work is expanded and the tourism infrastructure is developing.
Tourism is a growing sector in Moldova. We hope that after the pandemic the situation will return to normal and foreign tourists will start coming to Moldova again. For them, this is not just a purely tourist experience, it is also wine tourism. These two sectors in Moldova are interconnected.
InfoMarket: Why do you cooperate with different external partners in projects to support various sectors of the economy, in winemaking - jointly with Sweden, in the IT sector - jointly with Great Britain, etc.?
Scott HOCKLANDER: Collaborating with development agencies in other countries is the best practice. This has become a common and correct direction of investment: we cooperate, exchange ideas and experience. Many countries want to see donors coordinate their actions, carry out their expertise, and bring in their knowledge. Joint support of the Moldovan wine sector is the best case for our cooperation, but there are still many other opportunities, industries and countries we could interact with based on this practice.
InfoMarket: Is USAID support subject to the availability of an IMF program with a country?
Scott HOCKLANDER: In our case, this is not a condition. We are operating in many countries that do not have an IMF program. The Monetary Fund is more focused on cooperation from a tax point of view, and the program with it gives a signal to investors about the tax health of the country as a whole. It is important for us to engage in development activities with an emphasis on supporting the private sector, although, of course, we have programs to improve the fiscal base, public funding, but the priority is the development of the private sector.
InfoMarket: 20 years ago, the Moldovan banking sector was fully owned by local businesses, now 90% is foreign investment. Could the wine sector of Moldova, in your opinion, expect a similar development of events?
Scott HOCKLANDER: Investors are always looking for opportunities, even in the pandemic. The situation is stabilizing, the business environment is improving. We want to promote investors’ interests. Moldovan wine is a unique product, something special. And USAID stands ready to support and promote investments.
InfoMarket: In the mid-2000s, before the Russian embargo, the volume of Moldovan wine exports in monetary terms reached $350 million per year, even though bulk exports prevailed. In recent years, we have barely exceeded $100 million in exports. When do you think we will be able to return to the export volumes of the mid-2000s?
Scott HOCKLANDER: There were a lot of sales back then, but there was a high concentration of exports in one direction, so the embargo was a disaster. The goal is not to achieve the same level of sales, but to sell in safe, stable, reliable and diverse markets that will grow. Today Moldovan wine export is diversified. Wine of Moldova is sold practically all over the world. We provide technical assistance to everyone who is associated with the wine industry and wants to grow. The quality of wine has improved - Moldovan wines receive prize medals at international competitions. The next steps in the development of the wine sector are to cross the border together, under a single strategy, a single Moldovan brand and expand the geographical presence.
Today we are creating the history of people, residents of Moldova, who are doing business in winemaking and tourism. Our mission is to help them generate income from their successes, use it, continue to provide for their future and contribute to the development of the economy. And we are seeing positive results. This is the reason we continue to provide support and want to be a fellow traveler, especially since people of Moldova know how to work effectively: I have never seen so little money make so much. We provide little money, we help with expertise, ideas, and product development, and entrepreneurs share their success with their neighbors. // 17.05.2021 – InfoMarket.
