Sour grapes: New directive threatens to shutter Turkey’s boutique wineries
İSTANBUL – When Ankara-based architect and wine-lover Umay Çeviker learned Turkey was losing more wine-growing area each year than any other country, he decided to take action.
Çeviker teamed up with İstanbul-based wine educator and restaurateur Levon Bağış to launch Yaban, a wine label focused on Turkey’s endangered and forgotten grape varieties.
The pair hunted for obscure grapes in lesser-known viticultural areas, such as Erciş Karası, an endemic grape variety farmed 1700 meters above sea level on the northern shore of Lake Van.
“We want to make fresh wines, not the big, bold, tannic type we’re used to in Turkey,” Çeviker told Turkey recap. “Since 2021, we’ve been producing 10,000 bottles every year.”
But a new directive from the Ministry of Agriculture and Forestry threatens to force Yaban and many other small-scale wine producers to shutter their operations.
In December 2023, the Ministry released draft communiqué 2023/50, stating companies producing fermented alcoholic beverages, such as wine and beer, have to provide collateral to the government based on their production capacity.
This collateral – which can take the form of cash, property, government bonds or letters of guarantee from banks – is meant to act as a security deposit to be held in the case of future fines or missed payments by wine and beer producers.
For the smallest category, 20,000 liters and under, producers must provide 5,000,000 TL as collateral. From 20,000 to 300,000 liters, the amount increases to 10,000,000 TL. Above 300,000 liters, companies must put up 30,000,000 TL in collateral.
For many boutique winemakers, this is a prohibitively expensive sum.
Cost of doing business
Through most of the 20th century, wine production in Turkey was controlled by a state monopoly, but the privatization of Tekel alcohol distributors in 2003 led to a proliferation of boutique wineries around the country. Today, there are 185 licensed wineries in Turkey.
“At the top of the pyramid, there are four producers that will easily provide the money. It’s just a matter of calling their banks,” Çeviker said.
“The majority of wine producers produce around 20,000 liters or less,” he continued. “I’m pretty sure 85 percent of them will have to close, including us.”
Çeviker went on, saying that when he starts a new project as an architect, there are high material and construction costs involved, so he can understand the logic of submitting a letter of guarantee to a bank until the work is finalized.
“But in this area, it doesn’t make sense,” he told Turkey recap, adding the deposit requirements were disproportionate for boutique producers. “They’re expecting guarantee letters to the government starting with five million liras. You could build a winery with that budget.”
‘If we had known’
The sentiment is shared by Safiye Arifağaoğlu, whose family owns Mesashuna Wines, the only licensed winery in Turkey’s Artvin province.
“We got the licenses three years ago. If we had known they would ask for this money we would have reconsidered going into this business,” Arifağaoğlu said.
Arifağaoğlu explained that obtaining letters of guarantee from a bank is a complicated and time-consuming process, with banks charging up to a 5 percent fee for the service.
“You have to put up your winery or apartment [for collateral],” Arifağaoğlu said. “If you don’t have any real estate, it’s impossible to continue your business.”
As a practicing lawyer, Arifağaoğlu actively follows the T.C. Resmî Gazete, where new laws are officially announced, but this new directive came as a surprise.
“Nobody even heard that this directive came out. Under Turkish law, if there’s a directive, the ministries must ask for the comments of the related parties,” Arifağaoğlu said. “Usually there’s a period of 10 to 15 days for collecting these comments. They only gave one day.”
The bandrol system
According to the language of Draft Communiqué 2023/50, the collateral is for any potential unpaid debts to the government.
“If you don’t pay your taxes or social security, they’ll cash out the letter and what you owe will be deducted,” Arifağaoğlu said.
But both Arifağaoğlu and Çeviker argue the potential for unpaid government debts is already prevented by Turkey’s bandrol system. Each bottle of alcohol in Turkey is sealed with a bandrol, or a government-issued sticker that indicates the taxes have been paid.
“You have to buy bandrols and if you don’t get them, you can not [put any wine on the market] in Turkey,” Çeviker said. “So, there is no possibility that you can owe the government any tax or fines.”
At the time of filing, the Ministry of Agriculture and Forestry had not responded for comment on this issue.
For Arifağaoğlu, the directive places an inordinate burden on smaller producers. Mesashuna is licensed to make 5,000 liters of wine a year, but as it stands, the directive demands the same collateral for each winery producing 20,000 liters or less.
In response, Arifağaoğlu has filed a petition requesting producers making 5,000 liters or less to be exempted from putting up collateral and has invited other small-production winemakers to join her petition.
The effort to navigate these new regulations come at a time Arifağaoğlu would normally be focused on finishing the new year’s production and pruning her family’s vines.
“Even if we’re not able to make wine, we still have to take care of the grapes,” Arifağaoğlu said.
‘Cocktail of prohibitions’
Most boutique wineries in Turkey, however, do not own their own vineyards, but source their grapes from local farmers. Çeviker said other wine producers have already started making arrangements to close their operations as a result of the new directive.
“I received a call from a boutique producer after the draft law was released,” Çeviker continued. “He said ‘I cannot pay the amount. My only concern is being able to sell my stock.’”
For Turkish winemakers, the new directive is yet another obstacle in a long line of legislation restricting alcohol production and consumption.
In 2002, the ruling Justice and Development Party (AKP) instituted a special consumption tax on alcohol and cigarettes. In 2013, alcohol companies were banned from engaging in marketing activities. Subsequent laws have restricted when and where alcohol can be sold.
“It’s a brilliant cocktail of prohibitions and bans,“ Çeviker said. “I understand that you can’t have a market selling alcohol near a school or mosque, it makes sense. But we cannot run company websites, so we can’t explain our wine or our ingredients.”
At a time when Çeviker wishes he could focus on the release of Yaban’s new vintage, he finds himself wondering about the future of boutique wine production in Turkey.
“We understand that this is political. There’s no other reason behind it,” Çeviker said. “We are used to it, but this one is hard to comprehend.”
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