Greek Wine & Spirits industry: The aftermath of capital controls

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Athens’s based drinks journalists Denny Kallivoka and Eleni Nikoloulia asked key players in Greek’s wine, spirits and bar industries their business experience and views after the past weeks of economic turmoil.


Despite the fact that the past three to four years have been years of profound economic crisis in Greece, the Wine & Spirits industry has been amongst the healthiest, most flourishing and robust sectors of the Greek entertainment industry. Export markets seem to have discovered the virtues of the Greek local varieties and have been raising glasses with Assyrtiko and Xinomavro all over the world. While Greek bartenders have participated in international competitions and created an amazing cocktail bar scene, characterized by some international connoisseurs, as one of the most promising in Europe. [Evidenced by 'The Clumsies' in Athens shortlisted at Tales of the Cocktail Spirited Awards. SD] Meanwhile local microbreweries and drinks are expanding following international trends.

However, the events of the past three weeks, the great political instability and sudden economic collapse, together with the closure of banks and the implementation of capital controls created huge problems and had severe effects in consumption, imports and exports.

So we called and met 12 key people within the wine & spirits industry and posed them the same question. "In what ways and to what extent was their business affected by the implementation of Capital Controls and what will the future be." Here's what they said.

Chris Houseas


Bartender and owner 42 Bar in Athens
"During the past three weeks people prefer to go out in local venues and spend as little as possible. They feel reluctant in paying €10 for drinking something special, like a cocktail. They prefer instead to satisfy their need for going out and socializing with the minimum possible cost. Having said that, it becomes evident that beer consumption relatively increased, while cocktail consumption has been significantly hit. I'm afraid, that despite the outcome, the imposed capital controls have already crippled a fragile industry and many of the existing bars will face a serious financial problem in the near future. You see, this equation incorporates less customers, with a limited budget allocated to something considered as luxury at the back of their minds, while at the same time, running costs, and taxation are going to be increased further. It's a vicious circle."

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The Clumsies team

Lelos Georgopoulos


Co-owner The Clumsies, Theory Bar
"The Bar Industry has not been significantly affected, yet! And there is a good reason for that. Crisis and especially capital controls have created a syndrome of mass depression. So, people started gathering in bars in order get out of the house and relax from day long bombardment of bad news by the media. While the fact that numerous companies for reasons of force majeure have decided to put thousands of workers on a compulsory leave status, increased the number of customers. However, people consume less, a bottle of beer, or a coffee being the more usual drinks ordered nowadays.

In the meantime, I have to admit that we have started facing some shortages in imported ingredients, i.e. of potato chips since our importer could not import over the past weeks.

Businesswise, I'm trying to keep my glass half-full, but to be honest I can't imagine what is going to happen with the bar industry in case the capital controls are extended for a prolonged period of time. What is for sure, is that we are determined to keep on paying our employees and suppliers regularly in order to keep the business running. This is something that we made clear to everyone immediately after the capital controls were imposed in order to minimize insecurity among our colleagues. It was the only way for us to keep our business running as usual in the middle of a crisis.

After all, all the bar industry consists of people who created their careers from scratch, so even in the worst case scenario we are hardworking people and we will find our way out of it."

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Crysanthos Panas


Owner Island Bar & Restaurant
"What can I say about the crisis in general and for capital controls in particular? Well, I'll try to give to the overall situation an optimistic point of view, at least in the long-run. It's a common secret that quite a few businesses operating in the Greek food and beverage industry somehow manage to avoid paying their taxes to the Greek authorities. That's probably why so many restaurants, bars, clubs etc. prosper in Greece, despite the fact that if you operate according to the tax legislation you can't create a fortune overnight, based solely on the legitimate earnings.

I sincerely hope, that the capital controls, along with the necessary use of plastic money as a means of payment imposed by capital controls, will diminish if not eliminate this phenomenon. Thus, those opportunists who used to consider the food and beverage industry as a potential source for making easy money, damaging severely the reputation of the sector overall, will disappear within a couple of years."

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Dimitris Kiakos


Bartender & owner The Gin Joint
"The effect of capital controls in Greece wasn't as damaging as we thought. In fact, we've noticed an increase to the number of our customers during the weekdays, although during the weekends we had a loss. I believe that the forthcoming situation will affect us a lot, especially considering rumours about the forthcoming measures.

However, I remain optimistic and I believe that when a bar is neat and tidy in every aspect and keeps on doing what its best at, in the long run this process will separate the wheat from the chaff so to say, leading to a better future. Of course, in order to do so we will have to adapt to the new situation."

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Thanos Prunarus


Bartender & bar owner Baba Au Rum
"In the first place I was against this deal with Europe. However, I believe that we were not ready for a Grexit and that either way the forthcoming months are going to be tough. Our goal now is to keep on doing whatever is best for our bar, not business wise but from a social point of view. As far as this concerns me personally, I will do my best to retain the perfect business relationship I have with my staff and I will continue paying them generously. The bar is a small example of our society so I believe that we have to stay united and happy. On the other hand I have to mention that the past weeks we faced a 40% decrease of customers."

Alexandros Sourbatis


Bar Manager Spinte Bar, Thessaloniki
"In Thessaloniki, since the capital controls were imposed business went down by almost 30%. We also faced a big problem with cash flow since ATM's ran out of 20 Euro bills within two weeks so every customer only carried 50 Euro bills. So if for example, if we'd normally charge 13 Euros for two drinks instead we're charging 10 Euros since we have no change. We don't know what's coming up next, however I remain positive since bars are always one of the first choices for everyone when they face problems."

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Konstantinos Lazarakis MW


Imports Director at Aiolos and President of Wines and Spirits Professional Center
"Talking about Aiolos, which is a company operating in the Import-Export sector, with 75% of its total commercial activities focusing on local wines and the remaining 25% with imports, two weeks after capital controls were imposed in bank accounts, the company suffered an overall turnover loss of 10%, despite the fact that imported wines show a 20% turnover increase. Actually, we were selling more expensive wines. According to our analysis, during a period that Greek's consumption was limited well below nominal, the tourists "didn't give a f@ck" about the situation and wanted to enjoy and indulge themselves and drink well! I've talked with several restaurant owners and they were happy about the fact that everything happened during summertime, allowing them to keep their business running with tourists, despite the absence of Greek customers.

We have to mention however that in order to achieve that (maintaining sales to a more or less constant level), Aiolos took the risk of maintaining a 'less strict' invoicing policy, without demanding the payment to be made in cash and in advance, as was the case with competitor firms or in other sectors.

My personal belief is, that when the situation returns to some sort of normality, especially in the bank sector, and we stop being treated as the bad boys of the neighbourhood, in due time everything will return to normal. In the mean-while, we are doing our best for tourists to keep enjoying themselves as usual in Greece, hoping that this way the overall wine (as well as spirits and liqueur) consumption will not be seriously affected volume wise.

Regarding the situation, we have to say that Greeks act - or rather overreact - in an emotional way. As quickly as they rush to the supermarkets in order to buy provisions for overcoming the... decades to come of a potential disaster, with the same speed they will re-populate the taverns and the bars with the first glimpse of hope.

Over-reacting with emotion is not always bad though. Especially if we consider the statements of psychologists from all over the world who state that psychology plays a crucial role in overcoming a crisis. More than 70% actually. That means in other words, that our chances to leave behind us the crisis if things turn to be right in the near future, are by 70% higher than those of most of our fellow - Europeans. I strongly believe that for Germans i.e., with a much more rationalized way of thinking, it would have taken a decade before they go out of their houses even for a visit to a local Bierhaus, if they had to deal with a crisis like this one."

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Stelios Boutaris


Wine Maker - Managing Director Kir-Yianni Estates
"I'm very optimistic by nature. The past years, despite the economic crisis, we had a significant increase in wine exports, expanding in new markets as well. It seems that there is no such thing as negative publicity. Being on top of the breaking news worldwide for the last five years or so, Greece became the talk of the town gaining an awareness level that no advertisement would have accomplished, and all that awareness seems to have worked just fine, at least in our wine exports sector. It was a major breakthrough especially for the generic (endemic) Greek wine varieties (i.e. Assyrtiko, Agiorgitiko, Xynomavro and Moschofillero), that during this crisis managed to find their way to the foreign consumers' glasses. Until a while ago we had a staggering development rate.

Regarding Capital Controls, they haven't created any significant problems to our firm, yet, even though we might experience shortages with imported packaging materials such as barrels, bottles, corks etc. in the near future. Moreover, during the past weeks we have managed to export to Europe, USA and Canada. On the other hand, the prolonged Bank Holiday has stalled the entire local market. More than 50% of the companies do not invoice, or they refuse to credit their accounts fearing of a potential haircut.

However, the major issue with Greek economy and all the firms operating under it, has to do with insecurity. Insecurity is the name of the game right now, forcing Distributing Companies to decrease the number of employees, no new-deals can be made since no one really knows what is going to happen next.

Still, the worst case scenario would be a Grexit. Staying in Europe is, according to my opinion, absolutely crucial, since the local wine economy is based to a vast extent on European programs that support Greek wines."

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Cyclades Microbrewery at Tenos Island

Alexandros Kouris


Owner of Cyclades Microbrewery at Tenos Island, producer of 'Nissos' Beer
"Given that we are a new, still in the expansion stage, exporting company, our major issue is how to increase production volumes in order to meet the demand. That main goal has remained constant. The great tragedy of the current situation though, is that despite spending an entire day searching for a refrigerated container to ship my exports to Australia, my efforts were in vain. Three companies had to turn down my request for the simple reason that nobody is currently importing anything, therefore no containers are available for exports.

Another issue is the shortages or the lack of raw materials as well. We were lucky on that, since we had our stock replenished just a week before the capital controls were imposed. Otherwise, it would have been very harsh for us to keep on running things as usual, since a lot of cleaning products and packaging materials we use are imported. In other words, companies will soon be facing discontinuities on the supply chain.

As far as the tourism industry is concerned, internal tourism has been severely damaged and things don't seem to improve, as the insecurity and the psychological strain is building on Greek society. Mass psychology plays a crucial factor in coping with a crisis, economic or otherwise, and for the time being, things are not promising for people and businessman alike. Going around making transactions using only cash reminds me of the third world.

This situation is not viable, not for long at least, but I strongly believe that as soon as the Greek Banks reopen things will gradually reach a normality stage. The important thing now is to return to normal conditions before the summer season is entirely lost."

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Doris Tsolakidis


Marketing Manager Karoulias S.A.
"Imposing capital controls on bank accounts was a sudden and unprecedented financial measure that had a severe negative impact on the economy and the market. As far as the wine and spirits business is concerned, the consequences of capital controls were immediate and immense, severely undermining two of the basic pillars in our business.

Trade overall has been undermined, since it's practically impossible to import alcohol from abroad, while it is extremely difficult to undergo with any short of transaction within the Greek market. This leads to a dramatic decrease both on imports and sales.

The second undermined pillar has to do with promotion and advertising, since the psychology of potential consumers along with their buying ability has been radically reduced, resulting in the postponement or even cancellation of many promotional activities.

"mports and commercial transactions can be re-established and things can return to normal within six months after the banking sector resumes. Still, the question remains: how long will it take until the mass psychology of potential consumers manages to overcome the shock that it's been through? To put it in other words, how long will it take for people to overcome the imposed reorganization of priorities and reform of long-established buying habits? The psychological recovery of the extrovert Greek consumer has to be imminent, if we want to have a quick recovery of the alcohol industry as well. In my opinion, the sector upon which the Greek economy has to focus in order to recover is the food and beverage industry, where the heart of the market lies."

Sotiris Georgiou


Sommelier and Wine Manager Oinocosmos, Cava Kylix
"As soon as the Capital Controls in bank accounts were imposed, the imports (of wine and spirits) stalled. As a result, we had to cope with demand based entirely on existing stocks. For the time being this is not a problem, but if this situation is prolonged, then it will be hard for us to keep running our business as usual.

Regarding sales, we have observed the following:
• Excessive stockpiling from businesses operating in the food & beverage industry; for example a bar-restaurant in Mykonos purchased 120 bottles of Dom Perignon, paying in cash, in order to be able to meet the demand of foreign tourists.
• Increased number of expensive labels purchases were made by individual customers, who were afraid of bank account haircuts, thus preferred to invest in expensive labels.

Regarding tourism, internal tourism has been badly affected, while high-end inbound tourism is not.
Despite all these, my personal belief is that if we manage to somehow re-establish political and social stability in the next three months, the economy will rebound."

Vassilis Kalatzis


Owner Granikal Imports and Three Cents Artisanal Premium Greek Beverages
"We are shocked with the situation in Greece. Our business was at the expansion stage and all of a sudden we hit a wall that stopped us. I have no idea what's coming up next but I'm convinced of one thing: as long as the banks remain closed, there is nothing ahead of us but a dead end.

However, we are doing our best to keep our business running, both for our sake but also for the sake of our partners. "Three Cents Artisanal Premium Beverages" is a collection of new Greek products and we were discussing many collaborations and export opportunities, all of which have now paused. On the other hand, we are trying to think positive and remain optimistic. In fact, we are already discussing a new flavoured beverage and trying to schedule our participation at various bar shows in Greece and abroad."

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