What Israel Must Do to Become a Wine Superpower

Making good wines is not enough to guarantee success for Israeli winemakers, who face a weak local market and boycotts from abroad.

File photo: An Israeli vineyard.Olivier Fitoussi

An elegantly dressed couple enters a restaurant. They’re celebrating a special occasion and ask the waiter for “the best wine you have.” He comes to the table with a bottle and ceremoniously uncorks it. He pours some wine into one of the glasses and asks one of them to taste it.

Those in the know will roll the wine on their tongues and talk about “acidity” and “aromatic richness.” The waiter will nod in agreement, realizing that this is a sophisticated person with expensive taste. Most customers will giggle slightly in embarrassment, crack a bad joke about astringency and feel very unsophisticated.

We’ll reveal a little secret: The idea is simply to see if you like the wine and that it’s not spoiled. In other words, even if there is an entire science behind wine–tasting, you can still enjoy good wine even without knowing all the secrets.

Holiday drinkers

Even though wine has a place of honor in Judaism, since it is considered a festive drink used to sanctify festivals and mark celebrations, it is not widely consumed in Israel. In fact, according to the Israeli Wine Council, an Israeli drinks an average of five liters of wine a year, compared to 40-plus liters imbibed by the average European or American.

“Almost 40% of the wine is sold in Israel prior to the holidays – Rosh Hashanah and Passover – 2.5 times as much as in an ordinary month,” says Nir Gal, VP of marketing for the wine and beer division of Tempo beverages, which owns the Barkan Wine Cellars, one of the largest wineries in Israel. “Israelis are not big wine drinkers compared to people in the rest of the world, especially Europe and the United States,” he says.

Daphna Miller, VP of marketing at the Carmel Winery, agrees: “There’s no culture or tradition of wine consumption among Israelis. In the traditional wine countries, people drink wine on a daily basis.”

“While there was wine during the biblical period and during the time of Baron Rothschild (1845-1934), only in the past 30 years has the wine produced in Israel attained a high quality, and can compete with wine produced abroad,” says Tzachi Dotan, director of the Israel Wine and Grapes Board, adding that in that respect “we’re a very young wine country.”

The reason is clear: Producing good wine takes time. “The manufacturing process, from planting the vineyard to preparing the wine, takes about five years. In Europe there are vineyards that are 200-300 years old. If you enter a vineyard, the winemaker asks you ‘How old are you?’ – and finds a wine for you from that year. We’re a young country, but we’ll get there too,” says Dotan.

Bargain bottles

Although the industry is relatively young, competition in the Israeli market is strong. According to the Israel Export Institute, there are about 300 wineries in Israel, about 60 of them commercial, and the rest boutique and home wineries. Five wineries control 80% of the market: Barkan and Segal, Carmel, Ramat Hagolan, Teperberg and Binyamina. The Israeli wine market has a turnover of about 1 billion shekels annually, and produces about 40 million bottles of wine and 10 million bottles of grape juice annually.

Most of the wine consumed in Israel is sold in the food chains, and 80% costs less than 50 shekels a bottle. “In other countries most of the wine is also sold in supermarkets. In some of the chain stores you can find Israeli wines for 24 shekels. That’s part of the trend, with prices dropping slightly due to the competition among the large wineries — and the consumer benefits,” says Ariel Ben Zaken, owner of the Castel winery, a family winery that produces about 300,000 bottles a year.

Ben Zaken considers the strong competition a positive thing, which in the end will contribute to increasing wine consumption in Israel. “The increased competition leads the wineries to become more efficient, to make better wines, and to lower prices.”

As a small winery that sells its cheapest bottle for 80 shekels, why should you encourage the sale of bottles sold for less than 50 shekels in the supermarket? Aren’t you supposed to want the consumer to develop a more expensive taste?

“As far as I’m concerned, the more wine a person drinks the more he will begin to develop a taste and start buying more expensive wine,” says Ben Zaken. “At the moment we’re talking about five-six liters a year for the Israeli consumer. Even if there’s an increase of half a liter — that will push everyone forward. Statistically, if you have 10 non-drinkers of wine, the chance that any of them will start drinking fine wine is zero. But the chance that someone who drinks cheap wine will switch to high-quality wine is 20%-30%.

“Wine isn’t Coca Cola. It’s a natural product that changes during the course of its lifetime. It grows and ages, and therefore it’s a complex and interesting product. I assume that anyone who loves wine will continue to take an interest in it and will buy the more complex product.”

Not only kosher wine

Israeli winemakers aren’t entirely dependent on domestic drinkers — about 20% of Israeli wine is exported, mostly for the kosher market, according to the Israel Export Institute. Overall, that represents just a tiny share of the international wine market.

“Worldwide, sales are divided into the kosher and non-kosher markets,” notes Ben Zaken. “The kosher market is relatively tiny. How many Jews are there in the world — 15 million. But the advantage [of this market] is that demand is steady and anyone who’s already drinking kosher wine will prefer wine from Israel. We receive a warm embrace from Diaspora Jews, who like to drink kosher wine.

“In the other markets we’re not really important. If a European wine drinker in Europe has 10,000 labels, he probably won’t choose us. We don’t have an international reputation and people don’t connect wine with Israel.”

“Israeli wine abroad has received a ‘seal’ of kosher wine, which doesn’t have a high-quality image among non-Jewish buyers,” says Miller of Carmel Winery. “The job of the Israeli government, in cooperation with the wineries, is to change this mistaken idea and to rebrand Israeli wine, because the wines are excellent by any international standard.”

“Kashrut makes wine production more expensive,” notes Dotan of the wine board. “Every seven years there’s a sabbatical year [when there’s no harvest], there’s a kashrut supervisor in the wineries and anyone who works there has to be a Shabbat observer. All that increases the price of the wine compared to [prices in] the rest of the world. At the same time, you can find excellent wines here for 30-50 shekels. Of course we want to continue to sell to the Jewish community, but at the same time we also want to break into the [larger] market as Israeli wine.”

“Israel as a country is a bad brand,” says Tempo’s Gal. Winemaker Roni Saslove agrees. “A few years ago I met the head buyer of Whole Foods in New York, who was very impressed by the Israeli wines. I asked if she would order, and she declined. Israeli is seen as a problematic place politically.”

Dotan believes that two factors are holding back the industry — both are connected to reputation: of the country and the wine. “Many groups boycott Israel,” he says. “We also have to refute the rumors that we make wine that isn’t good enough.”

Rebranding

The winery owners and winemakers believe that the problem can be solved with better branding. “We have to build our reputation, and that requires a joint effort of the government and the wineries,” says Dotan. “Chilean wine became popular worldwide because the government decided to invest in branding. The Israeli government also has to support Israeli wine so it can compete. As opposed to Israel, the European Union supports growers and wineries.”

“Producing wine is expensive,” notes Miller. “There are agricultural costs, land, kashrut, prolonged production processes and an absence of government subsidies. Unlike other countries, Israel doesn’t enable all the wineries to make a good living.”

Then there is the role of restaurants. Wines can be found at affordable prices in the neighborhood supermarket and in wine stores, but in restaurants prices are much higher. “The [high] price of wines in restaurants, which are a potential for increasing consumption, prevents some consumers from buying more. The more restaurants offer glasses of wine at affordable prices, the stronger the culture of drinking wine with food will become,” says Miller.

“It’s true, restaurants sometimes charge four times as much as the bottle price, which is problematic. But restaurants operate with very low profits and have a hard time existing,” says Saslove.

There are also some encouraging trends for the local industry. “We’re seeing a significant increase in wine consumption among Haredi [ultra-Orthodox] and religious communities,” notes Saslove. “Where once they drank grape juice or inferior sweet wines on Friday night, today fine wine has become a status symbol.

“There’s also an increase in wine consumption among women aged 25 and above, who go out to have a good time and are beginning to take an interest in the wine they drink. It isn’t something for men only. It’s connected to feminism and liberation.

“The PR of Israeli wine has greatly improved, because some of us have more money and more leisure time. So we’re looking for the good things,” says Saslove. “If we can’t buy a home — at least let’s enjoy good food and wine.”