Unlocking the Potential of Lithuania's Wine Market

Despite double digit inflation, per capita income is rising in Lithuania, driving a boom in restaurants plus a demand for Champagne. Felicity Carter visits their wine fair to find out more.

Vilnius is stylish and walkable, with a mediaeval old town at one end, and a modern cityscape at the other. The elegant capital of Lithuania also boasts a lively fashion scene and a restaurant culture that feels fresh and exciting.

The country’s per capita income is $26,976, according to the OECD — and it keeps rising, despite high taxes and an inflation rate that hit nearly 19% in 2022. It also has a lively tech sector, where talented graduates can earn high incomes.

The wine culture is an entirely modern phenomenon.

The wine culture is patchier, being an entirely modern phenomenon; traditionally, Lithuanian wine has been made from blackberries or dandelions. But those well-paid IT professionals and other young Lithuanians are travelling, which has introduced many of them to the joys of drinking a glass of wine with dinner.

Many of them came to taste at the Vynos Dienos 2023 wine fair, held in May and spread over two floors. The place was packed, while the tastings were so oversubscribed, people sat on the floor.

What’s paradoxical, is that this growing love of wine is happening in a country whose government is resolutely anti-alcohol.

The government's attack on alcohol

Elections are held every four years in Lithuania and in 2016, the centre to centre-right Lithuanian Farmers and Greens Union won a surprise victory. In 2017 they passed a series of anti-alcohol laws: they raised the legal age to buy alcohol to 20; they reduced the hours during which alcohol could be sold; they increased the excise taxes on wine three years running; and they slapped a complete ban on alcohol marketing.

The laws have been reasonably popular because they resulted in a sharp decline in drinking, so there are no signs of them being reversed; Lithuania was the third highest consumer of alcohol in the EU — nearly 10% of the population was said to have an alcohol use disorder.

They slapped a complete ban on alcohol marketing.

Arūnas Starkus | Photo by Vygintas Skaraitis

For Arūnas Starkus, the co-founder of the wine fair, however, the government’s war on alcohol has become zealotry, and he pushes back on what he sees as state overreach as often as he can. For example, he once got a 40-page complaint about his website from the government; some public servant had gone through it line by line and declared that it was full of false claims. Starkus shakes his head while explaining that government officials complained about the use of phrases like “this wine has good body” or “this wine is rich”, claiming that as wine is not a person it can have neither body nor possessions. It took one of his employees an entire week to write a rebuttal, but he got to keep his website intact.

Booming wine culture

Otherwise, his wine business is booming. He and his wife and partner Rasa Starkus got into the wine trade in their 30s, after doing some short courses in Bordeaux. “We decided to establish a small educational centre, to give tastings and maybe some lectures,” says Starkus. But, back in 2003, they discovered there was no interest in their venture, because there was no wine culture.  

Rasa Starkus | Photo by Vygintas Skaraitis

To supplement the business, they added an import and distribution arm a year later. “We were just newcomers and very young,” he says. They weren’t sure what to buy, so they hit on a formula: find the acknowledged best producer in a region, and contact them.

“And this was the way we started with really very good partners,” says Starkus. “They’re inspiring, they’re very educated and very interesting.”

In search of a format to connect

Listening to the great winemakers and wine companies speak about wine taught the Starkuses how to communicate with the market, and they realised that a key element was giving the wine trade a forum to connect. In 2005 they founded the Vyno Dienos wine fair and launched a wine magazine, Vyno Žurnalas. A sommelier school came later, and in 2008 they began translating major wine books into Lithuanian.

“We now have a kind of mature market that means there is a big supply of different styles of wine.”

Today their Vyno Klubas wine store is a multi-storey building with a wide range of wines on the ground floor, seminar rooms upstairs, and boxes of very fine wines in the cellar. Starkus said the company could do all this because there was no competition.

Lithuania’s per capita wine consumption is now 12 litres, which is double what it was when he started. “We now have a kind of mature market that means there is a big supply of different styles of wine,” he says. “There is a big community of experts who can speak about wine, and we have all the infrastructure to communicate despite the restrictions. So the market functions like anywhere.”

A quick snapshot of the Lithuanian market

Vilnius, population 700,000, is the beating heart of the wine market, though wine is sold across the country. There is no hard data to draw on, but the distributors exhibiting at the fair all agreed that €5 to €7 wines represent 95% of consumption. The premium segment exists, but it’s extremely small.

Starkus suggests that anyone looking to sell top wines in Lithuania needs to offer a commercial product as well. “Otherwise you have to deliver 100 bottles or 60 bottles sometimes, which is not so good from the logistics perspective,“ he says.

The commercial wines have to be under €2 ex-cellar — and it’s even better if they’re €1; excise is €1.48, VAT is 21%, and logistics add another €0.60 per bottle. Margins are tight.

The commercial wines have to be under €2 ex-cellar — and it’s even better if they’re €1.

This makes things tough for independent retailers, as they can’t offer special deals without losing significant money. As a result, most wine is sold in chains owned by distributors.

Distributors also use the phrases “modern” and “traditional” to describe wine retail: “modern” refers to the chains or online stores, while “traditional” usually refers to a single store, which is often a grocery store. 

Wine lovers at the exhibition | Photo by Vygintas Skaraitis

The distributors and what they sell

AMBER Distribution is Lithuania’s biggest importer of still wines and spirits. “We actually started our business when we got independence from the Soviet Union in 1991,” says Žydrūnas Krapukaitis, AMBER’s wine category manager.

AMBER has its own online store, and supplies both the traditional and modern trade, though the modern segment accounts for around 80% of their business. Krapukaitis says that Italy has strong appeal, and Primitivo does particularly well. “If you’re talking about origin, it’s Italy, France and Spain,” he says, but as more people travel, wines from New Zealand, Portugal and even the USA are finding a market.

He says that when considering whether to list a wine, AMBER will often reject modern labels — consumers are still conservative and reassured by classical labels. Blends don’t work very well either, unless they have the varieties clearly labelled.

Consumers are still conservative...  and blends don’t work very well either, unless they have the varieties clearly labelled.

Mindaugas Minkevičius, Brand Manager at MV Distribution, says that while consumers still mostly prefer sweeter styles, the consumer palate is beginning to embrace drier styles, which he thinks is due to the increasing popularity of dry styles of sparkling wine.

“Regarding the origin of wines, Spain, Italy, France and Chile combined are more than 75% of our whole wine consumption,” Minkevičius went on. He added that acidity is still difficult for many consumers to understand.

There is also a growing fine wine sector, where wines are sold in boutique wine stores. Getting into that side of the business “opens a lot of doors on restaurants, on wine bars, on vodka, on different segments as well,” he says.

All the distributors and suppliers interviewed at the fair agreed that sparkling is a hot category, from Cava to Prosecco to Champagnes, including mature Champagnes.

Dealing with the alcohol laws

Growing the wine market is definitely a challenge when all promotional avenues are blocked. “We are a dark market,” said one distributor, though tastings are still possible.

Wineries that have a non-alcoholic wine in their portfolio have a clear market advantage, because these products can be marketed. As a result, Codorníu has become very popular; its non-alcoholic option, which comes in more or less the same packaging as its wine range, is heavily marketed.

One thing that all the distributors emphasised is that the only way to be successful in Lithuania is to be active in visiting the market.

“This is the rule number one, because nobody is looking actively for something,“ said Starkus.  “There are not so many newcomers who are just now building the portfolio. We are kind of mature.”

Mature, but growing.

Article by Felicity Carter; full article: https://www.meiningers-international.com/wine/events-wine/unlocking-potential-lithuanias-wine-market