Basic Analysis and Action Plan on

Ground of Initial analysis of the

Sector in

Darko Jakšić, author;Ivan Bradić, associate 4/15/20

This analysis was prepared as part of the USAID Competitive Economy Project implemented by Cardno Emerging Markets USA, Ltd. (in cooperation with DNA Communications and Souktel Inc.)

CONTENTS

1 GRAPE PRODUCTION ANALYSIS 5 1.1 Surfaces under vineyards and number of grape producers in Serbia 5 1.2 Grape production and grape yields in Serbia 6 1.3 Production of grapes from autochthonous and regional varieties and from the variety 7 1.4 Number of vineyards with autochthonous and regional varieties and the Prokupac variety 9 1.5 Surfaces under vineyards with autochthonous and regional varieties and the Prokupac variety 11 1.6 Production of planting materials and clonal selection of autochthonous and regional vine 13 varieties and of the Prokupac variety

2 GRAPE PROCESSING AND WINE PRODUCTION ANALYSIS 16 2.1 Wine production in Serbia 16 2.2 Wine producer numbers in Serbia 16 2.3 Maximal annual grape processing capacities 18 2.4 Maximal annual wine production capacities 20 2.5 Production of wine from the Prokupac variety and other vine varieties 22

3 ANALYSIS OF THE GRAPE AND WINE MARKET 25 3.1 Purchase of Prokupac and other variety grapes 25 3.2 The most significant Prokupac variety on the market 26 3.3 Average grape and wine prices and Prokupac variety wine prices 27 3.4 Quality of Prokupac variety grapes observed through most important international competitions 28

4 PROJECT ACTIVITY PROPOSALS AND RECOMMENDATIONS 29 4.1 Establishing high quality of wines from the Prokupac variety through a system of geographical indications 30 4.2 Promotional activities 30 4.3 Media promotion 31 4.4 USAID Competitive Economy Project technical assistance to clients who apply for loans 32 through the USAID guarantee program 4.5 Workforce training and development program 32

LITERATURE 34

APPENDIX 35

LIST OF ABBREVIATIONS

MAFWM Ministry of Agriculture, Forestry and Water Management RAH Registry of Agricultural Households SORS Statistical Office of the Republic of Serbia USAID CSS USAID Competititve Economy Project ha Hectare hl Hectoliter kg Kilogram l Liter PDO Protected Designation of Origin PGI Protected Geographical Indication t Ton VR Vineyard Register

1. GRAPE PRODUCTION ANALYSIS

1.1. Surfaces under vineyards and number of grape producers in Serbia

In accordance with the information from the Statistical Office of the Republic of Serbia (SORS), there were slightly more surfaces under vineyards in Serbia in 2019 (20,501 ha) in comparison with 2018 (20,333 ha). Namely, realistic surfaces under vineyards were determined after the 2012 Agricultural Census, aided by the information from the Registry of Agricultural Households (RAH) and the Vineyard Register (VR) confirmed on field. On these grounds, SORS registered a total of 21,201 ha under vineyards, which was taken as reference value for monitoring increase or decrease of surfaces under vineyards (Graph 1). It should be mentioned that surfaces under vineyards used for commercial purposes, which are registered in the VR, are significantly lower and they reflect the actual situation concerning production of grapes intended for the market.

Graph 1: Overview of surfaces under vineyards in Serbia; 2010-2019 (ha) 23000 22500 22000 21500 21000 20500 20000 19500 19000 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

According to the 2012 Agricultural Census, 80,341 out of the registered 621,445 households owned vineyards, which is 13% of all registered households in Serbia. Such a large share of grape producers in the total number of agricultural producers indicates the importance of the grape production sector and the high number of households with smaller vineyards, which means that a significant portion of producers are not sufficiently competitive. However, this structure of producers with vineyards of smaller surfaces represents a significant potential for preservation and development of autochthonous and regional vine varieties, and for the development of rural areas in which these varieties are grown, in particular the Prokupac vine variety, which is typical for Serbia. For this reason, there is a need for more intensive implementation of aid for grape producers, with the aim of strengthening their know-how with respect to vine cultivation technology, increasing grape quality, and reducing production costs. With the aim of increasing competitiveness of Serbian grape producers, national, IPARD, and other means of financial assistance are currently made available for raising new vineyards and increasing the phytosanitary status of existing vineyards, introduction of mechanization fit for modern grape production, advancement of nursery production, and other purposes. To this end, existing technical support for producers participating in the loan system provided through the USAID guarantee program and advisory assistance for support measures applications will result in increased use of favorable funds and significant new investments in the wine-growing sector.

1.2. Grape production and grape yields in Serbia

Grape production in Serbia, which is highly dependent on climate conditions in relevant years, was between 120 and 200 thousand tons at the annual level over the previous ten years. Generally, grape production has mostly been uniform over the past three years. According to SORS, there was a slight increase in grape production in 2019 (163,516 t) in comparison with 2018 (149,474 t) (Graph 2).

Graph 2: Overview of grape production in Serbia; 2010-2019 (t) 250000

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According to the data from SORS, and excluding the year 2014 (which was extraordinarily poor), grape yields were between 7 (slightly less than 7) and 9.4 t/ha (Graph 3). Yield per hectare was somewhat higher in 2019 (8 t/ha) in comparison with 2018 (7.4 t/ha). This slight increase in average yield was primarily the result of more favorable climate conditions, and partially the result of newly raised vineyards entering the period of peek fertility. Increasing yield per hectare is not an imperative in modern and winemaking practice because increased yields directly correspond to decreased grape quality and consequently the wine quality. The necessity of controlled yield reduction is particularly pronounced for autochthonous and regional vine varieties. This includes the Prokupac autochthonous variety, which is genetically a high-yield variety. Therefore, a strict limitation of grape yields is recommended for production of higher quality wine and for increasing the competitiveness of producers. The best way to ensure permanently lower yields and production of higher quality grapes and wine is to regulate grape production with the system of geographical indication that would clearly define maximal grape yields that ensure production of PDO or PGI wines. The USAID Competitive Economy Project (USAID CSS) can certainly contribute, through development programs and workforce training, to the advancement of know-how for high quality grape production for PDO/PGI wines in changing climate conditions, and with wine consumer habits changes. Positive experiences from the USAID CSS in education activities implemented in cooperation with the University of California, Davis (USA) and the Lukowa Akademie (LUKOWA Food AG from Switzerland) could be applied to training workforce in the viticulture sector, which could gradually strengthen competitiveness of this type of agricultural production.

Graph 3: Overview of average annual grape yields; 2010-2019 (t/ha) 10 9 8 7 6 5 4 3 2 1 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

1.3. Production of grapes from autochthonous and regional varieties and from the Prokupac variety

In accordance with the information from the VR (data from the publication Viticulture and Winemaking in Serbia, editor D. Jakšić, hereinafter VWS), and a survey conducted by the author of this analysis, of the total number of commercial producers (4,464 producers), 71.68% produce grapes from autochthonous and regional varieties (excluding the highly prevalent regional vine variety Grašac), and 37.30% producers have vineyards with the Prokupac variety. The vast majority of grape producers that produce grapes for commercial purposes are located in the Tri Morave wine-growing region (2,159 producers). Significant numbers of producers, more then 200, are located in the Srem, Niš, Šumadija, and Negotinska wine-growing regions. Although 3,200 commercial producers have vineyards with autochthonous and regional vine varieties (excluding the Grašac regional vine variety), about half of them (1,665), have vineyards with the Prokupac vine variety. These producers, in particular grape producers with larger surfaces under vineyards of the Prokupac variety, could be the focus of future USAID CSS activities. The wine-growing region with the largest number of grape producers with vineyards under autochthonous and regional varieties is the Tri Morave wine-growing region (1,641 producers). Other regions with more than 200 grape producers with autochthonous and regional varieties are the Srem and Niš wine-growing regions (Map 1). The Tri Morave wine-growing region has the largest number of producers with the autochthonous Prokupac vine variety (956 producers) in terms of quantity as well. However, other wine-growing regions do not have these numbers of grape producers of this particular variety, with only the Niš wine-growing region having more than 100. Because of the large number of grape producers, including autochthonous and regional varieties and particularly the Prokupac variety, the Tri Morave wine-growing region should certainly be covered by the potential project activities and efforts should be focused on the establishment of producer associations with the aim of advancing the quality and promotion of local wines. For these reasons, the wine growing regions of Tri Morave and Toplica with their most outstanding sub-regions should receive particular attention.

Map 1: Distribution of grape producers and cultivated vine varieties in wine-growing regions

Within the Tri Morave wine-growing region, the largest number of producers are located in the Župa (957) and Trstenik (669) wine-growing subregions. In the Župa wine-growing subregion, as the leading subregion with respect to the number of grape producers, there are as much as 819 grape producers producing grapes from autochthonous and regional vine varieties. There are 444 such grape producers in the Trstenik subregion alone. The analysis of grape producers in the Tri Morave region, showed that as many as 549 grape producers grow the Prokupac vine variety in the Župa wine-growing subregion, while the Trstenik wine- growing subregion has significantly fewer producers of this variety – about 170 (Map 2). Thus, Župa subregion represents a significant potential for future activities on preservation and development of this autochthonous variety and promotion of Prokupac wines. In terms of percentage of grape producers growing the Prokupac vine variety in comparison with all other varieties, the Toplica wine-growing region is the leading one in Serbia and, although it does not have a large number of grape producers, 88% of the total number of producers in this region have vineyards under the Prokupac variety (Map 3). In the Prokuplje subregion of the Toplica region, almost all grape producers are at the same time producers of grapes from the Prokupac vine variety. Therefore, this subregion received special attention in data analysis and research of potentials for future project activities.

Map 2: Distribution of grape producers and vine Map 3: Distribution of grape producers and vine varieties in the Tri Morave wine-growing region varieties in the Toplica wine-growing region

Due to a significant numbers of grape producers with vineyards under the autochthonous Prokupac vine variety, the subregions of Župa (Tri Morave wine-growing region) and Prokuplje (Toplica wine-growing region) have a strong potential for project activities with the aim of advancement of competitiveness of local grape producers.

1.4. Number of vineyards with autochthonous and regional vine varieties and the Prokupac variety

According to the information from the VWS and the survey conducted by the author of this analysis, out of 20,324 vineyards, 22.39% are vineyards with autochthonous and regional vine varieties (excluding the highly prevalent regional variety Grašac), while 12.45% are vineyards with the Prokupac vine variety. The majority, nearly half of all commercial vineyards, is located in the Tri Morave wine-growing region (9,435 vineyards), followed by Srem (2,389), Šumadija (1,239), Southern (1,167), Negotinska Krajina (1,065) and other wine-growing regions (Map 4). The Tri Morave wine-growing region is the only region with a large number of vineyards with autochthonous and regional vine varieties. More than half of all vineyards in this region - 3,697 are vineyards with autochthonous and regional vine varieties. In addition, the Tri Morave wine-growing region is the first in terms of the number of vineyards under the Prokupac vine variety. Namely, this region currently has 1,519 vineyards with the Prokupac variety, which represents 91.23% of all vineyards with this variety in Serbia. This type of exclusivity of the Tri Morave wine-growing region with respect to the number of vineyards under autochthonous and regional varieties, in particular the typical Serbian variety Prokupac, indicates the necessity of planning further activities and enhancing the know-how and capacities of grape producers in this region.

Map 4: Distribution of vineyards with different vine varieties

Within the Tri Morave wine-growing region, the largest number of vineyards are located in the Trstenik (3,716 vineyards) and Župa (3,411) wine-growing subregions. However, by far the largest number of vineyards with autochthonous and regional vine varieties in the Tri Morave wine-growing region can be found in the Župa subregion (1,943 vineyards), out of which nearly half (976) are vineyards with the Prokupac vine variety (Map 5). Although the Trstenik subregion has a significant number of vineyards with autochthonous and regional vine varieties (998), the number of vineyards with the Prokupac variety is only 217. For this reason, the Župa subregion can be selected as the highest priority wine-growing subregion for organizing project activities focusing on the Prokupac.

Map 5: Distribution of vineyards and vine varieties Map 6: Distribution of vineyards and vine varieties in the Tri Morave wine-growing subregion in the Toplica wine-growing subregion

1.5. Surfaces under vineyards with autochthonous and regional vine varieties and the Prokupac variety

Of the total surfaces under commercial vineyards (6,826.69 ha), 17.73% are vineyards with autochthonous and regional vine varieties (excluding the Grašac regional vine variety) and 4.30% are vineyards with the Prokupac variety. Commercial vineyards in Serbia grow a total of 200 different vine varieties, and 30 of those comprise the group of autochthonous and regional vine varieties (excluding the highly prevalent regional variety Grašac for ease of presentation). Largest surfaces under vineyards of all vine varieties are in the Tri Morave wine-growing region, which has 2,102.21 ha under vineyards. In addition to this region, other vine-growing regions with more than 1,000 ha under vineyards are the Southern Banat and Srem wine-growing region. The Tri Morave wine-growing region has most surfaces under autochthonous and regional vine varieties (excluding the Grašac vine variety), a total of 549.50 ha out of 1,210.51 ha of vineyards under these varieties in the whole of Serbia. Other wine-growing regions do not have significant surfaces under such vineyards. The most significant vineyard surfaces with the Prokupac variety are located in the Tri Morave wine-growing region as well, followed by the Toplica wine-growing region, and these should be the primary viticultural areas for future project activities for strengthening competitiveness of domestic producers and promotion of wines from the Prokupac autochthonous variety.

Map 7: Distribution of vineyard surfaces and vine varieties

In terms of wine-growing subregions in Tri Morave, the Trstenik subregion has most surfaces under vineyards (592.37 ha), followed by the Župa subregion (412.22 ha). These subregions also have most surfaces under vineyards with autochthonous and regional vine varieties. In addition, the Župa subregion has most surfaces under the Prokupac vine variety (Map 8). In Toplica wine-growing region, the leading subregion with respect to total surfaces under the Prokupac autochthonous vine variety is Prokuplje (Map 9). It is worth mentioning that the name of the Prokupac autochthonous vine variety is derived from the town of Prokuplje, which indicates a tradition of production and a strong connection of the Prokuplje wine-growing region with this autochthonous vine variety. Because of significant surfaces under vineyards with Prokupac the Župa wine-growing subregion, and because of the significance of this variety in the Prokuplje wine-growing subregion, the USAID program for workforce training and development, aid for access to finances, and other activities would be implemented most efficiently in these subregions.

Map 8: Distribution of vineyard surfaces and vine Map 9: Distribution of vineyard surfaces and vine varieties in the Tri Morave wine-growing region varieties in the Toplica wine-growing region

1.6. Production of planting materials and clonal selection of autochthonous and regional vine varieties and of the Prokupac variety

Global wine production is based on international vine varieties that mostly originate from Western and Southern Europe. The emergence of the so-called new wine countries on the global market led to an even greater use of widespread international varieties, resulting in a worldwide wine globalization. In these market conditions, Serbia cannot be competitive with wines from vine varieties common in Europe and the world, and it must focus on autochthonous and regional varieties in order to achieve good results. However, the basic problem of our viticulture and winemaking lies in the widespread grubbing up and deterioration of vineyards with autochthonous varieties that occurred during the crisis period in the winegrowing and winemaking sector in the 1990’s. At the time, there were no special programs for scientific research of vineyards with these varieties or for selection of the best genetic material before grubbing up took place. This resulted in the loss of significant surfaces under regional and autochthonous varieties, and a permanent loss of genetic potentials of our vines. The domination of small producers and vineyards of smaller surfaces means that higher investments are required for production of grapes and wine in comparison with production of grapes and wine from widely used international vine varieties in the world. Therefore, there is a need to improve the competitiveness of domestic producers in the following period through production of wines that are not in the group of “global” wines and are distinguished by their characteristics and uniqueness. The best way to achieve this is through wines from autochthonous and regional vine varieties, particularly the Prokupac variety. However, the foundations for strong and systemic approach to these goals can rest only on massive planting of vineyards with seedlings from the certified category obtained through rigorous procedures involving phytosanitary and genetic clonal selection of best genotypes of the Prokupac variety and of other autochthonous and regional varieties that are adapted to relevant local environmental conditions. Although leading wine countries of the world dominantly produce planting materials and planting vineyards with seedlings of the certified category that are free of viruses or phytoplasmas or have been tested for them, Serbia still has a significant volume of production of vine nursery plants of the lowest phytosanitary categories (standard and standard S-A nursery plants). This unsatisfactory situation has an impact on viticulture and winemaking production, particularly the vine varieties whose planting materials do not exist in other countries and cannot be found outside of Serbia. Occurrence of certain problems in viticultural production and exploitation of vineyards is often the consequence of use of inappropriate planting materials in terms of quality and health of the plant. Some of the consequences of use of inappropriate planting materials are low establishment of plants and large number of empty spaces, mixtures of varieties and rootstocks, uneven plant growth, fast deterioration of plants and other. However, the greatest danger in planting vineyards with seedlings of lowest phytosanitary categories is the risk for the health of vine plants and uneven quality of grapes from different vine plants in the same production. For these reasons, it is necessary to invest efforts to establish and maintain vine planting material certification systems and to provide certified planting materials from best grapevine clones obtained through long-term scientific and expert effort on clonal selection. In light of the aforementioned, the basic problems in production and marketing of planting materials, especially the ones from autochthonous and regional varieties (including the Prokupac variety), can be classified in four groups: - Lack of appropriate capacities for implementation of a vine planting material certification system (facilities for pre-multiplication and conservation of planting materials, and other facilities and equipment); - Low capabilities for production of planting materials of higher phytosanitary categories from autochthonous and regional vine varieties. Since there were no state programs and scientific research institutions investing in clonal and phytosanitary selection of autochthonous and regional varieties, there is a significant deficit of initial plants and pre-basic categories from autochthonous and regional vine varieties that could serve further production of basic and certified planting materials; - Difficulties in obtaining basic planting materials for raising parent crops (mother blocks), in particular clones of certain vine varieties, due to foreign nursery producers' policy of selling finished, produced, and certified seedlings used for planting production vineyards, and not selling nursery plants of the basic category that could serve for multiplication and additional production of planting materials; - Unsuitable domestic regulations on planting materials that are not harmonized with international standards for clonal selection and certification of planting materials, there is no obligation to carry out simultaneous genetic and phytosanitary clonal selection. For this reason, seedlings from registered domestic vine clones unfortunately cannot be found on the market in Serbia. The structure of nursery plant production in Serbia, dominated by international varieties, speaks volumes of the unsatisfactory situation with respect to production of planting materials from autochthonous varieties. In accordance with information from the MAFWM, the Plant Protection Directorate (average for 2015/2016, 2016/2017 and 2017/2018), production of vine seedlings for the following five vine varieties dominated: , , , and (Graph 5). On the other hand, production of seedlings from autochthonous and regional varieties was significantly lower and focused mostly on production of seedlings from the Vranac, Smederevka, Rkaciteli, Tamjanika (white Tamjanika group), Prokupac, Frankovka and Grašac varieties. However, it should be noticed that vine seedlings of Vranac and Smederevka varieties were intended mostly for planting of vineyards in neighboring countries and territories, and not for the domestic market. Total average production of Prokupac seedlings in Serbia was 148,882, which is (with the average of 4,000 vine plants per hectare of newly planted vineyards) enough for only 37.2 ha of new vineyards per year.

Graph 5: Production of seedlings in Serbia for 20 most common vine varieties; average for 2015/2016, 2016/2017 and 2017/2018

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Production of vine seedlings of the certified category currently consists primarily of international and several widely spread regional varieties. Production of certified seedlings of the following varieties is dominant: Cabernet Sauvignon, Chardonnay, Merlot, Riesling, Sauvignon Blanc, Grasevina, , , Frankovka, Pinot Gris, Petit Verdot, Syrah, Tempranillo and Afuz Ali. Production of seedlings of the certified category from autochthonous, regional and domestic newly created varieties is symbolic, and averages 63,050 produced plants (that is, 16,383 sold nursery plants/nursery plants with issued certificates). This is only 1.25% of the annual average production of seedlings of the certified category for the three production years that were analyzed (2015/2016, 2016/2017 and 2017/2018), and only 0.47% of the annual average number of vine seedlings of the certified category with issued certificates. In order to improve this situation, it is necessary to initiate active scientific and research activities aimed at clonal selection, that is, selection of best genotypes of autochthonous and regional vine varieties. In addition, it is necessary to work in parallel on certification of planting materials with the aim of obtaining “virus free” or “virus tested” grafts from best clones. This would help resolve the issue of chronic lack of seedlings of clones of autochthonous and regional vine varieties for production of high-quality grapes and wine. However, clonal selection is a complex process that takes several years and requires significant finances, facilities and equipment, as well as highly qualified workforce. There were activities aimed at clonal selection of the Prokupac vine variety in the previous period, but without the parallel phytosanitary and genetic selection in accordance with official EU procedures; thus, there are no seedlings of these registered domestic clones. Some institutions have only recently begun clonal selection of the Prokupac variety, and they are selecting vine plants with good health and good production and utilization values, all with the aim of preserving autochthonous and old varieties facing extinction, and improving their quality. Selection of best genetic clones of autochthonous and regional varieties, phytosanitary selection and testing for the most significant economically incurable diseases, as well as sanitation (that is, “cleaning” from causes of these diseases), are the foundation for production of planting materials of appropriate categories, including certified seedlings for planting vineyards. The aforementioned research, clonal selection and implementation of a planting material certification system for autochthonous and regional varieties will be an imperative for the following period in the Serbian viticulture and winemaking sector. Although clonal selection and production of nursery plants of higher phytosanitary categories is a long-term and demanding process, the USAID CSS could contribute in the following short-term period in overcoming this problem through promotional activities and advancement of know-how, in particular by making this topic one of the priorities of the event “First Conference on the Prokupac Vine Variety”, the organization of which was proposed in Chapter 4 Project Activity Proposals and Recommendations, and further developed in the Action Plan for Implementation of Activities within the USAID CSS in the Wine- Growing and Winemaking Sector. 2. GRAPE PROCESSING AND WINE PRODUCTION ANALYSIS

2.1. Wine production in Serbia

According to data from SORS (data for 2019 has not been published at the moment of writing this study), registered wine production in the industry was between 330,000 and 370,000 hl in the past three years (Graph 4). In the context of general climate conditions in 2019, it can be presumed that the total quantity of wine produced from the 2019 vintage is slightly higher than in 2018, accordingly, slightly higher production is expected from the Prokupac vine variety as well.

Graph 4: Wine production; 2009-2018 (000 hl) 3000

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2.2. Wine producer numbers in Serbia

In accordance with data from the VWS, 383 wineries in Serbia are currently engaged in commercial wine production, 35.51% of which (136 wineries) produce wines from autochthonous and regional vine varieties (not taking into account wines from the highly prevalent Grašac regional vine variety). Although the number of vineyards under the autochthonous Prokupac vine variety is relatively high, as is the number of grape producers that grow this variety, only 36 registered wineries make Prokupac wines. This represents 9.29% of the total number of registered commercial wineries, which indicates the need for planning more activities focused on strengthening capacities of Prokupac grape producers with the aim of increasing commercial wine production or creating cooperative relations with existing wineries. On the other hand, there is a need for project activities with existing producers of Prokupac wine aimed at emphasizing the qualities and uniqueness of wines from this variety. Most of the wineries present on the market are located in the Tri Morave wine-growing region (89 wineries), followed by Srem (79), Beograd (28), Šumadija (26), Negotinska Krajina (24 wineries) and other wine-growing regions (Map 10). In terms of the number of wineries that produce, among other, wines from autochthonous and regional vine varieties, the vast majority is located in the Tri Morave wine-growing region (as much as 43 wineries). Other wine-growing regions have far fewer wineries that produce wine form autochthonous and regional vine varieties, significant numbers of such wineries exist in the Srem region (27), Negotinska Krajina (11), Beograd (8), and Šumadija wine-growing region (8 wineries). With 24 wineries, the Tri Morave wine-growing region is also the first with respect to the number of wineries producing Prokupac wines. Other significant regions with wineries producing Prokupac wines are Šumadija (5 wineries) and Toplica wine-growing region (3 wineries).

Map 10: Distribution of wine producers and vine varieties used in wine-growing regions

Within the Tri Morave wine-growing region, the highest number of wineries is located in the Župa wine-growing subregion, a total of 58 wineries (Map 11). This subregion also has 32 wineries producing wine from autochthonous and regional vine varieties, while 18 of those produce wines from the Prokupac vine variety. The significant number of wineries producing Prokupac wines in the Župa wine-growing subregion provides favorable conditions for future project activities and implementation of the USAID CSS development program for training and workforce, and assistance in accessing finances. With respect to the Toplica wine-growing region, Prokuplje wine-growing subregion is the most significant subregion in terms of the total number of wineries, and in terms of the number of wineries that produce wines from the Prokupac variety as well (Map 12). Prokuplje subregion is the location of the entire production of grapes from the Prokupac variety in the Toplica wine-growing region. For this reason, and because of the connection between the name of this variety and this wine-growing subregion, it is recommended to implement future USAID CSS activities in this wine-growing subregion.

Map 11: Distribution of wine producers and vine Map 12: Distribution of wine producers and vine varieties used in the Tri Morave wine-grow. region varieties used in the Toplica wine-growing region

2.3. Maximal annual grape processing capacities

Currently available maximal annual grape processing capacities in Serbia are at 130,689.35 t, and half of those capacities,i.e., 66,181.15 t, are the maximal annual capacities of wineries that produce wines from autochthonous and regional vine varieties. Maximal annual grape processing capacities of wineries that produce wines from the Prokupac variety are 20,956 t, which represents 16.03% of total maximal capacities of all wineries in Serbia. Because of significant grape processing capacities of the Rubin AD Kruševac winery (Tri Morave wine-growing region), there is a high maximal grape processing capacity for Prokupac grapes. If this big winery was not included in the analysis these numbers would have been significantly lower.

Map 13: Distribution of Maximal possible annual grape processing capacities (MPAGPC) in wine-growing regions

Focusing on wine-growing regions, the highest maximal annual grape processing capacities exist in the Tri Morave region (53,916 t). Other regions with significant maximal annual grape processing capacities are the Šumadija (21,795 t), Toplica (15,356 t), (10,070 t), Southern Banat (8,737 t), followed by other wine-growing regions. Highest maximal annual grape processing capacities for producers of wines from autochthonous and regional vine varieties can also be found in the Tri Morave wine-growing region (45,365 t), followed by the Toplica wine-growing region (15,356). Maximal grape processing capacities of wineries producing wines from the Prokupac vine variety are the highest in the Tri Morave wine-growing region as well, with 18,990 t. With respect to wine-growing subregions, the highest maximal annual grape processing capacities in the Tri Morave region can be found in the Župa wine-growing subregion (29,082 t), followed by the Kruševac wine-growing subregion (17,000 t). However, maximal annual grape processing capacities for wines from autochthonous varieties are 1,505 t in the Župa wine-growing subregion, while they are as much as 17,000 t in the Kruševac wine-growing subregion. As previously stated, the Prokuplje wine-growing subregion is the leading subregion in the Toplica wine-growing region, and both the total and variety-specific maximal annual grape processing capacities are the highest in this subregion (356 t).

Map 14: Distribution of Maximal possible annual Map 15: Distribution of Maximal possible annual grape processing capacities (MPAGPC) in the Tri grape processing capacities (MPAGPC) in the Morave wine-growing region Toplica wine-growing region

2.4. Maximal annual wine production capacities

Maximal annual wine production capacities in Serbia stand at 79,788,000 l, out of which 58.22% are maximal capacities of wineries that produce wine from autochthonous and regional vine varieties (46,459.600 l). Maximal annual capacities for wine production of wineries that produce wine from the Prokupac vine variety are 13,822 l, which represents 17.32% of total maximal capacities on the state level. However, one should bear in mind that capacities of several large wineries are included in calculation of this maximum, among which are the capacities of the Rubin AD Kruševac winery (Tri Morave wine-growing region). More than half of the maximal annual wine production capacities are located in the Tri Morave wine-growing region (41,595,100 l). In addition, significant capacities exist in the Šumadija (11,096,400 l), Vrannje (6,196,000 l), Southern Banat (5,791,380 l), and Srem region (4,592,825 l), followed by other wine-growing regions. The Tri Morave wine-growing region also has the highest maximal capacities for production of wine from autochthonous and regional vine varieties (33,496,500 l), including highest capacities of wineries that produce wines from the Prokupac vine variety (12,741,000 l).

Map 16: Distribution of Maximal possible annual capacities for wine production in wine-growing regions (MPAWPC)

Within the Tri Morave wine-growing region, highest maximal annual wine production capacities can be found in the Kruševac wine-growing subregion (11,507,100 l), which also has the highest capacities of wineries that produce wine from autochthonous and regional vine varieties, i.e. those that produce the Prokupac vine variety (11,500,000 l) (Map 17). Total maximal annual capacities of wineries in the Župa wine-growing subregion stand at 21,223,000 l, while capacities of wineries that produce wines from autochthonous and regional varieties are 17,802,500 l. Maximal annual wine production capacities of wineries in the Župa wine-growing subregion that produce wine from the Prokupac vine variety are 887,000 l, which represents highest capacities for production of wine from the Prokupac variety in Serbia, not taking into account capacities of large wineries in the Tri Morave wine-growing region. With respect to the Toplica wine-growing region, maximal annual wine production capacities in the Prokuplje wine-growing subregion are 224,000 l for all categories (Map 18), which makes this wine-growing subregion a must for planning future project activities.

Map 17: Distribution of Maximal possible annual Map 18: Distribution of Maximal possible annual wine production capacities (MPAWPC) in the wine production capacities (MPAWPC) in the Tri Morave wine-growing region Toplica wine-growing region

Presented data on maximal annual wine production capacities in the Župa and Prokuplje wine- growing subregions indicates that it would be advisable to utilize the exclusivity of these wine-growing subregions for production of wines from the Prokupac vine variety. In addition, through increased technical assistance for accessing finances provided by the USAID CSS, producers in these two subregions could become more competitive and recognizable for their Prokupac variety vines.

2.5. Production of wine from the Prokupac vine variety and other vine varieties

Commercial wine production from the 2018 vintage in Serbia, based on data from the VWS for the most important wineries, was 28,765,250 l. Production of wines from autochthonous and regional vine varieties was 5.88% of this, or 1,692,901 l. Quantities of wine produced from the autochthonous Prokupac variety in Serbia were 401.038 l, which is 1.39% of the total quantities of wine produced. Although this is a small portion of wine production in terms of quantity, the remarkable quality of Prokupac wines represents a huge potential - this exclusivity and limited production could be used to increase competitiveness of winemakers and for systemic regulation of wine quality through the PDO/PGI system of geographic indication Analysis of wine production from the 2018 vintage in wine-growing regions indicates that the Tri Morave wine-growing region with 11,490,329 l and the Tisa wine-growing region with 5,200,385 l, have the largest volume of wine production. However, it should be noted that a large portion of wine production in these regions comes from wines produced from raw materials imported by several large wineries that operate in these regions. The biggest quantities of wine from autochthonous and regional vine varieties (excluding the Grašac regional variety) were produced in the Tri Morave wine-growing region (1,063,116 l), and the biggest quantities of wine from the Prokupac vine variety were also produced in the Tri Morave region (304,338 l), followed by the Toplica wine-growing region (68,807 l) (Map 19).

Map 19: Distribution of wine produced from the Prokupac vine variety and from other varieties in wine-growing regions; 2018

The Tri Morave wine-growing region is characterized by a high volume of wine production, the majority of wine from all varieties was produced in the Kruševac (7,104,215 l) and Župa (1,453,529 l) wine- growing subregions (Map 20). These leading wine-growing subregions in Tri Morave region are first with respect to production of wines from autochthonous and regional vine varieties as well (excluding the Grašac regional variety), Kruševac subregion leads with 610,398 l, followed by Župa wine-growing subregion with 383,267 l. According to data from the most significant wineries for the 2018 vintage, production of wine from the autochthonous Prokupac variety was 283,063 l in the Kruševac and 50,431 l of wine in the Župa wine- growing subregion. Although the Kruševac subregion is the leading in this respect as well, it should be noted that a single winery, the Rubin AD Kruševac winery, is responsible for the bulk of production in this wine-growing subregion and that there are several wineries producing Prokupac wines in the Župa wine- growing subregion (although this does not include data from all wineries). With respect to production of wine in wine-growing subregions of the Toplica wine-growing region, the Prokuplje wine-growing subregion is leading in terms of total wine production (425,777 l in 2018), production of wine from autochthonous and regional vine varieties (75,640 l), and production of wine from the Prokupac vine variety (68,807 l) (Map 21).

Map 20: Distribution of wine produced from the Map 21: Distribution of wine produced from the Prokupac vine variety and from other varieties in Prokupac vine variety and from other varieties in the Tri Morave wine-growing region the Toplica wine-growing region

Based on the comprehensive analysis of wine production, it can be concluded that the volume of wine production from Prokupac variety grapes, which is not particularly large (we are not dealing with “mass production”), coupled with the quality of those wines, provides possibilities for further work on improvement and maintenance of quality of these wines, as well as on strengthening competitiveness of existing wine producers and inclusion of new producers in the wine sector.

3. ANALYSIS OF THE GRAPE AND WINE MARKET

3.1. Purchase of Prokupac and other variety grapes

In accordance with data on annual averages for the previous three grape vintages (2017-2019), the total average quantity of purchased grapes of all varieties in Serbia was 9,887.76 t. Average annual quantity of purchased grapes from autochthonous and regional vine varieties (not taking into account the Grašac variety, which is grouped with international varieties in this analysis) was 2,033.36 t, which represents 20.56% of total purchased grape quantities. Average annual quantity of purchased Prokupac grapes in Serbia was 492.17 t, which is 4.98% of the total volume of purchased grapes. In terms of wine-growing regions, the highest average quantity of purchased grapes from all varieties was in the Tri Morave wine-growing region (3,966.74 t), followed by the Srem (2,980.41 t), Leskovac (728.06 t), and other wine-growing regions. The highest average annual purchase of grapes from autochthonous and regional vine varieties in the 2017-2019 period was in the Tri Morave (1,461.77 t) and the Srem wine-growing region (220.38 t). Significant purchases of Prokupac variety grapes were registered only by grape producers in the Tri Morave wine-growing region (463.88 t) (Map 22).

Map 22: Distribution of grape purchase of Prokupac and other varieties in wine-growing regions

In terms of the Tri Morave wine-growing region, Župa wine-growing subregion stands out as the viticultural area with the highest volume of purchased grapes, both with respect to total average annual purchase of grapes from all varieties (1,710.70 t), purchase of grapes from autochthonous and regional vine varieties (769.27 t), and the average annual purchase of grapes from the autochthonous Prokupac variety (286.22 t) (Map 23). Map 23: Distribution of grape purchase of Map 24: Distribution of grape purchase of Prokupac Prokupac and other varieties in the Tri Morave and other varieties in the Toplica wine-growing region wine-growing region

3.2. The most significant Prokupac variety wines on the market

Given the surfaces of vineyards under the Prokupac vine variety and the number of wineries that produce wine from the Prokupac variety, it is no surprise that the majority of high-quality wines which are not limited to local markets and can be found throughout Serbia (primarily in restaurants, specialized stores, markets, and other) come from the Tri Morave wine-growing region. This analysis focused on 39 varietal wines (“etiquette”) most common on the market, i.e. wines produced from at least 85% of wine from the Prokupac variety grapes. This type of wine is produced by 36 wineries in Serbia (Appendix 1). The majority of available varietal wines from the Prokupac variety, that is 26 wines (“etiquette”), are produced in the Tri Morave wine-growing region and come from 24 wineries. In addition to this wine- growing region, Šumadija (5 widely available wines produced by 5 wineries) and Toplica (4 wines produced by 3 wineries) wine-growing regions are also important for production of market-intended (commercial) wines from the Prokupac variety. The breakdown of information per wine-growing subregion indicates that the Župa wine-growing subregion is the most important subregion in Tri Morave region, having 19 wineries that produce 21 widely available market wines from the Prokupac variety grapes. Within the Toplica wine-growing region, the most important subregion is the Prokuplje wine- growing subregion with 3 wineries that produce 4 videly available wines from the Prokupac variety grapes. In accordance with the aforementioned, a proposal can be made for future USAID CSS activities aimed at the wine sector and the Prokupac vine variety to focus on the Župa (Tri Morave region) and Prokuplje (Toplica region) wine-growing subregions.

3.3. Average grape and wine prices and Prokupac variety wine prices

In accordance with data from SORS, prices of grapes intended for processing (wine grapes) were between 0.2 and 0.3 EUR/kg in previous years. However, in general, there is a trend of mild average price increases for this type of grapes (Graph 5). This trend is in line with the long-term price growth of average wine prices, from 1.6 EUR/l in 2009 to 2.1 EUR/l in 2018 for white wines, and from 1.9 EUR/l in 2008 to 2.2 EUR/l in 2018 for colored, that is, red wines (Graph 6). This growth of wine prices was the result of investment activities in the viticulture and winemaking sector and introduction of modern technologies in domestic wine production, which resulted in a significant increase in wine quality. The gradual increase of wine prices was also the result of changes in business policies of wine producers, who are shifting to the production of high-quality wines characterized by the terroir of the area from which they originate.

Graph 5: Average prices of grapes for processing (EUR/kg); 2009-2018 0.4 0.3 0.3 0.2 0.2 0.1 0.1 0.0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Graph 6: Average wine prices (EUR/l); 2009-2018 2.5

2

1.5

1

0.5

0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Blue columns - white wine; Orange columns - red wine

Analysis of 39 wines from the Prokupac grape variety that are readily available on the market was conducted as part of this study. The analysis was conducted by collecting wine prices from web sites and portals engaged in on-line wine sale (Appendix 2). Prices of some wines were not found at these web sites, but these are mostly wines with small production volumes, which do not have a significant impact on average prices in wine-growing areas or average prices of wines from Prokupac variety grapes. The average price of all readily available commercial wines from the Prokupac variety grapes is RSD 943.76 / EUR 8.03. This price for Prokupac wines (nominal volume 0.75 l) is about four times as much as the average price of red wines in Serbia, which was 2.2 EUR / l in 2018. In terms of wine-growing areas, the lowest average price of Prokupac wine was in the Kruševac wine-growing subregion (Tri Morave wine-growing region) (RSD 450.00 / EUR 3.83), while the highest was in the Pokuplje wine-growing subregion of the Toplica region (RSD 1,322.99 / EUR 11.25). Prices in the Župa wine-growing subregion (Tri Morave region) have a significant range, from RSD 600.00 / EUR 5.10 to RSD 2,092.00 / EUR 17.80. On the other hand, prices are more balanced in the Prokuplje wine-growing subregions (Toplica region) and range between RSD 1,090.00 / EUR 9.27 and RSD 1,625.00 / EUR 13.82. The wine price analysis indicates, as it was expected, that prices of Prokupac wines are higher if the production included aging wines in oak barrels or bottles. It was the wines with longer aging that reached higher prices and were more sought after on the market and some of them have even won prestigious international awards. However, the aging of wine is only one of the parameters that impact wine quality and prices, resulting in higher production costs. Thus, it is necessary to take into account the entire technology of grape and wine production, modern equipment used by the relevant wineries, terroir of the relevant area and other factors. Based on this analysis, it can be concluded that wines from Prokupac grapes have high quality and are competitive with their prices; therefore, additional project activities within the USAID CSS would speed up the development of domestic wineries and help them become more competitive on both domestic and foreign markets.

3.4. Quality of Prokupac variety grapes observed through most important international competitions

Serbian viticulture and winemaking sector saw significant investments in previous decades and wine producers have changed their business philosophy as production of high-quality wines with pronounced terroir became dominant, which is supported by information on success and numerous awards for Serbian wines in international competitions. This study included an analysis of results from renowned international competitions, in particular the Balkans International Wine Competition (Sophia, Bulgaria) for the period 2016- 2019, Decanter World Wine Awards (London, UK) for the period 2016-2019, and Mundus Vini (Neustadt, Germany) for the period 2016-2020 (including only the „Spring Tasting” for 2020). In all of these competitions, Serbian wines have been recording a steady increase in received awards and medals, in particular at the Decanter World Wine Awards competition (229 medals), which is the most prestigious competition in the world and has a very strict grading system (Table 2). Wines from the Prokupac variety grapes make up a significant portion of Serbian wines awarded in international competitions in analyzed years. Prokupac wines participated with 2.62% in awards received by Serbian wines at The Balkans International Wine Competition. A total of 7.43% of Serbian wines awarded in the Decanter World Wine Awards in analyzed years were Prokupac wines, and as much as 9.09% at the Mundus Vini competition. One wine that should be particularly pointed out is the 2015 “Prokupac Doja” which won the trophy for the best red wine in the Balkans produced from autochthonous vine varieties in the Balkans International Wine Competition in Sophia (Bulgaria) in 2017. Also, this year (2020) wines from the Prokupac variety: “Doja Prokupac” 2017, “Temet Tri Morave Reserve” 2017, and the “Virtus Prokupac” 2017, won gold medals at the Mundus Vini competition in Neustadt (Germany), which speaks of the significant increase of wine quality in previous years. Since there are 200 vine varieties grown in commercial vineyards in Serbia, out of which 31 varieties make up the group of autochthonous and regional varieties, it can be concluded that Prokupac is the Serbian vine variety with the best potential, whose promotion can significantly improve competitiveness of domestic producers and present Serbia as a country with unique high-quality wines.

Table 2: Awards for Serbian wines in renowned global competitions Balkans International Special awards / Gold Silver Bronze Wine Competition Trophies / Best Total Prokupac wines medals medals medals (Sophia, Bulgaria) of show … 2016 1 8 15 21 45 0 2017 1 / 1* 6 22 26 / 2* 55 3 2018 1 6 33 / 2* 13 53 2 2019 3 12 42 19 76 1 Total 6 32 112 79 / 1* 229 6 Annual average Prokupac wines 1 0 2 3 6 for all wines 57.25 Decanter World Wine Special awards / Gold Silver Bronze Awards (DWWA) Trophies / Best Total Prokupac wines medals medals medals (London, UK) of show … 2016 0 0 5 15 20 0 2017 0 0 15 / 1* 25 / 2* 40 3 2018 0 1 15 / 2* 28 / 3* 44 5 2019 0 3 12 / 1* 29 / 3* 44 4 Total 0 4 47 97 148 11 Annual average Prokupac wines 0 0 4 8 11 for all wines 37 Special awards / Mundus Vini Gold Silver Bronze Trophies / Best Total Prokupac wines (Neustadt, Germany) medals medals medals of show … 2016 0 4 1 0 5 0 2017 0 0 4 0 4 0 2018 0 0 1 0 1 0 2019 1 5 6 0 12 0 2020 1 13 / 3* 2 / 1* 0 16 4 Total 2 28 14 0 44 4 Annual average Prokupac wines 0 3 1 0 4 for all wines 8.8 * Prokupac wines

4. PROJECT ACTIVITY PROPOSALS AND RECOMMENDATIONS

The previous analysis indicates that wines from the Prokupac variety are produced by wineries numerous enough for organized participation in establishing systemic production of high-quality wines. A significant number of Prokupac wines are high-value wines sought after in the market, in particular by consumers familiar with the quality and characteristics of wines from this variety. The fact that Prokupac wines have been recognized and awarded at renowned international competitions is of particular importance, since it attests to the possibility of improving the commercial utilization of this advantage in the future. However, these wines, although mostly familiar to domestic and foreign consumers, have not reached the potential in terms of producers’ profits. They could benefit from improved promotion of wineries and wine-growing areas from which they come. In addition, some of the producers market their wines at lower prices because of the lower quality of their wines, and they could benefit from improvement of technological production methods adapted to characteristics of the Prokupac vine variety. Support for producers from the USAID guarantee program for loans and advisory assistance for application would have, along with other activities, a significant impact on improving competitiveness of producers that make Prokupac wines. This would help wineries that have not reached the maximal quality of their wines to improve in this respect, and also help all wineries to expand their production capacities.

Better and more active promotion of wines from the Prokupac vine variety and participation of wineries that produce Prokupac wines in the system of geographical indications, would certainly lead to improved competitiveness of domestic wineries. This would attract more investments in the viticulture and winemaking sector and result in an increased volume of wine production. Considering this and bearing in mind the positive attitude of wineries towards cooperative activities aimed at improving the quality of wine and joint presentation and promotion, the below-listed activities are proposed.

4.1. Establishing high quality of wines from the Prokupac variety through a system of geographical indications

In order to ensure continual production of high-quality grapes and wines and provide conditions for proper presentation of characteristics and uniqueness of wines from the Prokupac variety and other local varieties, the proposal is to register, i.e. protect geographical indications for those wine-growing areas in which the autochthonous Prokupac vine variety is dominant or traditionally grown. Establishment of protected designations of origin would ensure standardization in production and quality of wines and would result in increased recognition of these wines and increased consumer trust in wineries that produce wines controlled and certified in the geographical indication system. In addition, protection of geographic origin of Prokupac and other autochthonous and regional varieties would ensure that the reputation of wines from the Prokupac and other local varieties and their respective producers, is maintained. On the other hand, protection of designations of origin would contribute to improved recognizability of domestic wines on foreign markets, and to improved promotion of wines and Serbia in general. Protection of geographical indications requires drafting of detailed studies (product specifications) for future designations of origin (equivalent to PDO denomination in EU), aimed at wine-growing areas that have the highest potentials concerning the Prokupac vine variety. These are future PDOs Župa and Prokuplje, as they have the highest number of producers of wine from this variety and because this variety accounts for a significant share of wine production. In addition, the Župa wine-growing subregion is characteristic for the production of wine from the Tamjanika vine variety, and wines from this and other local varieties could be included in future PDOs In order to ensure production of high-quality grapes and wine in accordance with the standards defined in product specifications of future PDOs, it is necessary to keep improving the producers’ know- how in an organized manner. Thus, activities related to geographical indications should be combined with development and training programs. After registration/protection of PDOs on the national level, it is proposed to provide assistance to local associations in the procedure for registration/protection of these future PDOs at the EU level. A successful process would make PDO Župa and PDO Prokuplje the very first designation for wines from Serbia registered at the EU level in accordance with the PDO/PGI system for geographical indications, and this would certainly contribute to promotion of these designations and popularization of wines bearing them. With the aim of more successful promotion of future PDOs Župa and Prokuplje, it is proposed to draft a publication on these designations, and for the purpose of faster and more efficient implementation of activities, close cooperation is proposed with MAFWM, local associations and institutions, as well as with the Association Winemakers and Viticulturists of Serbia.

4.2. Promotional activities

In order to garner the interest of public and consumers for the broader circle of producers of wines from the Prokupac variety and other autochthonous and regional vine varieties, and for wines bearing designations of origin based on these varieties, it is necessary to organize and provide assistance to domestic wine producers for participation in events dedicated to wine. Because of the problems caused by the Corona virus pandemic, the majority of international wine events and expos have been cancelled this year. Therefore, it is proposed to organize promotional activities in Serbia in 2020, with invitations for select foreign guests, experts and wine journalists.

4.2.1. Conference on the Prokupac autochthonous vine variety

The wine manifestation „Dan Prokupca“ (The Prokupac Day) is informally organized every October 14th. It is dedicated to this vine variety and it includes wine tastings and presentations in wine shops, restaurants, and wine salon in the country (in particular in ) and abroad. This year’s „Dan Prokupca“ will be the fifth of its kind, and it would be beneficial to mark this anniversary in an appropriate manner. Based on the great interest for the topic on Prokupac and other autochthonous and regional vine varieties at the panel organized by the USAID CSS, and given the requests from participants at the panel to expand this topic into a multi-day expert event, it is proposed to organize an international conference on the autochthonous Prokupac vine variety, with the proposed name “First Conference on the Prokupac Vine Variety”. The conference could be held on October 13, 2020, in the Župa wine-growing subregion or in its vicinity (Vrnjačka Vanja, etc.) with organized visits to wineries in the Župa wine-growing subregion and/or the Wine Museum in Aleksandrovac. This conference could present positive international experiences in preservation, development and valorization of autochthonous vine varieties, experience in clonal selection and certification of planting material of autochthonous and regional vine varieties, as well as specific issues and challenges in production of grapes and wines from the Prokupac vine variety. As part of the conference, the terroir of the PDO Župa and the terroir of the PDO Prokuplje could be presented, as well as the future designations of origin, accompanied by wine tastings. It is worth mentioning that until now there has never been a scientific-professional conference with the theme of the Prokupac vine variety, so this event could be called “The First Conference” and it would attract a lot of attention and interest of the viticulture and wine public in the country and the region. The conference would be organized by professional and scientific institutions and individuals working on topics related to the Prokupac vine variety, as well as the local association of wine producers and local institutions. In order to make the discussion and conclusions of the conference as practical as possible and to result in specific concrete activities in the future, it is suggested that cooperation and participation of representatives of MAFWM, the Serbian Chamber of Commerce, the Association of Winemakers and Viticulturists of Serbia and other institutions and organizations.

4.2.2. Participation at the 17th “Belgrade Wine Salon” in Belgrade

“Belgrade Wine Salon” is the most prestigious wine event in Serbia and the region, and it is held annually in December at the Hyatt Regency hotel in Belgrade. Due to its size and high number of visitors, wine distributers, wine media and other participants, this event is ideal for the promotion of wines from the Prokupac vine variety and protected designations of origin. Thus, the organized participation of grape and wine producers from the Prokupac variety is proposed for the 17th “Belgrade Wine Salon”, scheduled for December 10-12, 2020, with presentation of future PDOs Župa and Prokuplje, as well as the presentation of wines at the Master Classes and other special tastings organized as part of this event.

4.3. Media promotion

The Prokupac vine variety and wines produced from grapes of this variety are well known in Serbia, and to an extent in the region. However, they remain largely unknown outside of Serbia. Countries like Bulgaria, Greece, Georgia, Croatia and others, although they are not large wine producers, have become recognizable worldwide for wines made from their autochthonous vine varieties. Similarly, Serbia can become recognizable for its local varieties, and Prokupac has the most potential in this respect. In this context, media promotion on the international level can achieve great results, and the beginning can be the presentation of the Serbian wine sector and PDO denominations based on wines from the autochthonous Prokupac vine variety. Thus, the support from the USAID CSS is proposed in the form of publication of at least one report in one of the globally renowned wine periodicals, such as Decanter, and perhaps wine periodicals such as the Wine Spectator or Meiningers Wine Business International. 4.4. USAID CSS technical assistance to clients who apply for loans through the USAID guarantee program

In order to ensure continual production of high-quality grapes and wine, introduce oenological procedures and assets that improve the quality of wine, and ensure implementation of all required standards in production of wines with geographical indications, the majority of producers in the Župa and Prokuplje wine-growing subregions and some grape producers will require constant advancement of know- how. Since there are positive experiences with the technical support from the USAID CSS involving fruit and vegetable producers and processors, in particular concerning actual technical assistance for applicants for loans provided through the USAID guarantee program, it would be desirable for this support to be expanded to grape and wine producers. Investments in viticulture and winemaking production are most costly and challenging in agriculture, and mistakes in the planting of vineyards cannot be rectified subsequently nor can the damages be remedied. For these reasons, and with the aim of utilizing existing incentives and opening new possibilities for grape and wine producers to apply for subsidies within the IPARD II measures, technical assistance for clients using loans and different types of state, regional and local assistance will certainly contribute to improved utilization of funds and development of the viticulture and winemaking sector.

4.5. Workforce training and development program

It is proposed to organize three types of trainings within the workforce development and training program in the following year. - Training in the field of viticulture, with a focus on vine ecology and grape production technology for Prokupac vine variety and other local vine varieties. In addition, this training can include exchange of experiences in plant protection measures (in particular with respect to untreatable diseases such as the cause of the yellowing gold disease, Flavescence dorée phytoplasma). The trainings can be organized in the form of one or more seminars and practical exercises for implementation of agro-technological and ampelotehnical measures. Additionally, it is proposed to carry out soil sampling in representative localities and laboratory analysis of soil, as well as analysis of climate conditions (if possible with simulation of future climate changes in the Župa and Prokuplje wine-growing subregions), followed by drafting of a brief study on environmental conditions with thematic maps and recommendations for every locality with vineyards of producers of Prokupac wines, with the participation of said producers. - Training in the field of wine production and implementation of modern oenological practices and means. These trainings would be intended primarily for producers of wines from the Prokupac and other local varieties who could improve the quality of their wines and achieve higher prices for their products. Improved wine quality would be in line with standards from product specifications for protected designations of origin, which would help maintain continual high quality of products. The implementation of these activities could be organized in the form of one or more seminars, and particularly through monitoring of wine production from the 2020 vintage and assistance provided to, e.g. 10 producers of wine from the Prokupac variety that currently produce wine of lower quality and/or have lower product prices. Within this activity, it is proposed to prepare recommendations for improvement of Prokupac wines for producers that participate on a basis of wine quality parameter analyses and practical work. - Training in the field of geographical indications, marketing, and promotion that would be implemented in the form of one or more seminars, in which producers could get acquainted with requirements for production and marketing of wines with protected designations of origin, the wine market, requirements regarding labeling and export of wine, promotion and other related topics. Within this activity, it is proposed to analyze all wine labels of participating producers and give proposals for the harmonization with Serbian and EU regulations, in order for labelling to meet the requirements of domestic and EU regulations and find their place in the market.

Since the USAID CSS has an established cooperation with the University of California Davis (USA), which is one of the leading universities in the field of viticulture and winemaking, in addition to the proposed activities, it is recommended to organize training with and/or at this university. Namely, the USAID, or more specifically the USA embassy in Serbia, has been implementing the professional training program for employees in the viticulture and winemaking sector through the Cochran Fellowship Program (https://rs.usembassy.gov/cochran-fellowship-program-2019/) since 2019. Therefore, it is recommended to establish cooperation with representatives of the USA embassy with the aim of defining a joint agenda for training at UC Davis in 2020, whose training would help meet the requirements for professional workforce and producers of wine from the Prokupac variety. The “train the trainer” system that would enable the knowledge acquired by participants in the Cochran Fellowship Program to be shared with grape and wine producers would be ideal from the perspective of viticulture and winemaking using the autochthonous Prokupac variety and other local vine varieties.

Within a short period, all of the proposed activities would significantly contribute to the promotion of wine, producers of wine from the Prokupac variety, as well as of protected designations of origin, which would result in a better recognition of Serbia as a wine country with specific wines, and would improve the overall competitiveness of domestic wine producers in domestic and foreign markets. These proposed activities can be utilized in the future as a good model for other autochthonous and regional vine varieties and other PDOs based on these varieties, which would all contribute to further and greater affirmation of Serbia's viticulture and winemaking.

LITERATURE

Ivanišević D., Jakšić D., Korać N., 2015: Vinogradarski atlas. Popis poljoprivrede 2012. Republički zavod za statistiku. Beograd. Jakšić D. (urednik) 2019: Vinogradarstvo i vinarstvo Srbije, Analiza sektora proizvodnje i prerade grožđa i proizvodnje vina, Centar za vinogradarstvo i vinarstvo Niš. Jakšić D., 2019: Study: Initial Analysis of the Serbian Wine Sector, USAID Competitive Economy Project implemented by Cardno Emerging Markets USA, Ltd. Jakšić D. 2019: Study: Analisys of the Regulatory Framework and Economics of the Wine Sector, Cooperation for Growth (CFG) project. Jakšić D., Ivanišević D., Đokić V., Brbaklić Tepavac M., 2015: Vinski atlas. Popis poljoprivrede, 2012. Poljoprivreda u Republici Srbiji. Republički zavod za statistiku. Beograd. Jakšić D., La Notte P., Mannini F., Žunić D., Korać N., Todić S., Životić Lj., Perović V., Ivanišević D., Vuković A., Jović S., 2012: New zoning of the viticulture areas in Serbia. IX e Congres International Terroirs Vitivinicoles. 25-29.06.2012. Dijon-Riems, France. 44-45. Jeftić M. (urednik) 2019: Izveštaj o stanju u poljoprivredi u Republici Srbiji u 2018. godini, Ministarstvo poljoprivrede, šumarstva i vodoprivrede, Beograd, 2019. Službeni glasnik Republike Srbije, br. 41/2009 i 93/12: Zakon o vinu.

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