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Support Added Value Enterprises Activity Phase-II AgVANTAGE

Assessment of Wine Tourism In Georgia

August, 2005

Prepared by: Sandra A. Chesrown, AICP Urban Planner & Tourism Specialist

This work is performed under United Stated Agency for International Development/Caucasus Contract No: 114-C-00-02-00086-00.

Table of Contents
EXECUTIVE SUMMARY................................................................................................. 2 SECTION 1. INTRODUCTION ........................................................................................ 4 SECTION 2. PROJECT BACKGROUND ........................................................................ 5 SECTION 3. CONDITIONS FOR DEVELOPMENT OF WINE/RURAL TOURISM RAPID TOURISM ASSESSMENT (RTA) ........................................................................ 7 3.1 INTERVIEWS ....................................................................................................... 8 3.2 VISITOR PROFILES AND TARGET MARKETS ......................................................... 14 3.3 ASSOCIATED TOURISM SEGMENTS ...................................................................... 15 3.4 HUMAN RESOURCES THE LEGENDARY HOSPITABLE LOCALS .......................... 20 3.5 INFRASTRUCTURE ................................................................................................. 21 3.6 VISITOR INFORMATION AND GUIDES .................................................................... 21 3.7 MARKETING, PROMOTIONS, AND PUBLIC RELATIONS ......................................... 22 3.8 VISITOR PLANNING .............................................................................................. 22 3.9 INDUSTRY ORGANIZATION AND LEADERSHIP ...................................................... 22 3.10 INVESTMENT IN WINE TOURISM ........................................................................ 23 SECTION 4. WINE TOURISM CLUSTER/COMPETITIVE ASSESSMENT.............. 23 GETTING THE COMMUNITIES AND WINERIES READY ....................................................... 23 WINE TOURISM CLUSTER DEVELOPMENT STEPS ....................................................... 23 4.1 STRATEGIC PLANNING A TANGIBLE FRAMEWORK FOR DECISION MAKING ..... 23 4.2 TRAINING AND PUBLIC AWARENESS (TRAINED MANAGERS ARE CRITICAL TO SUCCESS)..................................................................................................................... 24 4.3 DESTINATION MANAGEMENT ............................................................................... 24 4.4 INFRASTRUCTURE AND FACILITIES DEVELOPMENT (PRIVATE AND PUBLIC INVESTMENT) .............................................................................................................. 24 4.5 PRODUCT DEVELOPMENT AND VISITOR ACTIVITIES ........................................... 24 4.6 MARKETING, PROMOTION AND BRANDING .......................................................... 25 4.7 COMPETITIVE ASSESSMENT .................................................................................. 25 SECTION 5. ACTIVITIES TO MOVE GEORGIAS WINE TOURISM FORWARD . 26 5.1 CHART OF PROPOSED ACTIVITIES ............................................................. 26 5.2 PROJECT OUTPUTS AND INDICATORS........................................................ 32 5.3 MONITORING METHODOLOGY ............................................................................. 33 5.4 GEORGIAS WINE TOURISM AT THE END OF THIS PROJECT ................................. 33 APPENDICES................................................................................................................... 34 APPENDIX 1 SCHEDULE OF MEETINGS HELD IN GEORGIA APRIL 21 MAY 5............... 34 APPENDIX 2 GEORGIAS GLORIOUS GRAPE TRAIL ......................................................... 36 APPENDIX 3 ORGANIZATIONAL CHART FOR WINE TOURISM ....................... 37 BIBLIOGRAPHY ............................................................................................................. 38 ACKNOWLEDGMENTS TO THE PROJECT TEAM.................................................... 39

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LIST OF ACRONYMS AgVANTAGE AgVSG CRI CTO DMG DoTR EBRD GEF GHA GoG GRDF GYWA KWGA LOP M&E MED MoC MoE NPS PAD PIU PMC PWG RTA SO SWOT TA TIC UNESCAP USAID WTO/UN Support of Added-Value Enterprises AgVANTAGE Strategy Group Community Resources Inventory Community Tourism Organization Destination Management Group Department of Tourism & Resorts European Bank for Reconstruction and Development Global Environment Facility Georgia Hotel Association Government of Georgia Georgian Rural Development Fund Georgia Young Wine Growers Association Kakheti Wine Growers Association Life of Project Monitoring and Evaluation Ministry of Economic Development Ministry of Culture Ministry of Environment US National Park Service Protected Areas Development Project Project Implementation Unit Product Market Chain Product Working Group Rapid Tourism Assessment Strategic Objective Strengths Weaknesses Opportunities Threats Assessment Technical Assistance Tourism Information Center United Nations Economic & Social Commission for Asia & the Pacific United States Agency for International Development World Tourism Organization/United Nations

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EXECUTIVE SUMMARY
The largest economic sector in Georgia is agriculture, with grapes as an important product, particularly in the Kakheti Region. Georgia had 145,000 ha in production at one time, but the Soviets destroyed many of the fields. In 1990, there were 117,000 ha used for grape growing, but that number has been reduced to 68,000, with room for growth to perhaps 90,000 ha. Kakheti supplied three-fourths of the grapes for wine production. However, after the fall of the Soviet Union, wine production was greatly reduced due to deteriorating machinery, wine counterfeiting, and highly competitive export wine markets in dozens of other countries. Supply still greatly exceeds demand, and the wineries are buying many more red than white grapes, leaving farmers with lower prices and a large unwanted quantity. But the wine economy is improving, and in 2004, grapes and wine brought Georgia $36 million in export revenues, primarily to Russia but also to Ukraine, Switzerland, Kazakhstan, China and the US, and accounted for 8% of total exports. Government support for the wine is just beginning, with a January 2005 decrease in taxes on the wine industry from 20% to 15%. Loans to the wine industry have also dramatically increased, and revised laws on foreign investment have attracted internationally known wineries, such as the US based Wente Brothers and French based Pernod Ricard, as investment partners. A major issue that Georgian wineries face is wine falsification or wine that is of a lower quality being bottled and sold less expensively as Georgian wine. It was said that this is a particular problem in Moldova and Ukraine, where cheap powder, not grapes, are used to produce cheap wine. To battle counterfeiters, the Georgian government established the Wine Quality and System Formation Fund under the Ministry of Agriculture, with a promised control unit in Kakheti that has not yet opened, and adopted the Lisbon Agreement, an international treaty that obliges signatory countries to ensure that products are branded with the correct country of origin. In December of 2004, the German Government/GTZ opened a $1.7 million wine testing laboratory. Tourism on the other hand, which only began in independent Georgia in 1995, is a largely untapped sector. Georgias deep rooted wine culture, mild weather, historic monuments, charming villages, and accessibility to a large Euro wine tourism market make it an ideal location for tourism to thrive. Although there were 300,000 visitors to Georgia in 2004, according to the Department of Tourism and Resorts only 15,000 to 25,000 were actual tourists under WTOs definition. Georgias share of the Euro market can be significantly expanded, and its share of tourism in the Americas, SE Asia, and the Middle East can also grow with proper master planning, strategic planning, product development, public relations, and marketing. Poverty alleviation through sustainable tourism development, as recently detailed by UNESCAP research, is possible. Remote areas, such as those found in the Caucasus, often experience the most poverty and joblessness, yet at the same time they offer the best culture and nature-based tourism opportunities. Rural villages would be attractive to tourists for their heritage traditions and unspoiled beauty, which can in turn be supported by the development of tourism infrastructure and training programs. Wine tourism can be the crowning glory of cultural and nature based tours. The AgVANTAGE consultant spent April 21-May 5th in Georgia doing a baseline assessment of resources, talking with various tourism stakeholders and visiting cultural heritage sites and wineries throughout Tbilisi and the Kakheti region. At the end of the site visit, the consultant and AgVANTAGE held a roundtable called Wine, The Soul of
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Georgian Soil, in which the stage was set for wine tourism in Georgia, assessing resources, visitor services, challenges and opportunities, and explaining case studies from the Old (Europe) and New (US, Australia, New Zealand, South Africa, and Eastern Europe) Worlds of winemaking. About 35 stakeholders participated, discussing project ideas and future steps to build wine tourism in the Kakheti region. It is the consultants assessment that tourism, in general, has a broad future in Georgia, and that wine tourism has a small but bright future, and could be an important contributor to the economy through training and limited supply side development. Georgia offers a unique and authentic wine and food heritage which can be readily linked to tourism and expanded in support of agricultural products such as walnuts, hazelnuts, bread, cheese, fruit, mushrooms, poultry and ham. The cultural landscape around Telavi is quite intact with its picturesque stone and brick villages, historic churches, ancient fortifications, and facilities of the vine including grape vineyards, wineries and maranis. Those who work in subsistence agriculture with little hope for advancement could be trained in more lucrative tourism jobs. Tourism can act as a catalyst for not only sustainable rural economic development, but also for regional development of infrastructure and conservation of heritage and nature. As instructed, the purpose of this report is not to delve into general tourism issues, including national policies impacting tourism as a recognized sector and investment in hotels across the country, which is sorely needed. Rather, the purpose is to focus directly on wine tourism. However, it is important to mention some general principles and to understand categories that apply to all forms of sustainable tourism, including tourist facilities, tourist services, and infrastructure. Successful tourism is about supply and demand, but sustainable tourism is always about community involvement, local ownership and jobs, and preservation and management of the cultural and natural heritage. Tourism creates jobs for local communities directly through lodging, dining, shopping, etc., and indirectly through construction and services. It stimulates entrepreneurs and diversifies economies, particularly in rural areas where employment and income may be sporadic or insufficient. It can also enhance rural quality of life through the construction of cultural and recreational facilities, if they are built to be shared. Lastly, tourism generates foreign exchange. Along with such positives are negatives, and communities must manage potential environmental and social costs, such as degradation of protected natural areas from overuse, traffic congestion, litter, vandalism and damage to historic sites, crime, and erosion of cultural values. This is as true for wine tourism as any other form of tourism. Wine tourism could have a relatively long season, as tours would be on-going throughout the year with the peak period being the spring and summer. Another peak might be the harvest from September 15-October 15, when special industrial tours allowing tourists to actually see the wine making process could be included. Festivals and special events could be held all year. On the days that vineyards advertise they are open to tourists, it is critical that trained staff be present for tastings. The obvious immediate target market for wine tourism is comprised of local leisure visitors, international expats (including business people, consultants, donor agency staff, NGO staff, and diplomats), regional tourists from the former CIS including Russians (who have traveled the world and are now looking for Soviet nostalgia packages), Azeris, Armenians, Ukrainians, and Turkey, international adventure travelers who are unconcerned about a lack of infrastructure. All are looking for weekend getaways and leisure/family vacations.
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The longer-term market is more complicated, as marketing funds will be scarce. Successful wine tourism for Kakheti will be difficult, and in Racha even tougher. But wine is the soul of Georgian soil, its unique 8000 year old legacy for the future. In Georgia, to quote Vladimir Mayakovsky, who was born near Kutaisi, using his wine metaphor for Georgian wine tourism: We are not yet wine. We are still just machari. Through the activities that are detailed in this report, particularly in Section 5, the project hopes to move wine tourism from machari to a well aged product with excellent color and bouquet, as Mother Georgia challenges from her post above Tbilisi.

SECTION 1. INTRODUCTION
This report was compiled by Sandra Chesrown, AICP (Wine Tourism Consultant) following a mission to Georgia, totaling 12 days in April and May of 2005, followed by five days of reporting in the US. The work was performed as a consulting assignment to AgVANTAGE, ACDI-VOCA, and funded by USAID. The preliminary findings were obtained from an intensive schedule of site visits and interviews. They were presented and discussed in a roundtable at AgVANTAGEs headquarters in Tbilisi to Georgian tourism industry and wine industry stakeholders. (See the Power Point presentation at Appendix 1.) Findings were also discussed with AgVANTAGE staff and presented to USAID in Tbilisi. The outcome of those discussions with stakeholders has helped to shape this report. The assignments Scope of Work (SOW) was as follows: 1. Evaluate current conditions for development of wine and agro tourism in Georgia; 2. Assess and make recommendations on industry organizational models and help to set the stage for an institution or institutions with whom USAID can work in the future; 3. Develop drafts of strategies and mechanisms for creating necessary infrastructure of tourism activities, including training, (and operational), and promotional components, tour modules (wine tourism route), etc. 4. Develop drafts of strategies for developing, organizing, promoting of wine tourism services in Georgia; 5. Facilitate a seminar on wine tourism, presenting successful models in the US or elsewhere. The audience will be travel agencies, tour operators, wineries, and representatives of the Department of Tourism in Georgia; 6. Make recommendations to AgVANTAGE staff in defining the best effective assistance mechanisms to local tourism organizations and farmers in aspects of agrotourism development. 7. If the countrys potential merits the effort, the consultants report will be a draft proposal for follow-up technical assistance activities. Required deliverables include this Final Report with a Draft Strategy.

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SECTION 2. PROJECT BACKGROUND


AgVANTAGEs mission is to strengthen the capacity of Georgias agricultural sector to respond to export opportunities by mitigating critical constraints and by enabling Georgian producers, processors, and marketers to compete successfully in international markets. Georgias rural communities are struggling to build their local economies. Georgias ancient tradition of wine-making and viticulture is part of Georgias important agricultural sector, and wine grapes link them to wine tourism. Although wine production in Georgia dates back literally thousands of years, the wine tourism industry is in its infancy and is poorly organized and presented. As wine production is primarily a rural activity, wine tourism could dramatically increase the number of jobs and revenue to rural communities. Therefore, in December of 2004, AgVANTAGE staff met with the Governor of the Kakheti region, to discuss potential AgVANTAGE assistance to the region. The Governor expressed an interest in technical assistance to help the local grape growing farmers to improve their growing practices, and in developing a pilot program of small wineries under the Georgia Rural Development Fund. In response, AgVANTAGE met with four major wineries and the Georgian Rural Development Fund. AgVANTAGE found that the Georgian wine making industry had been steadily developing over the past decade, with major private investments into large vineyards, and wine processing and bottling factories in Kakheti, Racha, and other regions. Most of the wine is exported to the former Soviet Union, especially Russia, Ukraine and the Central Asian republics. Stakeholders identified three major problems with the wine making industry: 1. grape production and consolidation; 2. processing and marketing; 3. quality control. Grape Production and Consolidation Georgia produces 500 different grape varieties. Of those up to 40% are used to make wine. 75% of the grapes are grown in the Kakheti region, but only 15% are used by commercial wineries. Other wine producing regions are Gori (Atanuri wine) and Racha. The number of large tract farmers, or those who have more than 50 ha of vineyards with plans to increase to 100 ha or more, is not significant but it is growing as more and more vineyards are being planted. During Soviet times, Georgia had about 140,000 ha of vineyards currently, GE has slightly more than 20,000 ha. Formerly, Georgia produced 620,000 tons of grapes per year it now produces 200,000 tons or about one-third of the former capacity. Problems that large tract farmers face include obtaining good quality chemicals, trellis poles, and rootstocks, affordable crop insurance, maps on topography and soil composition, and accurate regional data on grape varietals. Large wineries are gradually planting their own vineyards on plots of 100 ha or more and creating their own production base. Some have already made significant investment in training and human resources to improve management and market research (into grape varietals and demand) and in facility design to improve operations. However, they all need improvement to meet the demands of wine tourism. Medium sized farmers or those with 10-50 ha of land, comprise about 10-15% of grapegrowing farmers. They are experiencing the same problems as larger scale farmers and some are in need of new agricultural machinery, market and pricing information, as well.
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Medium sized farmers are normally less sophisticated in their practices and varietal selection. Therefore, productivity and quality are usually inferior. Larger wineries, which receive grapes from on average 10-20 medium sized farmers usually provide assistance to medium sized farmers during the growing season, better preparing them for harvest time. Small sized farmers, who have between 0.5 ha and 5 ha of land (average of 1.5 ha) constitute the majority of Georgian grape growers. They are subsistence farmers, who are extremely dependent on wineries in terms of price setting at harvest time. Most have Soviet style vineyards, low yields, and low quality production. Some sell their grapes to large vineyards (average of 200 per vineyard). The fragmentation of the grower base has created a need for middle-men who consolidate grape production and sell to large vineyards. The vineyards complain that the middlemen seek unfair profits, yet mix high and low quality grapes, which results in significant investment by the vineyards in quality control. As large vineyards increasingly produce their own grapes to alleviate quality control issues and increase profits, medium and smaller sized farmers could be pushed out of the commercial market, unless they are willing to consolidate their production base through cooperatives or associations. Processing and Marketing Capacity Sales of Georgian wine are increasing, although they are still not at levels experienced during the 1980s. Because of significant domestic and foreign investment over the past decade, large scale Georgian wineries are improving, resulting in modern bottling lines and improved marketing strategies. Imports to traditional Soviet Union countries continue while new distribution channels to Europe, the US, and Japan are opened. Marketing is not the biggest challenge. The biggest challenge is reaching full production, due to a lack of quality grapes and raw materials. Quality Control The major threat to Georgias wine industry is very poor quality control and falsified wine production, or others selling inferior products with additives and colorants, particularly to Russia, under Georgian labels. This is negatively impacting the reputation of Georgian wine, distorting prices through unfair competition, and creating potential health hazards to consumers. AgVANTAGE Assistance AgVANTAGEs approach to development of commercial agriculture through marketchain development interventions was found to be applicable to the Georgian wine industry, although common interventions such as association building and demonstration sites were felt to have little impact. Modern nurseries exist and operate commercially. Consolidation centers were felt to have little long-term commercial viability, as medium and large scale vineyards would be more competitive. It was felt that direct technical assistance to small and medium growers is already provided by larger wineries and would be a duplication of effort. The most positive areas identified for technical assistance included updating of maps and data (to organizations like the Institute of Horticulture and Viticulture), but probably through other donor funded assistance (as AgVANTAGE is commercially focused). This analysis led AgVANTAGE to analyze processing and marketing interventions to wineries, but as previously mentioned neither are of high priority as markets with increasing sales have been established. The most impact could be achieved through
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establishment of a market information system to coordinate grape supply and demand during harvests and avoid significant price fluctuations. Georgian Rural Development Fund (GRDF) The GRDF is funding a pilot project regarding the establishment of small wineries. It targets the domestic market of restaurants and hotels, as international markets are difficult to penetrate without expensive marketing and promotion efforts that most small wineries cant afford. Pending the outcome of this project, AgVANTAGE could help small and medium sized farmers in the processing and marketing aspects of establishing small wineries. However, limited production capacity would also limit the development impact on a small number of farm families. Quality Control Interventions Although AgVANTAGE has the technical expertise to help to establish international standards for a quality control program like ISO 9001, it was felt that large wineries already have the financial resources to contract service providers on a commercial basis, and that small to medium sized wineries do not have the financial means to set up and maintain such quality control programs. AgVANTAGE staff could help to create an industry driven quality control program through the establishment of a strong industry association, the seal of which could curb wine falsification. However, this requires a strong public awareness campaign, and those resources are not available without negatively impacting other sectors where staff are currently engaged. This analysis led to the conclusion that the best technical assistance could be provided in evaluating the potential for wine/rural tourism. Therefore, USAID engaged AgVANTAGE to complete a 19 day study that evaluates current conditions for development of wine tourism and makes recommendations for this segment of the tourism industry. .

SECTION 3. CONDITIONS FOR DEVELOPMENT OF WINE/RURAL TOURISM RAPID TOURISM ASSESSMENT (RTA)
From April 20 May 5, 2005, the Consultant conducted a Rapid Tourism Assessment (RTA) for Wine Tourism in Georgia. During this field visit, the Consultant completed a series of site visits and interviews. In the tourism industry, beer is a beverage but wine is a life style, and it fits Georgias cultural landscape. Wine tourism, defined as visitation to vineyards, wineries, festivals and shows for which tasting and the wine region are the prime motivating factors, can be marketed on a continuous basis to local and expat leisure tourists, and during most of the year to regional and international tourists. For international cultural heritage tourists, who are usually well educated, well traveled, relatively affluent, and interested in high quality experiences, wine is usually a value added factor of a 1-2 day visit on a longer cultural heritage tour. Wine tourism is often a half to one day visit on a nature based or adventure tour.

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3.1 INTERVIEWS
A total of 45 interviews were held with individuals either directly or indirectly involved in wine tourism, including discussions with the following: AgVANTAGE staff, USAID international donor programs, The head of the Department of Tourism and Resorts of the Ministry of Economic Development, two local government representatives in Kakheti (Governor and tourism head), six inbound tour operators in Tbilisi, six representatives of wineries in Kakheti and Marriotts sommerlier in Tbilisi, two viticulture associations - one in Tbilisi and one in Telavi, seven major handicraft artisans, NGOs, and galleries in Tbilisi, nine hotel and guest house operators in Tbilisi and Kakheti, four Ministry representatives (one DoT/Economic Development and three from different departments of Culture), The various concerns are summarized below: AgVANTAGE Pilot projects should pertain to AgVANTAGEs mission and produce direct benefits to rural economies. USAID The assignment does not pertain to Georgias general tourism sector, but rather to wine and agro or rural tourism. The sub-sector should be linked to agriculture, job creation, and poverty alleviation in rural areas, with the identification of strong counterparts to implement and continue the project. Human resources should be strengthened. Performance should be measurable, with strategies and indicators. Department of Tourism, Ministry of Economic Development Although under the umbrella of the MED, the Department with a lean staff of nine has its own budget, which increased ten-fold over the past year but is still lower than needed. The DoT has no written strategic plan, but the Chair has one in mind. They are currently working on political issues (bonding, corporate liability, civil court procedures to encourage free markets), and are meeting with embassies to discuss travel advisories. Immediate target markets include local and CIS countries, and they would like to build international cultural heritage/wine, adventure, and nature tourism by targeting Europe, the US, Canada, Japan, China, Taiwan, Brazil and Argentina They believe there is some potential for health tourism, as well. DoT is planning to work closely with the Ministry of Culture (MoC) to market cultural heritage sites (with the MoC doing the conservation, management, and ticketing), open Travel Information Centers, and promote the Kakheti Wine Festival the end of October. However, DoT is not planning to do any wine routes but is leaving that to the tour operators. DoT is active in international trade fairs and is paying part of smaller local tour operators costs to participate (ITB Berlin, London, Istanbul, Madrid, Japan and in the future Dubai). The Chairman, Saba Kiknadze, is hopeful that the Department will receive assistance to train department heads in statistics, marketing, and other areas. He confirmed that many associations are needed to promote tourism Tour Operators, Hotel, Tourism some of which exist on paper but are not operating. There is no formal training program for guides, and tour operators train their own, although DoT is hoping to start a practical pilot project with the Ministry of Education (28-30 schools have tourism courses but all are theoretical).
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(See proposed Organizational Chart, Appendix 3.) Local Government The Kakheti tourism staff and Governor are expanding from one staff to two in June of 2005. They have been actively promoting wine quality and trying to stop counterfeiting, and the Governor is forming a wine unit to check quality in restaurants. They are also developing the framework for new visitor facilities (auctioned off hotel near the castle to a local investor and are hoping to auction off a hotel at Chachavadze/Tsinindali), and they plan to create a tourism information office with DoT and a wine route with a map and brochure. They also want to promote grappa to locals through a grappa complex that was owned by the former President and might be privatized. In addition to links to Kakheti cultural heritage sites, they would like to link a Kakheti wine route to nature based tourism in Tusheti, where there are seven to eight lower quality guest houses that offer lodging from June to October, mainly to journalists and expats, who go to trek, fish, or hunt.. Inbound Tour Operators All companies featured wine tours as a one day excursion as part of a longer cultural or nature based tour. Caucasus Travel, a sophisticated and impressive local tour operator operating since 1990 with strong ties to international tour operators, has already established a week-long Wine Route tour consisting of 3 days in Tbilisi, a day in Mtskheta where they visit a cognac producer, and 3 days in Kakheti where their groups stay at local guest houses. All operators agreed that the wineries need to improve their presentations and tastings with trained staff, and noted that their clients prefer heritage buildings and drinking from glass rather than plastic. Tourists have expressed that inconsistent wine quality is a big issue for wine tourism, particularly at guest houses. Tour operators also recommended that, if a prototype guest house is developed, that it have rooms with private bathrooms, consistent hot water, and electricity. Some had not focused on the US as it is too time consuming to find a partner, and they had not attended a trade fair in the US. Some have strong working relationships with operators in Baku and Yerevan, as their strongest regional target markets are Armenia and Azerbaijan.. None had focused on Turkey as a regional partner because it is a stand alone destination for Europeans; however, they agreed that it could be included in a regional tour to Americans. International target markets included Europe (Germany, Italy, France, Netherlands), Japan, and Israel. Australia and the Americas were a distant market. None seemed to have seriously considered Scandinavia. 75% of their tours were cultural, about 25% nature based including mountain hiking. Many operators housed international tour groups at one to three star hotels that are not international standard. Most have guides that speak the languages of their target markets, and most participated in major international trade fairs in their target markets (Berlin, London, Milan, Japan). None participated in a trade fair in the Americas, although one had excellent working relationships with major US based tour operators.. Israel was seen as a major opportunity. Many Georgian Jews moved there 20 years ago, and now there is a direct two hour flight to Tel Aviv. All viewed the Department of Tourism has a good promoter for Georgia. Although all agreed that there was a need for a tour operators association, there is an obvious lack of mutual interest between inbound and outbound operators.

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Unusual concerns arose such as excessive dog barking in Telavi, pushing tour groups to quieter smaller villages a problem for guest houses - and pagan rituals that omit women from participating. Infrastructure, particularly poor roads to mountain regions, is a huge issue, and the lack of it is reducing their marketing of ecotourism to expat and regional markets. Tour operators hope that the Silk Road Express train would improve its facilities and services, to encourage more regional travel from Baku. None were aware of either the International Youth Hostel Association or Elder Hostel and the strong potential it offers for tourism. Wineries In all cases, the large Kakheti wineries are just beginning to develop wine tourism, and generally they are moving forward. All are understanding of the need for consistent quality at the wine tastings, although none performed a professional tasting for us with educational interpretation. Some are more understanding of the concept than others. All of the tasting rooms, visitor circulation, parking, architecture and landscaping need improving. Some thought that offering museum areas and guest lodging were priorities, although internationally neither is common. The wine artifacts are interesting and could be part of the tasting rooms. However, only small boutique wineries, with a strong heritage concept, usually succeed when mixing wine/vineyard management and hotel management. None of the wineries offer picnicking areas, which is one of the primary motivating factors for wine tourists, although one had an outdoor dining area. None were thinking of restaurant or caf areas, although the traditional supra, such a strong tradition in Georgia, is another area in which the wineries could participate. Wedding and conference facilities, which often offer opportunities for additional income if managed properly, were not part of the programs. At Telavi Wine Cellars and at GWS, the Consultant discussed the importance of a facilities master plan that results in correct placement of buildings to allow for protection of view-sheds of the vineyard and tour circulation. Both seemed interested in physically improving their wineries as tourist attractions. None have formal staff training programs to provide formalized friendly service, but some were sending staff to Europe to train and staff were wonderfully passionate about their wine. In terms of winery marketing and promotion, most are just beginning to organize their formal relationships with tour operators, and marketing on their web sites. There is little interpretation at the wineries, and guests are not aware or educated about the cultural importance of the grape. A couple of the large wineries have sophisticated brochures which have been used in international trade fairs and export promotions. There is ample opportunity to use Georgias rich history in wine promotion and link it to international tourism marketing, including such themes and imagery as Jason and the Argonauts/the Golden Fleece, Tbilisis historic architecture, Kakhetis vernacular village architecture, the Caucasus, the cult of Dionysus, St. Nino, David the Builder, King (Queen) Tamara, the link to Buffalo Bill Cody, and The Knight in the Panthers Skin. There are also wineries in Imereti (Kutaisi) that produce sparking wine and in Racha, famous for a semi-sweet red wine, which should be integrated into a regional wine route. Unfortunately, there was not time to visit those wine areas. (See Appendix 2, The Glorious Grape Trail) Telavi Wine Cellar Winery Strong potential for wine tourism.

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Good management. Good quality wine. Interesting existing facilities. Needs better master plan with protected viewsheds. Good location between Telavi and Gremi in quiet countryside. The winery has operated for eight years on 150 ha of vineyards, with 200 more ha planned. With 60 permanent employees plus 300 part-time, all of whom are local people, they produce 3.5 million bottles of wine per year, mainly selling to Russia and CIS countries, but also to the US (California, NJ, NY), Switzerland, Germany, New Zealand (CIS immigrants), and Japan. Last year Caucasus Travel brought them 5-6 buses of tourists. They believe in the benefits of wine tourism, and their tasting facility and a small lodging area are being built and should be ready by 2007. Regarding a wine tour, they do not want to take tourists through the bottling area, but because it is very high-tech state-of-the-art facility that exhibits quality they do wish to show bottling from the window above it. Their primary problem is financing. The head is also the head of the five year old Kakheti Winegrowers Association, which produced the first Georgian Dictionary of Winemaking, a web site, and two magazines through a $30,000 grant from the Eurasia Foundation. The problem is that local winemakers, who have no understanding of the benefit of working with each other, did not want to contribute fees, and the association fizzled to dormancy. Regardless, he believes that they must have an association to make wine tourism work, and they must work with local guest houses to serve higher quality wine. He sees value in the recent trip the Governor took to Napa Valley, as it is important to see how wine tourism works. GWS Co. Strong potential for wine tourism. The winery was established on 700 ha of vineyards in 1993 by the French company, Pernod Ricard (most tour operators thought it was the best for wine tourism). The winery produces 4-5 million bottles per year under various brands (including Tamada, Dzveli, and Tbilisi), and 70% are of medium and high quality and are exported to Russia, Ukraine, Kazakhstan, Belarus, and the Baltics. 200,000 trial bottles have been sent to the US, under a stricter quality testing project with labels in English. 30,000-40,000 bottles are sent to Japan and 30,000 have been sent to NYC to an area of Russian and Georgian immigrants. A few have been sent to Cyprus and Turkey. The winery employs 160 permanent staff and 50 seasonal staff, and buys grapes from 500 farmers in Kakheti, 300 farmers in Racha, 150 farmers in Imereti, and 50 in Akareche village. (If there are 5 people per average household, this one winery probably feeds 5000 people.) A tasting room has been set up in a charming building, and there is an opportunity to feature warm weather tastings on a traditional wooden balcony bridge. The young staff, some of whom studied in France and California are knew the Napa Valley quite well, is pushing the management to re-organize for professionally run wine tastings and to set up a wine museum. Teliani Valley Winery and Mildiani Winery Some potential for wine tourism. Needs strong improvement to facilities and training of staff for tastings. Good sommelier. With the appearance of a real factory, Teliani is leasing space from Mildiani, but is renovating an auto factory for future use later in 2005. Teliani produces 650,000 bottles annually, and they sell to Ukraine, Bulgaria, Kazakhstan, Russia, and the US (NY and Georgia). They have 35 permanent and 10 seasonal employees, and 50 farmers process their grapes there. Teliani is pure Georgia owned with a 28% share by the European Bank for Reconstruction and Development (EBRD). EBRD plans to sell its share in four years with the first right-of-refusal to purchase to Teliani. Teliani is also hoping to build a hotel (seven rooms) in the winery for tour groups (although the Consultant explained that a more scenic location might draw more tourists),
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and they plan to have a trained staff and sommelier, an old style murani, and a tasting room with a good view of the Caucasus. Their vineyard will be integrated into the winery, and staff has participated in wine tours to Italy, France, and the Napa Valley (Mondavi, Beringer, Phillips). Their wines include Teliani Cabernet Sauvignon, Mukazani, and Menavi (like a NZ sauvignon blanc). Mildiani is owned by a Georgian family from Svaneti, and they also own Saperavi Wine Factory. The two wineries share the same wine expert, and he is planning his own boutique winery and guest house in a renovated old house with a view of the vineyards elsewhere in Kakheti, the best prototype we have seen for wine tourism. Shumi Winery Some potential for wine tourism. Needs improvements to wine quality, tastings, staffing, facilities. Viticulture and other Wine Associations The Institute of Viticulture and Horticulture was established in 1930 on a picturesque 20 ha campus with some Soviet style and some charming buildings on the edge of Tbilisi, to do scientific research on viticulture, horticulture, fruit production and processing. The Institute has a small academic program of 12 undergraduate students working towards a 4.5 year degree. The Institute also offers technical advice to the private sector including farmers. They have an old museum, some of which is interesting. Three regional offices operate in Najara, Mskheti, and Kutaisi/Sakara Village, and the latter could be integrated into a tourism wine route. The Institute interacts with wineries but not tour operators, who have taken it off their tour route. A number of associations have been formed in Georgia, including the GE Wine Association, the Hotel Association, and the GE Association of Sommeliers, but they all appeared to be dormant except the GE Young Winegrowers Association (GYWA) which was enthusiastically forming under a woman from Tara Winery with staff of GWS, Mildiani, Bagrationi, and a GTZ person. Members are young people who have studied in the West and believe in the lobbying power of associations and the need for member support to push both the wine industry and wine tourism forward. They are preparing a web site and they will be looking for members from the Department of Tourism, Ministry of Agriculture, private sector wineries, and others. Some of them are pushing their management to improve their wine tourism facilities and tastings. Handicraft Artisans, Art Galleries, Academy, Markets Tourists, no matter which segment, like to shop and take home memories of their trip. Shopping is under-developed in Tbilisi. The lack of credit cards is a major issue, and it deters tourists from spending. Supposedly, this issue of high rates charged to retailers by local banks is being solved. There are active NGOs training and marketing rural handicrafts, and there are a number of high quality galleries in the Old Town of Tbilisi. There is very little tourist shopping in Telavi/Kakheti, other than wine in grocery stores, or surrounding villages. Only one wood carver was visible in Telavi. There are no shops or galleries, and products are brought to Tbilisi to be sold. . Primary products include heritage dolls, art, tapestry, wood carvings, bone carved knives, carpets (many imported from Azerbaijan), archaeological jewelry and artifact reproductions, enamel jewelry, teka (felt products), paintings, photographs, and many others. There are few wine related products. The most visible are various types of wine horns and ceramic wine bowls. The concept of an Art/Wine Walk was very exciting to the high end galleries of Tbilisi. All were unusually concerned about preservation of Georgias heritage and were interested in stronger associations with wine tourism. The NGO
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handicraft associations were appreciative of DoTs help (trade fair participation) and wanted to strengthen their programs in the rural areas. Hotel and Guest House Owners Hotels, other than the few international standard, appeared to be a weak sector. The Hotel Association is either dormant or dead. International standard hotels in Tbilisi, which are quite impressive, indicated abnormally high occupancy rates, regardless of the small number of tourists in the current market. There is room for growth in supply. Other than the Georgian owned Marriott which has an excellent sommelier, managers did not seem to be very focused on wine tourism. Smaller hotels did not seem to really understand the basic concepts of successful tourism, including lobby and room design, public relations, marketing, food and beverage, etc. Lodging in Tbilisi is limited to six or so quite good international standard hotels with a room capacity of approximately 553. Each hotel features a good restaurant. They include the Tbilisi Marriott/150 rooms, Marriott Courtyard/116 rooms plus 10 suites, Sheraton Metechi Palace/150 rooms, Hotel Betsys/35 rooms, Kopala Hotel//40 rooms, Hotel Old Metechii/35 rooms, and Villa Berika/17 rooms. There are many other small hotels of a decent but lower standard and a couple charming B&Bs such as Villa Mtiebe in the Old Town with a room capacity of approximately 200 additional rooms, for a total room capacity of less than 1000 rooms. Lodging in the regions is limited. Although there are no international standard hotels in Kakheti region, lodging for wine tourism is available. There are at least two operating hotels which are clean and somewhat attractive, including the country based, classical Russian style Shuamara, seven kilometers from Telavi, and another is under construction in Telavi. There are other hotels slightly farther from Telavi. There are about 25 guesthouses in Telavi alone, and they can accommodate up to 150 people. Six or so are of a good quality with approximately 30 rooms. Four higher end guest houses, grouped together on one street, have 20 rooms with shared baths. They work together to meet the needs of tour operators from Tbilisi. The guesthouses seem to have no interaction with the Department of Tourism in Tbilisi, but some interaction with the local Governors tourism staff. Some owners did not like the idea of advertising their businesses, perhaps due to tax implications. Although there are no written statistics, it appears that about 300 visitors per year stay at the nicer guest houses in Kakheti during the peak period (month of June and AugustSeptember) and the non-peak period (July, October, fewer in April and May). Tourism is almost dormant in the winter from November through March. The average rate is 30 GEL or Georgian Lari ($20 US) per person per night including dinner and breakfast. Although no restaurant managers were interviewed, Tbilisi offers numerous charming establishments of Georgian cuisine including opportunities for the supra or table feast similar to a medieval banquet with traditional music headed by a tamada or toastmaster. There are no international standard restaurants in Kakheti region, although there are a couple of cafes in Telavi that are lunch spots and guest house food was quite good. The cuisine offers ample opportunity for traditional, delicious fast food that self-drive tourists could pick up along the wine trail, including katchapuri and lobia or bean stew. Ministries Culture There is no historic survey of local monuments and no law for heritage defense, and this will become a bigger issue as tourism develops and looks to demolish vulnerable historic
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buildings for space. There is no preservation standard for renovation of Old Tbilisi City. National monuments have been surveyed to some degree, and there are three World Heritage sites: town of Mtskheta, Gelatii Cathedral in Kutaisi, and Chajaghe Village in Svaneti none have management plans. Vardzia Cave City has been nominated. A French organization has indicated interest in helping to restore some historic villages. Private funds were used to restore Gremi. There are 12 archaeological sites where ministry staff are employed and are charging admission, but they all need training, preferably exchanges where they can see how sites are managed. ICCROM representatives are arriving soon to assist. There is a big need for architecture staff to be trained abroad. The Ministry presented a questionnaire to locals communities as to their tourism expectations and how villagers would support preservation. With regard to museum development, they are interested in better design and presentation, and they are coordinating with the Department of Tourism and plan to print and distribute two products: a tourist map listing all the museums in Tbilisi and brochures on the cultural heritage. They have asked local communities to prepare the signage. Environment The Ministry is very active in establishing management plans for national parks and nature based tourism through the World Bank/GEF funded project. The project is called the Protected Areas Development Project to improve the conservation and sustainable use of Georgias biodiversity, including its tourism potential, by developing a system of national parks. The integrated parks would replace the current system of fragmented nature reserves. It is proposed that 80% of the revenue generated by the parks will return to the parks conservation, operations and management needs, while 20% will go to a national fund to be used for resource protection elsewhere in the country.

3.2 Visitor Profiles and Target Markets


The Georgia Department of Tourism and Resorts provided some information on visitor profiles and target markets, but there are few statistics available. Although 300,000 visitors arrived in 2004, Georgias Department of Tourism estimates that approximately 15,000 - 25,000 were actual tourists. . This number has significantly dropped from levels in the Soviet era and in the late 1990s, which is attributed to internal political turmoil, but is expected to increase in 2005. Exact visitor profiles (estimated arrivals, receipts, per day expenditures, length of stay) were not available, and data collection is just beginning. Landing cards would help to provide more reliable information on visitors. The Department indicated that most regional tourists are from the neighboring states of Russia, Turkey, Armenia, and Azerbaijan. Prior to the breakup of the Soviet Union, the number of visitors to Georgia from Soviet Republics was quite high, but it was not detailed because they were considered to be domestic tourists. International tourists entered Georgia and all Soviet states through Moscow. The local travel trade indicated that the number of Soviet tourists to Georgia was in the millions. This number was greatly reduced when former Soviet citizens were allowed to travel outside the Soviet Union. Very few INTOURIST facilities from the Soviet era were of an international standard, and tourism has gotten much more sophisticated in the past two decades. Like all economic sectors it will take years to build proper infrastructure and tourism facilities in Georgia. According to a report by Arthur Consulting Group International for the US Trade and Development Agency, which cites statistics from WTOs Arrivals at Frontiers of Tourists from Abroad, the number of tourists to Georgia in 1996 was approximately 117,000, but
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only about 7000 tourists were from Europe (Germany, France, Italy and UK), of a potential out-bound market of 160 million tourists. In 1997, it grew to approximately 124,000 with the largest source market being Turkey. Most were business tourists or family/leisure tourists. However, while Georgia was receiving 124,000 tourists, neighboring Turkey had nearly 10 million visitors. This illustrates the positive direction Georgia could move with appropriate tourism development and marketing as a regional destination on the Silk Road (with Azerbaijan, Armenia, and Turkey) and as an independent destination in the Caucasus and on the Black Sea.. Wine tourism is seen as a sub-segment of the important, large cultural heritage tourism market. It is also associated with other tourism segments detailed below. Wine tastings and visits to vineyards are a 2-3 day activity that tour operators include as part of longer tours. Local, regional, and expatriate tourists from Tbilisi are clearly important, on a short and long-term basis, to wine tourism in Georgia. In addition to local and expat tourists, Georgias regional targets are Ukraine, Czech, Poland, Russia, and Turkey. A slightly more distant but equally important market are the Mediterranean states of Israel, Cyprus, and Lebanon, and their strong linkages to wine and cultural heritage sites. In Europe, target markets are Germany, Italy, Netherlands, Austria, UK, France, Spain, Belgium, Sweden and Norway. Target markets in the Americas include US, Canada, and Argentina. In Asia, target markets include Japan, China, Singapore, and Australia.

3.3 Associated Tourism Segments


Cultural Heritage Tourism The Consultant, with the assistance of AgVANTAGE staff, took a sampling of Georgias resources and attractions for cultural heritage tourism that would be part of a wine tourism circuit. Wine tourism and cultural heritage have traditionally been linked in the Old World wine tourism markets. In France, for example, in a 1990s survey, 80% of wine tourists primary motivation was culture. In Italy, 98% of the wineries had heritage value. The same link applies to Germany and Austria. Even in New World wine tourism, such as the Napa Valley, Virginia, and South Africa, and closer competitors Bulgaria and Romania, winemakers are linking historic character and heritage value to vineyards to draw tourists. . Although international tourism is highly competitive, Georgias cultural heritage is unusually authentic and rich, particularly in Tbilisi city and its surroundings. Tbilisi is seen as the primary base for Georgias existing and future tourism industry. Its cultural heritage includes: Old Town (kala) with its Tbilisi Art Noveau and other historic architecture and heritage walk of Betlemi Quarter (SAVE and ICOMOS), a wide array of museums, some with very interesting collections including the National or State Museum, Modern Fine Arts Museum, Money Museum, Folk Art Museum (incredible collection but very run down), and the Folk and Applied Arts (Architecture) Museum, the Georgian Arts and Culture Center, a select variety of handicrafts the studio of knife artisan Kakhaber Zurnidze, commercial galleries, including Chardin (ancient enamel art) and the Gallery of Carpets and Handmade Dolls, and the Drybridge (riverfront) Market, unusually strong art photographers, historic churches and their precious frescoes,
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restaurants in adaptively reused old buildings, Nabadi folk theatre, and The Georgian Institute of Viticulture and Horticulture.

There are numerous other theatres that could be integrated into cultural tourism. Most of the public sites require protective conservation and restoration measures. Nearby Mtskheta sites, Georgias ancient capitol, include the well conserved World Heritage complex of churches dating from the 6th 11th C. including: Jvari Monastery, C. Svetitskhoveli Cathedral, and Shiomgvime Monastery. The Consultant also traveled to Kakheti, the Wine Capital of Georgia and one of the richest regions in terms of architectural monuments with its many layered history (including Persian, Ottoman, Russian occupiers), focusing on both the cultural heritage sites that tourists frequently visit and other sites that have potential for stronger visitation. In Kakhetis capital of Telavi and nearby, cultural heritage including wine specific sites were surveyed: Batonistsikhe Castle, relatively well restored, the A. Chavchavadze Estate with its amazing complex of buildings, including an old winery and marani or storehouse for harvested grapes, abandoned but interesting grappa distillery complex, owned by the former President of Georgia, a small winery that offer lunch to tour groups, a winemaker that is renovating an old house for adaptive reuse as a guest house and boutique winery in a charming setting, Alaverdi Cathedral, well conserved, Ikalto Monastery, somewhat conserved, the ancient church site in Gremi, somewhat conserved, and, en route between Telavi and Tbilisi, the hilltop village of Sikanaki with its interesting old streets and buildings. In other regions near Kakheti, the cultural heritage includes: museum villages and Keselo fortress in Tusheti National Park, just north of Telavi, Inner Kartli region with the birthplace of Stalin at Gori and the extraordinary rock cut, ancient city of Uplistsikhe (6th C BC to 6th C AD). Imereti region with its important wine production including the city of Kutaisi, the ancient capital of West Georgia until King David the Builder liberated Tbilisi, and like Tbilisi, a town founded in the Middle Ages with its 11th C. Bagrati Cathedral The World Heritage site of the Virgin at Gelati, about a 20 minutes drive from Kutaisi, with its extraordinary frescoes and mosaics. The church was begun by King David the Builder in the 12th C. and completed in the 18th C. King David is buried at the site. Motsameta Monastery, an earlier 8th 11th C. small church about six km northeast of Kutasi and a 10 minutes drive from Gelati. Tourists could continue north to the other important grape producing region in Georgia Racha. Unfortunately due to time constraints and flooding, the Consultant was not able to visit this isolated, mountainous area where the population has declined in the past decade
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from 55,000 to about 37,000 residents, or its regional center of Ambrolauri, with a population of 3,000 people. Racha with its unique flora and fauna, mountainous villages, and historic monuments (including numerous churches such as those in Nikortsminda, Barakoni, Khonchiori, Mravaldzali, and Minda-Tsikhe), and its well known khvanchkara red wine, offers opportunity for nature based tourism and wine tourism. This combined force has the potential to build a community/rural tourism of small and medium based enterprises, and it should be supported as a way to diversify the economy and as a poverty reduction measure. Mountain villages in the area are being abandoned due to a lack of jobs, poor roads, limited public transportation, and few educational opportunities. Regionally, it is important to note that Georgia is part of WTOs established Silk Road program, and this offers significant regional tourism opportunities in the future, linking Georgia to Azerbaijans Caucasus Heritage Trail from Baku to Sheki and Zagatala and crossing into Georgia, and also to Armenia and Turkey. Agro or Rural Tourism (Bread, Cheese and a Kind Heart What Else Do We Need) Agro-tourism involves tourist visitation to farms and/or rural villages to experience farming and the rural landscape and traditions. At the same time, visitation and related payments to local communities can improve the life of farmers and promote the production of agro products and handicrafts, and preservation of the rural heritage. It can also serve as a communications link between rural regions and the broader world. Wine regions are agricultural by definition, and Georgia has strong potential for agro tourism, as it is primarily an agricultural economy in a charming rural environment. One of the main challenges facing wine tourism and its association with agriculture is the preservation of viti-cultural resources and the rural character and way of life. Agro-tourists are important in the early days of tourism development, as they are less fussy and interested in a positive interaction with rural communities and the traditional life style (lodging with families, bread baking, mushroom and grape picking, wool combing, cooking lessons, etc.). Agro tourism can boost the use of organic farming as value added production, and it also offers farm communities opportunities for adaptive reuse of farm structures, and the French are very interested in this concept of rural gate tourism. Agro tourism can be aligned with wine tourism, particularly as it regards family wine production. Agro tourists are looking for educational tours, and it would be relatively easy for farmers to illustrate how they use nearly all parts of the grape, leaving little to waste. They could show how the skins are used for raja or vodka production, the fresh juice of unripe grapes to add tartness to cooking, drying for raisins, preserving the leaves for dolmas, and using dried vines as skewers. They could serve their family wine in traditional vessels such as horns, or tasi (bowls), or chapi (two handled jug), or khelada (single handled pitcher). This could all be part of an educational dinner. In addition, tourists are often looking to be volunteers and they could provide assistance during the grape harvest as a visitor activity. At one of the wineries, local women were grafting, and this could be part of a living heritage tour. Local farmers were driving horse drawn wagons, and these could be incorporated into the experience of moving through the communities and the Morelli Mountains or foothills of the Caucasus to Gremi (Gremi Grape Route). In cooler weather, the wagons could have blankets for visitors. The farmers could take visitors to a very nice flat area along the river between Telavi and Gremi where a traditional tent camp (panchaturi) could be organized as a picturesque picnic or lodging area with a view overlooking the river, built of traditional twig fencing and twig roofs, featuring local
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people baking break and cooking barbecues (shashlik mtsvadi) with local fresh fruits (cherries, strawberries) , walnuts, and cheese. In nearby Kvareli there is a wine tunnel that could be renovated and visited. In addition to wine, traditional Georgian cuisine is an important resource, including the ubiquitous khachapuri and churchkhela (tourisms sophisticated fast food), chakhokhbili, satsivi, and khinkali. Caucasus Travel also offers The Route of Flavors targeting traditional cuisine that includes Tbilisi, Kutaisi, Mestia in Svaneti, Zugdidi, Batumi. A combined wine and cuisine route, closely aligning wine tourism with agro or rural community tourism, would strengthen both segments.. Outside Kakheti but on a regional wine trail is the historic city of Kutaisi, and here are found greenhouses of Georgias fabulous calla lilies, which could also be tied to agrotourism and a special spring agro festival. However, agro tourism is a much smaller and lower spending market than either cultural tourism or nature tourism. Wine tourism at a more commercial scale involving commercial wineries is normally associated with cultural tourism. Community Tourism and Pro-Poor Movement Tourism in the worlds poorer countries is growing faster than elsewhere in the world, according to a 2001 WTO report. International tourists are looking for a unique and authentic destination, and community tourism leads them directly to authentic traditional ways (which can be urban or rural based). However, much of the tourists investments do not go to the country but rather to international tour operators. Once considered a very low-budget way of traveling, community tourism trips that bring tourists into contact with local communities through homestays, eating, local cultural activities, etc. are found in more than 50 countries. The goal is to prevent leakage or loss of revenue outside the country, and rather to direct revenue to benefit the local communities. The most successful programs appear to be those that partner with a commercial tour operator or with a nonprofit organization. Kakheti in its current condition has a partially organized community tourism base, and with very little change could be linked to an organization called Tourism Concern, which publishes a guide to community tourism called The Good Alternative Travel Guide. Like wine tourism, community stays are often seen as value added to other types of trips, but they could also partner with wine tourism to directly benefit communities, particularly unemployed youth and women. A Kakheti wine tourism organization could also partner with tour operators and local schools and involve them in responsible wine tourism educational programs to control drinking and driving after tastings. Nature Tourism The Pristine Caucasus In addition to cultural heritage tourism, Georgia has a strong potential for nature based tourism, featuring the extraordinary Caucasus Mountains, rivers, and lakes. In France, a survey in the 1990s indicated that 40% of wine tourists were nature based tourists. Though not an essential component of a nature tour, wine tourism can attach itself as a value added half to full day experience on a nature based route. Under the MoEs Protected Areas Development Project, a partnership of communities in the parks, the Georgian private sector, and the national park administration will work together to promote nature based tourism and assist with the development of a system of folk hotels. Project staff are anticipating training through a park-to-park superintendent exchange program with the US National Park Service (NPS) for management and rangers.
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Park fees will include entrance, camping, concession, limited retail and lodging, rafting, and non-extractive research. No hunting will be allowed. Tour operators will bring visitors to the entrance for visitor information, and then park rangers (guides) will take them through the park. This is a very beneficial system for nature based tourism, and it will be important for the wineries to figure out a way to interact with this major resource base, particularly through featuring winery tour information in the visitors center, and wines at the park lodges and in retail shops. The parks are coordinating with the DoT, with whom they participated in the ITB/Berlin fair last March. Georgias important nature sites with hiking trails include: Borjomi-Kharagauli, the first National Park in the Caucasus launched in 1995 by the World Wildlife Fund (WWF) Georgia with support of the Georgian and German governments, Lagodekhi Nature Reserve and planned National Park with its forests, lakes, waterfalls, Vashlovani Nature Preserve and planned National Park, the management plan for which is now being developed by a consultant with its knurled geology and Alazani River, Tusheti Nature Preserve and planned National Park including Oreti Lake, Babaneuri Nature Reserve with its unusual endangered Zelkova or stone tree forests; and Batsara Nature Reserve with ancient yew trees. Nature based tourism also includes biking, and there is a strong opportunity to create a 3 km bike route (the Kvarelli Mountains Trail) on a flat section in Kakheti between Gremi and Kvareli, through an alee of chestnut and walnut forests, past green fields and foothills, ending at the Kvareli wine tunnel. This could be linked to picnicking, camping, and nut picking, and there are linkages to agro tourism, as previously discussed. Georgia has numerous fast flowing rivers, and there is great potential for whitewater rafting. Local tour operators are running trips primarily on rivers graded II-III, but there have been trips taken by Israelis on River Rioni in West Georgia which is graded IV-V. The Alazani River, a II-III, is in Kakheti. Tours to rivers in the east and the west could easily be linked to a regional wine trail. In Svaneti which is adjacent to the wine region of Racha, with its interesting heritage and mountains, there is strong opportunity for nature based tourism. Adventure Tourism The Wild Caucasus Adventure tourists are a rough and ready group of youth on low budgets who travel the world in search of adventure, requiring little infrastructure and paying little attention to security warnings. They are an important tourism segment for bringing money to local communities early in their tourism development, and promoting unknown regions by word-of-mouth, a powerful marketing tool. There is significant potential for regional adventure tourism in the Caucasus, particularly with links to the Silk Road to the east and Eastern Europe and Turkey to the west.. Although a small fraction of wine tourism, they have contributed to its growth in new world markets like Australia and New Zealand. In NZ, the government assisted in developing a system of backpacker lodges, similar to the International Youth Hostel system, which have drawn thousands of adventure tourists, as well as cultural and nature based tourists. The Department of Tourism might consider participating in an international adventure tourism trade fair, to build on this small but important short-term segment.
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Ski Tourism It is very common in the US to link wine tourism to ski tourism, as a way of relaxing after a day on the slopes. There is tremendous opportunity for the wineries in Georgia to link to the ski areas of the Caucasus through tastings and wine festivals. There are only two countries in the world that offer heli skiing Canada and Georgia. Although the sport is dangerous, it does have a following. Georgias Caucasus range offers two international ski competition areas with skiing (downhill and cross country) and snowboarding: Gudauri and Bakuriani. Existing ski resorts in Gudauri include Perebi Hotel/10 rooms and the Sporthotel Gudauri/121 rooms, and two cottages called Snow Inn. The Sporthotel offers restaurants, bars, conference facilities and year-round recreation. Bakuriani village has hosted skiers since the 1930s, and features an old fashioned ambience including forests of fir, a mountain train, and a market with fresh food, home baked bread, wild mushrooms and berries, and handmade wooly hats and scarves. The facilities are popular with locals, regional skiers and some European skiers, such as the Irish. In addition, during the summer months winter ski facilities should support an array of activities including hiking, climbing, horseback riding, hang-gliding, mountain biking, and swimming, making it a year round destination linked to warmer weather wine tourism.. Sun and Sea Tourism Although Georgia has the Black Sea coastline, it competes with nearby Turkish beaches, and sun and sea tourism is not as popular as it once was for health reasons. However, it is a valuable resource for tourism as has been proven in neighboring countries, and improved planning and tourism development could grow this market. For now, the segment will probably remain a local leisure based market, although there might be some opportunity for targeting Europeans with their long vacations (Italians, Brits, Germans) and regional tourists. Regardless of the size of the segment, the wine industry should target this market, and recognize that it might present a small but important opportunity to promote and sell refreshing summer white wines to combat the over-production of white grapes in Kakheti, and to increase length-of-stay for cultural heritage/wine tourists or nature based tourists to Georgia.. Health/Spa Tourism Many local Georgians are hopeful that Soviet era health and thermal resorts can be resurrected. However, in most cases the amount of investment necessary to bring rusting spas up to an international standard and compete with state-of-the-art spas that are sprouting up around the world and in neighboring central European countries would probably be excessive. For those that are resurrectable, there could be a link to wine tourism, particularly with the recent medical findings on the benefits of red wine such as Saperavi.

3.4 Human Resources The Legendary Hospitable Locals


Human resources for tourism include the following: Department of Tourism and Resorts, a slimmed down bureaucracy with budget constraints but under active new management, led by a former international tour operator. DoTR has taken a number of positive steps including canceling visas for high spending countries, participating in targeted international trade fairs, linking itself to the Ministry of Culture, and developing a web site, a small but active local government with a tourism staff of 1, soon to be two, in Telavi, Kakheti region,
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no local tour operators in Kakheti but four to six strong inbound tour operators in Tbilisi, with regional and international ties, no licensed local guides, four to six sophisticated winery management teams in Kakheti and Tbilisi with investment and technical capability to produce high quality wines and associated wine tourism, up to a dozen or so high quality, somewhat organized guest house owners in Kakheti and sophisticated hotel management and sommeliers in Tbilisi., limited but sophisticated commercial handicraft and art gallery managers in Tbilisi.

3.5 Infrastructure
Transportation In Tbilisi, public transportation system including a subway, buses, marshrutkas or mini buses, trolleys, and taxis. Although taxis are prevalent, very few drivers speak English or other foreign languages other than Russian, and this will be a problem for tourism. Although there was a bus at the airport, there was no information on how a tourist would take it into the city. Local transportation from Tbilisi to Kakheti and beyond includes paved but somewhat bumpy roads with very limited signage. In Kakheti region although there are community based buses, there do not appear to be any formal tour buses operating from Tbilisi to Kakheti. In Kakheti, there are only informal hiking trails and no organized biking trails. Regional transportation includes a regional train, a better but not international standard Silk Road Train, and boats across the Black Sea to the West and the Caspian to the East. International transportation includes an international airport, improvements for which are pending, with numerous weekly flights to Europe and the region. European carriers offering service include British Air with three flights weekly to London, Austrian Air with five flights weekly to Vienna, KLM with three flights weekly to Amsterdam, and Lufthansa with weekly flights to Frankfurt. All carriers connect to the Americas and Asia via those hub cities. In addition, Turkish Air offers good service to Istanbul, and Aeroflot flies to Moscow on a daily basis. Airzena Georgian Airlines flies to Europe and Israel. Caucasus Air flies to Armenia and AZAL flies to Azerbaijan and the Stans. A major amenity is the fast flowing river that runs through Tbilisi, but it is not used as either a scenic amenity with an interpreted river walk trail with benches, or for recreation or transport. Other Infrastructure Electricity is still somewhat sporadic, and telecom is decent in Tbilisi but there were no tourist internet cafes in the Kakheti region. One is supposedly being developed in Racha. Sewer and water lines are infrequent in villages. Kakhetis sewer and water capacity was unclear.

3.6 Visitor Information and Guides


Visitor information is almost non-existent outside Tbilisi. The DoT is working with Kakheti to develop a Tourism Information Center. There are no visitor information

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centers or rest stops along the road, and identificational, directional, and interpretive signage is limited. Few signs are in English. Very few cultural heritage sites are interpreted, and nearly all museums have poor exhibition design with low lighting and very limited interpretive panels. There are no formally designated wine trails with maps or brochures. There appear to be no formally trained local guides in Kakheti, although some of the churches have guides available. However, the castle guide in Telavi was more professional than the museum guides in Tbilisi. In the mountains north of Kakheti and Racha, there are well established Georgian mountain guides. The Geographical Society of Georgia issued a Mountain Guide Diploma in 1925, and mountain climbing with assistance from local village guides became very popular during the Soviet era. From 1991 - 1993, the Georgian Guide Service, a private company, trained under the Swiss Mountain Guide School. In 1993, the Georgian Mountain Guide School was established. This could be a vital basis for a more generalized Georgian Guides Training Institute, which could be affiliated with training at DoT for all types of guides including wine tourism..

3.7 Marketing, Promotions, and Public Relations


Marketing and promotion is limited although quickly improving on a national basis. Expatriates from Tbilisi and Baku are traveling into Kakheti. There appears to be no local marketing and only limited promotion through special events. Kakheti is sponsoring a wine festival in the fall of 2005. For wine tourism, major marketing issues are consistent wine quality and developed wine trails. This is important to all segments of international tourism. For the Caucasus region as a whole, a major marketing and public relations challenge is international perception. International tourists are not very aware of Georgia and its many assets, and they perceive the region as one of instability and political unrest. It will be important to distinguish Georgia from the other CIS countries, and wine tourism could be a major factor in developing this unique identity in the West

3.8 Visitor Planning


Tbilisis lack of urban planning, safe pedestrian crosswalks, and fast traffic is a major issue for tourism and the perception of hospitality, particularly when tours start coming in larger numbers and crossing in groups. It is important that Tbilisi address this issue now through stop lights with timed crosswalks, pedestrian islands, and traffic calming measures such as speed bumps to change drivers behavior and protect tourists as well as local people.

3.9 Industry Organization and Leadership


As is true with most former Soviet republics, the concept of associations and cooperatives is not popular with local people. They do not see or trust the benefits to be derived from such structures. Inter-tourism industry cooperation is lacking in all areas. Although often discussed, all of the following associations which could push tourism forward and lobby
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for necessary structural support appear to be either non-existent or dormant: Association of Tour Operators and Travel Agents, Association of Bed and Breakfasts, Association of Hotels and Guest Houses, Association of Guides, and Association of Wineries. The Kakheti Wine Growers Association exists primarily on paper, but all wine growers agreed that they need a revitalized association to move the industry forward.

3.10 Investment in Wine Tourism


If Georgia becomes serious about tourism as a sector, and wine tourism specifically, there should be an organizational framework for assisting investors. This was one of the keys to Turkeys success in tourism development. The Turkish Government decreed the importance of tourism to the national economy, reviewed and approved taxation, loan guarantees, and other policies to facilitate tourism investment, and established a special office under the State Planning Organization of the Prime Ministers office to guide investors in exploring opportunities, processing applications, approving licenses and management agreements, approving credits for joint venture companies, approving work permits for expatriates, and negotiating bilateral investment protection agreements.

SECTION 4. WINE TOURISM CLUSTER/COMPETITIVE ASSESSMENT Getting the Communities and Wineries Ready
Producers in S. Africa, where wine tourism is extremely well developed, are of three types: estate wineries growing their own grapes, small farmer coops, or independent cellars buying grapes and bottling under their own labels. Georgia has a different structure, and one that probably needs to change in the future, for the benefit of small farmers and larger wineries. Large wineries in Georgia are already moving towards growing their own grapes to produce a higher level of product quality. Small farmers are struggling, and need to form associations or cooperatives to share the burden and expand on the opportunity some need to form boutique vineyards. With regard to wine tourism, the following is a cluster development strategy that illustrates how the industry needs to move forward in a cooperative organized fashion, between the Department of Tourism in Tbilisi and the wine rayons. Obviously, there are larger national tourism issues that should be addressed, such as the formation of a public private partnership at national marketing levels such as a Georgia Tourism Board, which are not part of this assignment.

Wine Tourism Cluster Development Steps 4.1 Strategic Planning A Tangible Framework for Decision making
(e.g., Virginias Vision 2015) 4.1.1 Vision Wine tourism is an important component of Georgias tourism sector and should be supported to diversify the local agricultural economy. 4.1.2 Mission Georgia will develop a sustainable wine tourism economy through a public-private partnership.
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4.1.3 Goal To expand jobs, entrepreneurial opportunities, community benefits, and state revenue through wine tourism, and help to increase the number of tourists to Georgia from 25,000 to 250,000 by 2010. 4.1.4 Objectives * Market Research (demand forecasting and segmentation) Collect/Track Data, * Control Quality, * Market and Promote (Kakheti regional brochure), * Develop Operational and Management Systems, * Develop Monitoring System with indicators such as number of local people trained, jobs created, sites conserved or presented and managed, promotional activities developed, and enhanced institutions.

4.2 Training and Public Awareness (trained managers are critical to success)
* Rayon tourism staff, * guest house owners, * caf entrepreneurs, * guides, * sommeliers for wine tastings romance of the bouquet, color, taste, food pairings

4.3 Destination Management


* Wine and tourism association development for organization and leadership (e.g., Georgia or Kakheti Wineries Association(s), Young Wine Growers Association, Association of Wine Related Handicrafts, etc.

4.4 Infrastructure and Facilities Development (private and public investment)


* Limited road improvements/repaving, * Tourism Information Centers with Restrooms (Kakheti Visitors Center for Wine, Food and the Arts) * Winery visitor facilities * Guest House and Heritage B&B Prototypes * Investment Planning and Design Guidelines (identify investment opportunities linked to wine tourism and establish design guidance principles for investors).

4.5 Product Development and Visitor Activities


* Wine route/trail * Wine souvenirs/handicrafts * Wine festivals (Rtveli grape harvest when most local people spend their days in the fields harvesting, while the grandmothers cook churchkhela, the dangling sweet) * Adaptive re-use of heritage buildings for cultural preservation

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4.6 Marketing, Promotion and Branding


* Rayons jointly develop and implement marketing activities with the Department of Tourism and Resorts * internet marketing/web site * regional wine logo * brochures * wine tourism trade fairs

4.7 Competitive Assessment


Georgia can not currently compete with either Old World or most New World wine countries for wine tourists, as they are just beginning to develop wine tourism. However, it already competes with secondary wine locations, some of which are regional such as Moldova and Bulgaria. Although it is behind them in terms of wine tourism development, it has an established trade opinion in the former Soviet states as the cradle of wine, and this gives it strong positioning as it begins to develop wine tourism. Georgias core competencies include not only the quality of some of its wines and well established vineyards, but also its strong cultural and natural heritage, its strong in-bound tour operators, and the positive direction its Department of Tourism and Kakheti Governors office is moving. The key to successful wine tourism, like all forms of tourism, is strategic planning, training of the local community, public and private investment in staffing and marketing, attractive product development, an effective regulatory framework and enabling environment to ensure private sector competitiveness and growth, attention to quality standards, and a strong public private partnership to execute strategies. It takes time to build this framework, but a stronger economy with job formation based on cultural traditions would result. Tourism growth forecasts, exact number of visitors, and other data are impossible to accurately predict without statistical information. However, Georgias tourism is currently very low compared with historical numbers and the region, and with increased stability it will dramatically increase. The next section details phased within this strategic framework that could move Georgian wine tourism forward into a sustainable future. Short-term activities are those that are accomplished while the private sector/wineries are improving their products and facilities, to establish a strong basis for wine tourism. Medium-term activities are those that

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Section 5. ACTIVITIES TO MOVE GEORGIAS WINE TOURISM FORWARD


2005 2007 This chart is a list of proactive activities that could move wine tourism forward. It does not presume that all would be funded, but rather that all are important and move forward in a logical fashion from August 2005 until the end of AgVANTAGEs project life in December of 2007.

5.1 Chart of Proposed Activities


Short-term: August 2005 June 2006 Mid-term: July 2006 December 2007 Term/Partners Short-term 2005-2006 DoT and Rayon Governments Activity 1. Strategic Planning & CRI/Resource Data Base for Wine Tourism (incl Annual Action Plan) 2. Prototype Developing a Model Tasting in Kakheti Schedule August-June 2006 Technical Asst. International 96 D (one tourism/one SP consultants @ 48 days each) AgV 1 week/month over 11 months Budget Estimate $52,800

Short-term 2005-2006 Young Winegrowers Association & Wineries, GRDF Short-term 2005-2006 Kakheti Gov. Office & Local Developer Bout. Winery, GRDF Short-term 2005-2006 Racha Rayon & Local Farm Family Short-term 2005-2006 DoT, MoC, Kakheti Gov Office, Racha gov. officials, Imereti gov. officials, Young Wine Growers Assoc. Wineries Inst. Of Viticulture & Horticulture Mid-term

August December International 21 D 2005 (1 consultant from US winery) AgV 21 D over 3 months International 30 D (1 consultant from US boutique winery) AgV - 25 D over 4 months

$11,550

3. Prototype - Plan August for a Model November Boutique Winery 2005 & Model Guest House in Kakheti

$16,500

4. Prototype August June 2006 Agrotourism Program in Racha

International 30 D (1 tourism consultant) AgV 50 D over 11 months International 120 D (3 consultants tourism marketing, trainer, print/internet media) AgV 130 D over 11 months (lead on wine quality control program)

$16,500

5. Prototype -Wine August June 2006 Tourism Quality Control Public Awareness and Visitor Info Marketing Program Kakheti - Plan, Training Program, Wine Trail Map/Brochure, Web Site

$66,000 (plus Tbilisi printing costs)

6. Prototype-

July 2006 -

International 63 D

$34,650
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2006-2007 GE Handicrafts NGO & Rayon Governments Mid-term 2006-2007 DoT and Rayon Govts.

Mid-term 2006-2007 DoT, Rayons, & Young Winegrowers Association & Wineries Mid-term 2006-2007 DoT, Rayons, Wine Association, Farmers Assoc.

Developing & Marketing Handicrafts for Wine Tourism 7. Prototype Project Imereti/Kutaisi Visitors Info (expanded TIC) & Handicrafts Center Adaptive Reuse of CH 8. Prototype Wine Tourism Visitor Satisfaction Survey

June 2007

July 2006 June 2007

(1 consultant handicrafts expert) AgV 30 D over 12 months International 75 D (1 tourism architect, 1 tourism planner) AgV 45 D over 12 months)

$41,250

February 2007 June 2007

International 21 D (1 survey consultant) AgV 15 D over 4 months)

$11,550

9.Prototype September 2006 June 2007 Comm Tourism Org./Destination Management Building -3 rayons (including assoc. development) 10.Prototype Grape Expectations Harvest (expanded) Wine Festival Development Kakheti 11. Art and Wine Walk in Tbilisi/Old Town (could couple with Culinary Walking Tour of traditional foods) 12. Prototype Regional Tasting Room and Educational Vineyard Walking Tour in Tbilisi September 2006 September 2007

Mid-term 2006-2007 DoT, Rayons, Wineries

International 108 D (3 tourism management consultants @36 days each/1 each region, perhaps participation from executive volunteers AgV 75 D International 30 D (1 tourism special events consultant) AgV 15 D

$59,400

$16,500

Mid-term 2006-2007 DoT, Tbilisi Galleries, Restaurants, Wineries Mid-term 2006-2007 Inst. Of Viticulture & Horticulture, Young Winegrowers Association & Wineries Mid-term 2007 DoT, Assoc. of Tour Operators,

July 2006 November 2006

International 31 D (1 tourism specialist @10 days and 1 graphic designer 21 days) AgV 15 D

$17,050 (plus printing to be paid by Old Town galleries & wineries)

July 2006 November 2007

International 44 D (1 winery consultant @ 10 D & 1 landscape architect @ 34 D) AgV 10 D

$24,200

13. Fam Tour for February 2007 November 2007 Local and Intl. Tour Operators of Wineries, Cultural

International 21 D (1 tourism consultant) Local 60 D (1 local tour operator @

$11,550

$12,000

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Young Winegrowers Association & Wineries Mid-term 20062007 Rayon, Young Winegrowers Association

and Natural Heritage, Guest Houses, Handicrafts, etc. 14. Prototype Development of Local Wine Awards Program and Local School Wine Logo Competition Kakheti

$200 day) AgV 10 D

(plus fam tour costs by GoG) $11,550

February 2007 October 2007

Long-term 2007-2008 Kakheti Governors Office

15. Master Plan through Summer Graduate Program Development of Chachavadze and Tsinindali for Tourism 16. Study Tour Stone Barn Center for Food and Agriculture Hudson Valley 17. Study Tour Virginia Historic Wineries integration of wine, adaptive reuse, and cultural heritage 18.Conference Participation Ukraine Rural Tourism/EU

March 2007 November 2007

Any-term Rayon Tourism Reps, Winery Reps Any-term Rayon Reps Winery Reps

Open

International 21 D (1 consultant from winery) Local 21 D (1 graphic designer @ $300 day) Local 5 D (1 photographer @ $300 day) AgV 15 D International 75 D (1 master planner, 1 landscape arch. professor graduate summer program) Local 75 D @$300 (1 architect 1 structural engineer International 10 D (1 logistics planner) AgVANTAGE 15 D (participant) International -15 D (1 winery rep) AgVANTAGE 10 D

$6300

$1500

$41,250

$22,500

$5500 Plus cost of travel, per diem, etc.

Open

$8250 Plus cost of travel, per diem, etc.

Short-term DoT, Rayon Reps, Winery Reps AgVANTAGE Short-term DoT, Rayon Reps, Winery Reps AgVANTAGE

September 2005 Yalta

AgVANTAGE 5 D (organize participation)

Cost of travel, per diem, etc.

19. Conference Participation US GE Business Council, 8th Annual Conference (comp. bus. sectors incl wine and tourism) Mid-term 20. Guide DoT Training Training Program Institute (linking nature Rayons, Wineries based and CH tourism to wine tourism)
Assessment of Wine Tourism in Georgia

October 20-21 2005 Chicago

AgVANTAGE 5 D (organize participation)

Cost of travel, per diem

July 2006 December 2007 Tbilisi and Rayons

International 60 D (1 tourism guide) Local 60 D @$200 (1 tourism guide) AgVANTAGE 20 D

$33,000 $12,000

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Description of Activities in Above Chart: The chart illustrates proposed activities through the life of AgVANTAGE/GE, beginning almost immediately and ending in November 2007. The proposed projects are divided into short and mid-term activities that, in a logical order, establish a solid and sustainable basis for wine tourism. The proposed schedule and costs for international and local technical assistance are illustrated on the chart. The cost of AgVANTAGE staff would have to be added to the total cost of the program. Project: Short-term: August 2005 June 2006 Mid-term: July 2006 November 2007 Short-term Activities One through Five 1. The first activity is to work with the DoT and Rayons to establish a strategic framework for wine tourism, i.e., to develop a strategic plan. This would include helping the Kakheti tourism staff to prepare a situational analysis or computerized resource data base, also called a Community Resources Survey (CRS). This would be an accurate reflection of the number and condition of attractions in the built heritage, the natural heritage, and the living heritage. It would include visitor services, and identify the potential tourism labor force. It would assist the rayons in doing community surveys and holding public meetings with local stakeholders, to determine the communities needs and interests, to formulate the community vision for wine tourism, and to establish leadership roles in implementation. Also developed would be the format for annual action plans. 2. & 3. The second and third recommendations are for prototype activities that can be implemented in other regions: a model tasting program and a plan for a boutique winery/guest house in Kakheti. These are important because it does not appear that local stakeholders really understand what tourists want, and these are critical activities to successful product development. It would be essential to involve well experienced Western wineries in this activity, who could efficiently share real life experiences and quickly put the wineries on the right track. An expansive winery tour should involve the winemaker, the wine itself, caves or cellars, the type of barrels, food, art, gardens, history, culture, labels, themes, and all should be wrapped and presented in a romantic, sensory fashion. Reservation systems, group size, guides and PR, flow, staging, AV presentation (or not), music, visitor comfort and safety, and retail sales all are issues. 4. The fourth activity is to establish a rural/agro tourism program for Racha. This is well detailed in the agro-tourism section of this report, and is important for extending wine tourism from Kakheti throughout Georgia to create jobs in even more needy communities. 5. The fifth activity is to work on the broad issue of a wine rayon or regions marketing prototype, including quality control (public awareness campaign and logo), marketing plan, visitor information, wine trail map, brochure and signage development, annual calendar of activities, and a web site (e.g., Colorado.com). This might include advice from a US state wine marketing program. Mid-term Activities Six through Fourteen 6. & 7. The six and seventh activities are linked. Both regard development of retail products for wine tourism, taking from Georgias extensive wine heritage and using it to develop a handicrafts base.
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8. The eighth activity is a visitor satisfaction survey, which begins to orient the public and private sectors toward monitoring wine tourism. This would be developed in the spring and distributed to visitors during the summer peak and harvest peak seasons. (The project could include a broader tourism survey and development of a landing card, to help DoT develop solid statistics, as it is very difficult to separate wine tourism when creating a statistical data base (nationality, LOS, spending patterns, type of lodging, peak v. off-peak visitation, repeat v. first time visitor, etc.) 9. The ninth activity regards strengthening and empowering local or destination stakeholders to manage wine tourism by developing a Community Tourism Organization to act as a destination management group in the rayons. The Governor could take the lead on this activity, and the rayon could work with the Young Wine Growers Association and the KWGA to establish a strong base for implementing wine tourism. 10. The tenth activity expands and strengthens the existing Kakheti Wine Festival (perhaps Georgias Grape Expectations Food, Wine, and Handicrafts Fest) through a public private festival committee of rayon representatives, rayon wineries, and DoT. By broadening it into a wine and heritage food event with music and other attractions, more farmers, women, and youth could become involved, i.e., through cooking classes, local cheese, nut and fruit selling, handicraft demonstrations, etc. It could be modeled after the Food and Wine Classic in Aspen, with which the Governor of Kakheti is probably familiar. Wine tasting seminars could be led and sponsored by Marriotts sommelier. In addition to the wineries, international tourism companies, including the airlines, hotels, rental car agencies, and tour operators, could be sponsors. 11. The eleventh mid-term activity is development of an Art and Wine Walk, primarily a local and expat activity, that would be held one night per month (perhaps the first or last Friday of each month from April or May through September or October). It would be sponsored by and held at the local art and handicraft galleries and the wineries would sponsor/provide the wine. It could be linked to local restaurants and promotion of special traditional cuisine. Marketing and promotional brochure costs would be shared. Local hotels would also be asked to promote it, as would the DoT. The purpose is to draw locals and expats, as well as international tourists, through Baku activities out to the rayons as wine tourists. 12. The next mid-term activity would be a joint activity of the Institute of Viticulture and Horticulture in Tbilisi and the Young Winegrowers Association and regional wineries. The product would be a prototype for a regional tasting room and educational vineyard walking tour at the Institute, the general design principles for which could be copied in the rayons. Tasting rooms close to large population centers have proven to be very successful in drawing wine tourists out of the cities and into more rural areas. 13. This activity involves organization of a Fam (familiarization) tour to be organized by a local tour operator under the Association of Tour Operators with DoT, to draw both local tour operators and international tour operators to Georgia to experience wine tourism linked to cultural heritage and nature based tourism. In addition to the wineries/tastings, they would visit other wine region facilities, such as guest houses, and TICs, newly managed and presented cultural sites, and newly zoned and managed national parks. This activity is listed from February to November of 2007, with the expectation that visitor attractions and products in the rayons will have improved by that time, so that Georgia will be putting its best image forward to international tour operators.

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14. This prototype, developed in Kakheti, would encourage the rayons to promote public awareness of quality by working with tour operators, local wineries, local farmers, and local schools, on quality promotion. It would have two parts: the first would be an annual Wine Awards Program, which would give local wineries/farmers recognition for high quality wine tastings and grape production. The second would bring youth into the industry by involving them in a one-time promotional Wine Logo Competition, which could also occur as a short-term activity to jump-start the rayons. 15. This mid-term activity would be a comprehensive master plan for historic Chachavadze and Tsinindali Winery, which would address the historic precinct as one development. This complex is Kakhetis premier tourism attraction. The master plan would be designed with strong community participation under a summer international graduate program of planners, landscape architects and architects. It would be very expensive for either a donor or USAID to involve professional firms in designing a master plan, but involving top notch graduate students under the direction of professionals would save time and money and establish university relationships between the US and Georgia. The 12 hectare historic precinct contains a number of facilities that, although a tremendous resource for tourism, are quickly decaying including: * an estate mansion (now a museum), which could be a state-of-the-art house museum, * an 1886 winery which was operable until 1995 with 20 empty cellar rooms, and has room for handicraft studios, a wine museum, a tasting room, and other uses, * a hotel known as the Presidents Hotel with 12 rooms/baths, kitchen, dining room, conference room, banquet hall, tunnel, and mariani, which could be a wonderful boutique hotel again, * a hotel known as the Staff Hotel with eight rooms/four baths and a dining room, which could be staff housing for the complex, * a house known as Kruschevs Building, which is deteriorated but would make a wonderful conference center, * a small gatehouse, * a chapel with a wishing tree that is owned by the MoC and should be stabilized, * and a house outside the gate that could be adaptively reused as a visitors center with shop and restrooms. 16. 19 Activities 16-19 are recommendations for Georgian participation in study tours and conferences, so that they can directly learn about wine tourism. They are explained in the chart. 20. The final activity, guide training, although extremely important, is listed last as a mid-term activity, and in actuality would continue after AgVANTAGE ends. Its place on the chart recognizes that guide training is a national issue, and should be addressed as such. A tourism training institute is illustrated on the DoT Reorganization Chart in the appendices, and this is the logical place for guide training, with specialties in wine, culture, nature, etc. This activity would link wine tourism guides to the trainers of the National Parks project after it is established. There are many other activities that could be added to the list such as museum development, links to other tourism segments such as sand and sea or ski industry, Caucasus Challenge Race, renovation of the funicular, design guidelines for a prototype nature lodge or tented camp, farmers/handicraft market, photography show of The Abandoned Rural Heritage, etc. Although dynamic contributors to tourism development, they are not specific to wine tourism.
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Note on Associations: Although associations have not worked well in Georgia, they can be important contributors to successful tourism attraction development and destination operations and management. One example of a US prototype that could be emulated is the Vermont Farms Association. They have an effective brochure titled Vermont Working Farms Open to the Public, and a web site linked to the Vermont Attractions Association, the Vermont Chamber of Commerce, the Vermont Department of Tourism and Marketing, and the Vermont Community Loan Fund. Activities include agri or agrotours and farm stays with animal feeding, egg gathering, and breakfasts of farm yard products and as well as cross country skiing and vineyard tastings accompanied by local cheeses, breads, pates, and maple products. They also participate in the Celebration of the Vine Harvest Festival in September of each year. Another idea is to start a Women for Wine Tourism Roundtable in Tbilisi, where there are at least a dozen unusually capable women who were interviewed in various roles regarding wine, handicrafts, and tourism who could organize to promote development of the sector while benefiting their own professional objectives. Another good US rural model is the WREN (women in rural enterprises) program in New Hampshire, which is the fastest growing membership based organization in the state. It was created to address the economic challenges of living in the White Mountain region, once a tourism haven now often bypassed. WREN bring people together, particularly women owned micro-enterprises, to create sustainable rural livelihoods and vibrant communities. . Some of their successful projects to assess and develop agricultural markets include a rural artisan retail store with 140 members and sales of $500,000 and the development of bath products from goats milk, wool products (woven textiles and knitted clothing), jewelry, childrens books, pottery classes, and web training. They also participate through retail outlets and handicraft centers in rural town revitalization around arts and craft businesses. The WREN Zine newsletter publishes articles on summer destinations for locals and visitors including historic estates, galleries, antique shops, creameries, cafes, bakeries, theatres, craft workshops, potteries, bed and breakfasts, and rural lodges. WREN is part of the Association for Enterprise Opportunitys Sustainable Tourism Learning Cluster, funded by the Kellogg Foundation, which holds conferences and workshops.

5.2 Project Outputs and Indicators


Examples of project outputs and indicators that could be used to measure the success of this program include: Rayons a. strategic and action plans formulated with community input b. improved statistical tourism data base, c. developed resource inventory, d. management plans for sites, e. increased marketing plans and resulting information (brochures, TICs, wine trail map, etc.) for wine tourists. NGOs f. increased number of active wine tourism associations and destination management participants g. increased number of handicraft programs, including wine related handicrafts Private Sector Assessment of Wine Tourism in Georgia Sandra A. Chesrown

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h. increased number of tourism jobs generated in Kakheti (or other rayons), i. increased access for Kakheti farmers to markets (or other rayons), j. improved tastings at x vineyards, k. improved winery facilities at x vineyards, l. improved access for Kakheti farmers to technical information on wine markets, pricing, and quality standards, m. increased number of boutique wineries, n. improved handicrafts and increased number of quality products and retail sale outlets, o. increased number of trained local people in wine tourism, p. increased cellar door sales at wineries, q. increased number of rooms rented at local guest houses..

5.3 Monitoring Methodology


* * * * implement Action Plans, establish monitoring indicators, evaluate through community meetings and visitor satisfaction surveys, adjust according to findings.

5.4 Georgias Wine Tourism at the End of this Project


(The World Bank is estimating that the potential for annual visitors after one year at Vashlovani National Park is between 827 and 1250 and after six years it could reach as high as 6000 visitors. These are not statistics, just projections. We have no statistics. However, we know the expansiveness of wine tourism, and that the Napa Valley draws five million tourists each year. Georgian tourism with the help of wine tourism will grow to at least 250,000 real tourists (not just visitors) per year by the end of this project, if the national tourism structure is also built.) i. Wine tourism will be an understood concept by both the public and private sectors. ii. The quality of Georgias wine will have improved. iii. The appeal of Georgias unique traditional cuisine will be known to more of the world, and will be linked to wine tourism. iv. Tourism jobs in Kakheti, Racha, and Kutaisi will have increased dramatically. v. The quality of the consumer experience will have greatly increased. vi. Suppliers to the wine tourism industry will know what visitors want, and will organize through destination management groups. vii. Wine sales will have increased through educated visitors and brand loyalty. viii. The destinations will have developed positive wine tourism identities and facilities that benefit the community and foster community pride. ix. Rural economies will be diversified from solely agriculture, with women and youth having different roles in the tourism economy. x. Georgian farmers/grape growers will have increased their access to markets through the development of motivated associationsinteraction between producers and processors will have increased. xi. Georgian farmers and vintners will have experienced a significant learning curve, increasing their knowledge and putting to use improved strategies and marketing techniques for tourism. xii. Small grape-growers will understand the tourism demands of boutique wineries.
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xiii. Producers, processors and marketers will have improved access to technical information including new markets, pricing, quality standards, packaging requirements. xiv. 10 or more new products will have been developed for wine tourism.

APPENDICES Appendix 1 Schedule of Meetings Held in Georgia April 21 May 5


(meetings by category in addition to those with AgVANTAGE staff and USAID) (Power Point Presentation from Roundtable - already submitted) Government Representatives Mr. Saba Kiknadze, Head, Department of Tourism and Resorts, Ministry of Economic Development Mr. Nodar Chkhartishvili, Director, Georgian Institute of Viticulture & Horticulture Mr. Petre Tsiskarishvili, State Trustee (Governor) of Kakheti Region Ms. Nino Zaridze, Regional Rep. of Tourism Department, Kakheti Region Museum Director, Chavchavadze Estate Mr. Nikoloz Vacheishvili, Deputy Minister, Monuments Protection, Ministry of Culture Staff, Folk Art Museum Guides Guide at Batonistsikhe Castle, Telavi Guide at A. Chavchavadze Estate Guide at Ikalto Academy/Monastery Guide, Folk Architecture Museum, outside Tbilisi Handicrafts/Galleries Kebai Handicraft Association various members at Expo Georgia Ms. Anno Shanshiashvili, Executor, Georgian Arts & Culture Center Dry Bridge Fleamarket participants Owner, Chardin Gallery Owner, Gallery of Carpets and Handmade Dolls Mr. Givi Kandareli, Tapestry and Oils Artist and Professor, State Academy of Art/Museum of Tapestry Mr. Kakhaber Zarnidze, Metal Artisan Mr. Gia Chkhatarashvili, Photographer, Tbilisi Manager, Marriott Art Gallery Staff, Horizonti Foundation Hotels/Guest Houses/B&Bs Ms. Nino Adamashvili, Marriott Hotels Sommelier Rusiko Dzenladze, Owner of guesthouse in Telavi (also interviewed two neighboring GH owners) Neli and Malkhaz Tapolishvilis, Owners, Nelis Guesthouse, Telavi Staff, Betsys Hotel, Tbilisi Staff, Kopola Hotel, Tbilisi Staff, Hotel David, Tbilisi Staff, Vere Palace, Tbilisi International Donor Projects
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Mr. Paata Shanshiashvili, Director, World Bank/GEF Protected Areas Development Project (National Parks) Dr. Olaf Malver, Consultant, Vashlovani National Park, Ecotourism Master Plan, World Bank/GEF Protected Areas Development Project Mr. David Gur, Millennium Challenge Georgia, Project Coordinator, Tourism Tour Operators/Travel Agents Representative of Exotour (mainly outbound) Mr. Alexander Mamulashvili, Managing Director, Visit Georgia (inbound) Ms. Ia Tabagari, General Manager, Caucasus Travel Mr. Rati Gelashvili, Incoming Tourism Manager, Levon Travel Ms. Annabel Baddely, Marketing Manager, ERBO Adventure Travel Wineries Mr. Giorgi Tevzadze and Mr. Giorgi Samanishvili, Georgian Wines and Spirits (GWS), Telavi (also founding members of Young Winegrowers Association) Mr. Iraki Chkaidze, Production Manager, Mildiani Mr. Giorgi Dakishvili, Chief Wine Maker for Mildiani and Teliani Valley (also developing boutique winery/inn) Mr. Jumber Patiashvilis, General Director, Shumi Winery Mr. Niko Nikolaishvilli, Nikos House Winery in Telavi Representative of Mr. Nodar Saquashvili, Owner, Kakheti Wine House Winery (and Telavi hotel purchaser) Mr. Zurab Ramazashvili, Chairman, Telavi Wine Cellar Winery (head of dormant GE Winemakers Association)

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Appendix 2 Georgias Glorious Grape Trail


(to be featured on a variety of web sites, such as the Department of Tourisms, the GE Wine Association, the GE Young Winegrowers Association, the Hotel Association, the Kakheti Farmers Association, and the GE Association of Sommeliers.) The magic of sun, soil, and the Caucasus MountainsGeorgias Glorious Grape Trail, colored in the various purples of wisteria, iris, daylilies, lilacs, and ultimately grapes, takes you on a two day trip from Tbilisi to the many vineyards of Kakheti, as well as Telavis Batonistshviche Castle, the lovely Chachavadze estate and Tsinindali Winery, the 11th C. Alaverdi Church (September Festival), and the 6th C. Ikalto Monastery, and to the Gremi Tented Camp for a river side barbecue, all within a half hour of each other in the Kakheti Region. Overnight accommodations will be at charming local guest houses in Telavi or Kisikheir or at a small hotel in Gurjaani. En route, you'll pass by pastoral agricultural landscapes, groves of nut orchards, woodlands, and stone villages that will transport you to an earlier, simpler time. Days four and five you will continue to two other wine production areas, visiting historic Kutaisi and Racha. Day six you will return to Tbilisi. With fine local traditional cuisine and charming accommodations at local guest houses and handicraft centers along the way, you will find ample opportunity to relax in rural splendor and enjoy the authentic Georgian country life. At the wineries, experts will discuss viticulture (the art and science of growing grapes), viniculture and enology (making wines), varietals (type of grape they use), the history of the vineyard, preservation and adaptive reuse of their buildings, and the art of their labels. You will sample a medley of Georgian wine varieties vinified as sparkling wines, dry to semi-dry table wines and late harvest dessert wines that have won their share of praise from sommeliers and wine critics across the country. (Insert quote from Wine Enthusiast or Food and Wine magazines.) Local handicrafts and foods will be featured in their charming shop adjacent to their little wine museum. In the summer, stay and picnic on the grounds, and in the winter sit around the fire and sip wine - both with a spectacular view of the Caucasus Mountains. Check the web site of the Georgian Wine Association for dates of festivals and other special events. The winery is also available to host conferences, seasonal wine dinners, and weddings. Volunteers are invited to join the local farmers and wineries for the harvest experience the crush and press of the grape and, in return, be our guests for an outstanding lunch of fresh local products. Or just come , watch, sip, and enjoy this magical land. Breathe the clean, rural air. Once you are touched by Georgias spell, you must return.

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Appendix 3 Organizational Chart for Wine Tourism


ORGANIZATIONAL CHART FOR WINE TOURISM including Georgias Department of Tourism and Stakeholder Relationships Tourism Training Institute Ministry of Economic Development/ Department of Tourism & Resorts GE Tourism Board (public private pt.)

DoT - Department on Research, Statistics and Developing Target Markets includes Library

DoT Department on Product Development with Rayons and Other Ministries (MoC, MoE) including Special Events

DoT Department on Public Relations Press, Embassies, Governments, Overseas Business Councils

DoT Department on Marketing Web Site and Publications

Associations/DMG: wine industry, hotel/guest houses, travel agents, tour operators, handicrafts,
B&Bs

Rayons on Wine Rt/DMG: Kakheti, Tusheti, Inner Kartli, Imereti, Racha

Natl Government and International Projects: MoC and MoE, International Donors, NGOs

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BIBLIOGRAPHY
Hall, C. Michael and Sharples, Liz, Cambourne, Brock and Macionis, Niki, Wine Tourism Around the World, Development, Management and Markets, MA, ButterworthHeinemann, Elsevier Science, 2000. Arthur Consulting Group International for Radisson Hotels Worldwide, Tourism Development in the Republic of Georgia & Market Study and Financial Projections for Four Hotels, TDA, September 1998. National Seminar on Enhancing the Role of Tourism in Socio-economic Development and Poverty Alleviation, UNESCAP, Baku, Azerbaijan, November-December, 2004. Inskeep, Edward, Tourism Planning: An Integrated and Sustainable Development Approach, NY, Van Nostrand Reinhold, 1991. Planning for Local Level Sustainable Tourism Development, Canadian Universities Consortium, Urban Environmental Management Program, CIDA, 1995. Getz, Donald, Explore Wine Tourism: Management, Development and Destinations, NY, Cognizant Communications Corporation, 2000. Georgia Wine Cradle, Georgia Airlines Magazine, Spring, 2005. Various brochures from Georgian tour operators. Along the Road of the Bulgarian Wine, www.hrankov.com/bulgarian_wine.htm, June 2005. Bulgarian Wine Tourism, www.bulgarianwines.com, June, 2005. Bulgarian Master Vintners, www.bulgarianwines.com, June, 2005. Welcome to Moldova, The Wine Road, www.turism.md/eng/section/228, June, 2005. Inside Romania, Wine Tour, www.corporateleisure.com, June 2005. Jordan, National Tourism Strategy, 2004-2010, Chemonics International/AMIR Program, USAID, 2004. Georgia: Revolution in the Regions, www.eurasianet.org, June 15, 2005. United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), Poverty Alleviation through Tourism Development (ST/ESCAP/2265), August 2003. Butler, Sana, Community Tourism Enters Mainstream, NY Times, April 10, 2005.

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ACKNOWLEDGMENTS TO THE PROJECT TEAM


The Consultant gratefully acknowledges the capable assistance of AgVANTAGE staff, particularly Ms. Ketie Sharabidze, the key technical contact for the project, who within a short time-frame gathered the assignments background information, organized the extensive meeting schedule, and prepared field visit logistics and meetings.

Assessment of Wine Tourism in Georgia

Sandra A. Chesrown