One of the aims of Greece’s adjustment program has been to make the country more competitive, with a particular view towards boosting its exports. The main tool for this exercise has been the policy of internal devaluation, which has seen wages drop substantially.
As a result, unit labour costs, which rose rapidly from 2001, have been falling equally dramatically since 2009 and by the end of this year are expected to be at around 2005 levels. The intention of this policy is that this drop in costs is reflected in lower prices for goods and services.
This has by no means triggered a boom in the export of Greek goods, which had a total value of 27.6 billion euros in 2012, but there has been a steady rise since 2009. Food and beverages remain the leaders in Greece’s export market and the last few years have seen somewhat of a rebirth in the production of agricultural products for foreign markets.
The exports of Greek strawberries, for example, have skyrocketed during the past few years. In 2007, Greece exported just over 4,000 tons of strawberries with a value of 5.7 million euros. In 2012, exports reached more than 26,000 tons with a value of almost 40 million euros, making strawberries one of Greece’s 100 most exportable products. The rise in strawberry exports has been driven partly by the fact that producers have tapped into new markets. Russia, which is not among the main importers of Greek goods overall, accounts for more than 40 percent of Greek strawberry exports.
The Greek exporters who have been successful during the crisis, despite the difficulties created by the lack of liquidity and uncertainty about Greece’s future, have been the ones that adapted their methods, improved their products and sought new markets. A good example of this is Greek winemaking. According to the Panhellenic Exporters’ Association, the volume of Greek wine exported increased from 28,438 tons in 2008 to a peak of 39,591 tons in 2011. The value of wine exports shot up from 55.6 million euros in 2008 to 66.2 million euros last year.
This improvement has been based on much more than just internal devaluation. It is, instead, a reflection of a concerted effort on the part of a lot of Greece’s top winemakers, as well as many smaller producers, to take the steps necessary to become more outward-looking. The increase in exports has partly been based on better promotion, according to Markus Stolz, an expert on Greek wines, who acts as a middleman between producers and importers.
“The Greek wine industry, which has set up the New Wines of Greece website has done a very solid job of promoting Greek wine,” he says. “They have learned to focus on social media, have executed effective initiatives via trade events and inviting people over to visit Greece and tour the vineyards. They started out by inviting wine writers and bloggers, and now even bring in wine buyers.
“Five years ago, they just bought advertising space in wine magazines. This strategy failed, and a lot of money was spent without making any impact,” adds Stolz.
He also identifies improved cooperation between vintners as another reason behind the success of Greek wines in recent years.
“Some of them have started working together as a team, rather than only looking for their own, short-term benefit,” he says. “For example, the young winemakers of Naoussa meet every two weeks, share wines from around the world, discussing and executing initiatives to support their region.”
While Germany remains by far the top market for Greek wines, absorbing 47 percent of exports in volume and 41 percent in terms of value, the United States is the most profitable. Greece exports just 5.9 percent of its wine to the USA but these sales account for 13.2 percent of total revenues for Greek wine exports. Greek winemakers have shown flexibility by adapting to the new wine trends in the USA, where critics and sommeliers are becoming less conservative and are on the lookout for new and different wines.
“Greek wines fit in perfectly into this trend, as they are rarely too heavy, with restrained alcohol levels and being great food pairing partners,” says Stolz. “In terms of product and quality, the last five years have been amazing for Greek wine. There are now many young people who make wine and have a different mindset than the older generation. Quality keeps going up, ancient varieties are being revived and the winemaking has become much more refined.”
Writing in May, the New York Times’s wine critic Eric Asimov encouraged his readers to try a selection of Greek wines made from the moschofilero, roditis and assyrtiko grapes rather than “mass-market junk wines”. “The good news is the parallel universe of provocative Greek wines, made primarily from this trio of little-known grapes, is very much an available reality, offering a wonderful trove of wines that can be stimulating, even riveting, and rarely boring.” he wrote.
“Skip the insipid wines. Go right to the good bottles. Discriminate,” Asimov advised his readers. If the recent achievements of Greek wines are a good measure, then this could be an appropriate motto for all Greek exporters: Lower wages and prices alone are unlikely to be enough make their products attractive. Better organization and execution is required.
*An edited version of this article appeared in the Friedrich Ebert Stiftung publication "Ten Rays of Light in the Greek Crisis"