Wine culture is on the upswing in Malta, though local producers and importers find it hard to compete with undeclared imports from Sicily. John Farrugia on what the restaurant industry looks like when viewed through the filter of wine
Wine culture in Malta has certainly changed since the days when local produce was routinely likened to paraffin, and (if rumours are anything to go by) sometimes used for the same purpose, too.
Similarly, the local restaurant industry has experienced a veritable metamorphosis since the ‘boom’ of the 1980s. As an importer and distributor whose clients include mainly restaurants, few are better positioned than John Farrugia to comment on both these recent transformations.
Seen through the rosy tint of a wine bottle, the restaurant industry certainly does not appear to going through its best-ever period of late. But it’s not all bad news, either.
“In general, the feeling in not a great one. Some complain that covers are poor, but spending is good; others say covers are good but spending went down. Then there are a few who kept on with business as usual, and others who never saw such terrible times. As I see it, apart from the worldwide financial crisis, in this small island new catering establishments sprout daily, resulting in a greater distribution of the consumer.
“Some of these new establishments spend hundred of thousands on premium, rent, décor and equipment, then after a few months they realise that the results are far off their projections. However, in the interim these do affect the established market, as new places attract consumers...”
Greater choice for the consumer also translates into the availability of an ever-increasing wines of varying qualities to cater for different tastes and budgets. But on such a small island, how much demand is there really for superior quality wines?
“Like everything else in life, you get various qualities of the same item. There are wineries which focus on volumes, and produce commercial wines. These wines still have to go through surpassing quality standards, and will not harm anyone. This is what you will generally find on shelves and in bars. They are not bad wines; it is just that the producers’ business model is volume, and hence no specific attention to detail is given in the process.”
Other wineries, Farrugia continues, tend to focus more on quality and brand.
“They put a lot of pride into the process, which is reflected in the wine that is in the bottle. They spend a lot of time, effort and money in their investments to ensure that they keep up to the standards they believe in. Although these wineries are considered superior, they still offer value and one can easily buy a very good wine for €5.00...”
As for the demand, Farrugia observes that the market is split in two. “The on-trade part, which means selling to the catering establishments; and the off-trade, which are the ones on supermarket shelves. In general, catering establishments do not want wines that are found on shelves and prefer to offer a wine which is superior in quality and brand, but is also affordable for their clientele. So there is a market for both segments. Volumes are however more interesting of the off-trade part... but then. margins there are very squeezed.”
Both these dimensions have in recent years been aided by a slow and silent revolution taking place somewhere behind the scenes - notably, the enormous increase in appreciation for wines among Maltese consumers - traditionally more accustomed to beers and spirits, and until recently notoriously unfussy about the quality of what they actually consume.
“In general, Maltese drink better today than they did a few years ago. I believe that a lot of effort has been made through the media, local manufacturers, importers and establishments to educate the market over these years. These range from informative features in newspapers and magazines, wine tasting events, the employment of wine specialists to the contracting if advisors to draw up wine lists...”
One important factor was the removal of the import levy, which resulted in greater affordability of foreign wines – previously considered too prohibitive for “ordinary” consumers. Increased competition also led to a gradual elevation of local standards – a fact which can be attested by numerous awards won by local wines over the years - but this does not mean local producers and importers no longer face any challenges whatsoever.
Like others in his trade, Farrugia eyes with trepidation certain recent developments, notably regarding undeclared imports.
“The large volumes of parallel trading taking place through Sicily pose one of the biggest challenges to importers. Sometimes these are not even declared, and hence no Eco Tax is paid on the glass bottles...”
Furthermore, the market is currently being flooded by low quality imports which threaten to lower standards across the board.
“The amount of new agents importing wines – especially those who target low-end wines and dump these on the market – tends to damage all the efforts made by the traders who have a vision for the local wine culture. These threats affect the established traders, since the market consumption did not grow in proportion to the new importers importing wine. So the end result will be less investment in educating the market, which is a pity for the industry in general....”
Turning to local producers, Farrugia argues that more co-operation and less outright competition might be more helpful to all in the long run.
“Each of them is competing heavily against each other, reflecting in loads of money spent on marketing. I believe that today, they all offer similar products of very high standard. Perhaps they should jointly work together to get the Maltese to believe more in the local product.”
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