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Evolution of quality control of Moldovan wines in the transition from planned economy to market economy – where we were in 2012

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ELENA CRISTEA

 

 

Abstract

This paper focuses on the description of quality control of wines and its evolution during the transition from planned economy to market economy. The main factors that influence quality control, such as legislation, regulatory bodies, laboratories, have been identified.  A review of quality control methods from Soviet period is presented. Moreover, the development of wine quality control in post-soviet era is analyzed, and the factors which influenced it, such as Russian embargo from 2006, are identified. Furthermore, the new approach to quality control of producers and of the government is presented, with its advantages, disadvantages and new possibilities.

Introduction

Moldovan winemaking has a long history. It had periods of growth and destruction, depending on the fate of different peoples living on the territory of present-day Moldova. From ancient times and until present days, Dacians and other related tribes, then Romans and the Romanized populations, later Romanians, have all practiced viticulture and winemaking.

Moldova used to be Soviet Union’s most important wine supplier. In present times, approximately 10-12% of the national annual government budget is formed of incomes generated by viticulture (“Documents of OIV”, 2012).

The quality of wine was an important aspect for the locals in all times, even though the processes and the approach related to quality control were different. An important function in Romanian principalities was the one of “paharnic” – “cupbearer”, his responsibility was verifying whether the wine of the prince is poisoned or not, but also choosing the best wines for the royal court, taking care of  the royal vineyards and deciding the moment to start the grape harvest.

Later, in the era of industrialization, the approach to quality changed. The high production levels required a scientific-based, documented, centralized quality control system, especially considering the fact that in the beginning of the XIXth century, high amounts of wine were counterfeited (“Winemaking history”, 2012).

In the recent past, Moldova’s wine industry was based on a model of administrative order and mass production, which influenced quality and was not compatible with the global wine market. Presently, the country needs to find a new model – focused on international markets and on the control of wine quality from the vineyard to the table. Only using the new quality policies and quality control techniques, Moldova will be able to secure a position on global wine markets.

Geo-economical position of Moldova and its impact on wine quality control system

Considering the geo-economical position of the Republic of Moldova, in between European Union and former Soviet countries, the producers have to always consider and adapt to different quality standards and quality control systems. After the collapse of the Soviet Union, the Commonwealth of Independent States (CIS) was created for the maintenance of economical relations between former soviet countries. In 2001 Moldova joined WTO, ratifying all agreements regarding quality and safety of foodstuffs. Other organizations that Moldova has joined are: Central European Free Trade Agreement (CEFTA) which provides conditions for free trade of manufactured products, with significant preferences for agricultural goods. CEFTA is important since it offers the possibility of new markets for Moldovan wines (“Analysis of wine market”, 2012), (“Pre-strategy assessment of the Moldovan Wine Sector”, 2007).

Relations with the European Union

At the moment, Moldova is the only CIS country that has preferential economic agreements with the EU. From 1 January 2006 the European Union imposed a generalized system of extended preferences (GSP +) for goods from Moldova. GSP + has helped to offset the tendency of export decline. After this agreement the exports of wine to the EU increased to 13.6 percent in 2006. However, the number of customers from EU is still limited and the benefits of GSP + cannot be fully used by most producers in Moldova. Presently Moldova is actively participating in the negotiations on a future EU-Republic of Moldova Association Agreement. EU agreed in December, 2011 to launch negotiations on the establishment of a Deep and Comprehensive Free Trade Area (DCFTA). The Republic of Moldova concluded negotiations with the EU on a number of many important matters, the agreement on the protection of geographic indications being of particular importance for wine quality control and quality assurance (“Implementation of the European Neighbourhood Policy in the Republic of Moldova. Progress in 2011 and recommendations for action”, 2012).

After the creation of CIS, the tendency to preserve and use old soviet standards has increased. Although these are revised and updated, their use is sometimes conflicting with the use of new international standards. Therefore, the participation of Moldova at different agreements (CIS) is creating chaos in its wine quality policies, forcing to maintain many useless or outdated documents.

Wine quality control in Soviet era

The official policy of the Soviet Union stated that foods were not meant to be means of gain, but a way of meeting the needs of the population. The Soviet Union had a very centralized standard system – GOST (Russian acronym for государственный стандарт which means state standard). Standards issued before 1995 had legal power, the same as regulations and therefore were required to be used in areas that were defined in the preamble of the standard (“History of standardization in Moldova”, 2012).

Wines in the Soviet Union were prepared in accordance with the technological regimes, designed on the basis of science and study of the population. The most important means to improve the quality of grape production used to be the technical-chemical and microbiological control. In order to implement a control system, a network of wine laboratories was created, first in Crimea, then after World War II, in the newly annexed territories. Only in Crimea, there were about 30 of such laboratories. After 1945, a similar system of laboratories started appearing on the territory of present-day Republic of Moldova. By 1974, there were around 214 wineries in Moldova and a unique association “Moldvinprom” was created (“Technical and microbial control of wines”, 2012).

Depending on the complexity of the work and the desired result, the laboratories were classified in 3 classes:

  • Class I laboratories – performing analysis of 38 components of wines
  • Class II laboratories – performing analysis of 14 components of wines
  • Class III laboratories – performing analysis of 8 components of wines

The main function of the laboratories was to perform the quality control of raw materials and auxiliary materials which would afterwards be used in the production process, and to verify their compliance with the established standards. Analysis was performed to help winemakers to determine harvest time, check alcohol and sugar content during fermentation, keep the levels of sulphur dioxide under control and to determine levels of contaminants, such as mercury or arsenic. The laboratories were also empowered to monitor the purity of containers and equipment, as well as the quality of auxiliary materials.

The laboratories were controlling quality, correctness and timeliness of all technological processes, starting with the reception of the grapes and ending with the release of it on sale, influencing the decisions of the winemaker.

Although wine laboratories were assigned with great responsibilities, they also had many rights. They were allowed to ban production of wine in the case of non-compliance to the established conditions and quality parameters (“Technical and microbial control of wines”, 2012).

There were several disadvantages of the quality system used in the Soviet Union:

  • Limited area of action
  • No consumer-orientation
  • Non-structured approach to the system
  • Over centralized quality control system
  • Excessive responsibility on the central quality control bodies and little involvement of the other personnel

Legislative and regulatory framework of post-soviet era

A weakness of Moldova’s wine quality assessment system is the continuous change in legislation and in the structure of official bodies responsible of wine quality. The modification of the regulatory system started in 1993, when Moldova was preparing to join WTO. Previous mandatory standards (GOST, MS) have become optional in January 2007. Technical regulations are the only normative-technical documents that remained mandatory. However, the legislation states that wineries should issue technical instructions, describing the entire production process for each type of product and for each trademark. In 2006 the normative framework regulating winemaking included laws, governmental decisions, provision of Moldova-Vin agency and other ministries, regulations and normative and technical documents, with an estimated content of 150 000 pages. The most important of them is “The law on vine and wine from 2006”, but sometimes that one is ignored, while documents of less importance or even without legal power are considered superior. It is very hard to find a list that would indicate those documents that are no longer in force. Lack of transparency makes wine producers to ignore these. The wine sector is covered by numerous overlapping legal documents, some of them being outdated and expensive to implement. In addition, many regulations contain a number of restrictions which are not justified nor by market conditions, nor by international quality requirements (“Pre-strategy assessment of the Moldovan Wine Sector”, 2007), (“Documents on winemaking”, 2012).

It is clear that the legislative framework in assuring wine quality is too complex and heavy, and must be changed. Certain laws and regulations directly affect exports to Western countries because they are not harmonized with EU legislation and best international practices. The argument for maintaining the old system is that it is mandatory for exports to Russia and CIS countries. However, many other countries export to this market without having technological instructions for each name and trademark of wine. A good example for Moldova could serve Georgia, which denied the Soviet system and simplified the legislation. Presently a whole project on the change of the Moldovan wine legislation has been launched.

Governmental bodies responsible for wine quality

In Moldova, there are many administrative agencies responsible for the wine sector. But a clear separation of powers between the different agencies doesn’t exist, which leads to duplication of controls and inspections. The two main agencies are:

Moldova-Vin This specialized central administrative body with full powers in the wine sector is a ministerial-level institution that promotes the state policy in the wine sector as part of the national development strategy. Presently it is in the process of reorganization, being replaced by a ministerial department, (Department for policies in the sector of vine and wine). The Agency was also responsible for promoting products, organizing trade missions, trade fairs and exhibitions (“Current situation in the Moldovan wine sector”, 2012), (Moldova-Vin”, 2012).

State Inspectorate for the Supervision of Alcoholic Products (ISSP) This is a state body, which used to report to Moldova-Vin Agency and which is responsible for the supervision and control of alcohol production and its circulation at national level. Although the ISSP has these features, it is only a monitoring authority and has no powers to apply sanctions or penalties, which considerably limits its role and allow other authorities to engage in the wine sector control.

Other administrative authorities complicating business activities include:

National Centre of Alcoholic Beverages Testing (certification), the Centre for Evidence of circulation of ethyl alcohol and alcoholic products (release of trademarks and the control of their use), Central Tasting Commission (wine tasting), the Board of Approval of Appearance of Wine and Spirits (examines labels and technological instructions related to the labels). There are also other public authorities involved in the regulation of the wine sector, among which are the Chamber of Licensing, Department of Standardization and Metrology, police, environmental services, the former National Institute of Vine and Wine, also under reorganization. The presentation of wines was also supported by the Moldova Wine Guild which is a non-profit organization established in 2007 by several of Moldova’s leading private wineries (“Current situation in the Moldovan wine sector”, 2012), (“Reorganization of the wine sector in Moldova”, 2012).

The Russian import ban in 2006 and its consequences on quality control

In March 2006, Russia banned the import of Moldovan and Georgian wines, creating a diplomatic conflict between Republic of Moldova and Georgia on one side and Russian Federation on the other side. In that period 80-90 % of the total Moldovan wine export was directed to Russia. The main accusation of Russian authorities was that Moldovan wines contained heavy metals and pesticides. The Russian side claimed that pesticides were found 60 % of the Moldovan wine samples, although the proof of that was never presented to the Moldovan side. The Moldovan government brought the argument that many other countries import Moldovan wine and no problems related to pesticides or heavy metals were reported, considering the embargo as an economic blackmail (“The Russian embargo on Moldovan wines”, 2012).

The embargo in 2006 had serious impact on the economy of Moldova, e.g. wine production decreased by 63% from 2005 to 2006 and losses of wine sales in March 2006 – January 2007 were $ 180 million (“Pre-strategy assessment of the Moldovan Wine Sector”, 2012).

Apart from the economical consequences, the embargo motivated the producers to change their approach to quality assurance and quality control. After the embargo in 2006, the need for the ability to prove quality became stringent. Thus, producers started to understand that “to have quality” does not always mean “to prove quality”. That led to increased quality control and the beginning of changes in the quality system.

Quality control and certification after 2006

One of the conditions of the Russian authorities to lift the embargo was the creation of a single certification centre for wine, spirits and other products containing alcohol. Other conditions forced Moldova to introduce a complex, costly and time consuming procedure for wine certification. This system required inspection wineries, obtaining certificates of quality control, stamp of authenticity, restrictions on the names on the labels, and for the Russian market – a single point of entry import/export. Even wines for markets that do not require such strict controls are subject to these procedures. In addition, the same single, state-owned laboratory that issues certificates VI-1 for non-EU market was also performing the certification for the CIS market which causes long delays and additional expenses. As a result, Moldovan wine producers and exporters, with the support of the government, decided to create a unique specialized centre which will deal with wine quality control and certification, but also will help producers to implement quality systems. Therefore, the “National center of alcoholic beverages testing” was created around the Central laboratory created in the Soviet era, which had survived the crisis in early 90s and had a certain history and experience in the field of quality control (“Pre-strategy assessment of the Moldovan Wine Sector”, 2012), (“The National Center of Alcoholic Beverages Testing”, 2012).

In order to meet the new conditions it had to go through serious reorganization. The main activities of the Centre are certification and testing of alcoholic beverages for export and for sale in the local market, arbitrage testing, elaboration, review and implementation of technical documentation, implementation of methods of analysis in accordance with European and international practice. The centre is composed of two entities:

  • The Certification body
  • The Testing laboratory

Presently, there are two types of certification procedures: load certification and batch certification. Most wine producers choose load certification (certification bulk wine) because it allows testing a larger volume at a lower price. After load certification, the producer must obtain certification for the batch of bottled wine. Certification process includes seven steps (“Pre-strategy assessment of the Moldovan Wine Sector”, 2012).

Although the main function of the laboratory is to test quality and safety parameters of wines and spirits, certain lab operators are empowered to be auditors for laboratories of wine factories and to help them maintain an adequate quality system in the wine laboratory. According to state regulations, each winery must have a laboratory equipped with three qualified chemists and microbiologist. Some factories are impressively well equipped, but most have minimum equipment provided by law and are able to perform only the simplest analysis.  The same is valid for the certification body. Each expert is responsible for a certain wine producer and has the function to periodically inspect the wine factory and see if the producers comply with legal quality requirements, although usually for certification only the results from the laboratory are needed (“The National Center of Alcoholic Beverages Testing”, 2012).

Even though a unique centre for quality testing is probably the best choice for such a small country like Moldova there are also certain disadvantages, e.g. when the producer does not accept the results and the decision of the Centre, he is limited in his access to services of other laboratories.

Although in the past the lack of an effective regulatory control to ensure minimum quality standards was an obvious weak part, the new system introduced in late 2006 is considered too complicated and too centralized. Taking into account the provisions of other laws and agreements of the WTO, and that competition between laboratories stimulates competence, the authorities of Moldova understood that the liberalization of the conformity assessment market is necessary, which is why, in April, 2003 the Law Nr.186-XV on conformity assessment of products was adopted. The law settles the central definitions in the area, the most important being:

  • Accreditation- the process through which a body that has a certain authority, recognizes legally that a body or person is competent to carry out specific tasks
  • Certification of conformity-action of a third party which certainly demonstrates that an identified product conforms to aspecific standard or other normative document

Considering these definitions, it can be noticed that the accreditation focuses more on competence of specific tasks, while the conformity certification is defined for products. It is generally accepted that accreditation is a specific process of certification, while certification is just the actual confirmation of certain characteristics.  For the application of the law on conformity assessment of products, the Accreditation centre of Moldova started its activity in 2003  and presently a visible progress in the liberalization of quality control market can be noticed.

Situation in 2012

  • 3 certification bodies for quality management systems
  • 2 certification bodies for food safety management systems
  • 4 certification bodies for wines and spirits
  • 32 accredited laboratories performing analysis of wine and spirits (“The register of accredited bodies of Moldova”, 2012)

Geographical appellation and traceability

Moldova has a complicated regulatory system of names, the most important being:

  • VDO – “Vin de origine” (rom. wine with origin)
  • VDOC – “Vin de origine controlată” (rom. wine with controlled origin)

Wines produced in specified regions (VDO wines) must be produced using defined methods and meet defined quality standards. VDOC regions (with designation of origin) are sub-territories of VDO regions which are subject to more stringent quality and production standards. Moldova created its system being inspired by the ones existing in France and Italy. The argument in favour of this system was that it contributes to the preservation of tradition and quality assurance. But this argument is now a doubt. Even in traditional markets of Moldova, such as Russia and the CIS, the average consumer will not be willing to pay more for a wine with designated origin, while on new markets the consumer has a vague idea about Moldova (“Current situation in the Moldovan wine sector”, 2012).

Such a system can be justified in countries such as France, which have regions with already established reputation in winemaking traditions. But even in France the value of the system is challenged by today’s industry switch to other perception of quality. In Moldova, the question whether the claimed benefits worth the effort for the public and private sectors to fully maintain the system. Moreover, the system prevents innovations, which are very important in adapting to rapidly changing consumer tastes. Also, Moldovan producers must implement a great number of regulations and standards, which is quite impossible to achieve without a traceability system (“Pre-strategy assessment of the Moldovan Wine Sector”, 2007), (Turcan, 2006).

Moldova tried to implement a wine traceability system, but in reality this can be hardly noticed. The system is very bureaucratic, implying periodical reports from producers to a central authority, by email, and this can be complicated since some wineries are not even connected to the internet. The current system is outdated and needs to be reformed by simplifying and adopting the EU model. The creation of that implies the development of a national cadastre of vineyards (Turcan, 2006).

ISO quality certification and HACCP

As a consequence of the embargo, many companies started introducing new quality policies and strategies, e.g. the wine complex “Milestii Mici” successfully implemented the Integrated Management System. Also, big producers such as “Chateau Vartely” and “Purcari” have obtained the quality certificates ISO 9001:2000 and have introduced the HACCP. The introduction of integrated quality systems after 2006, led to an increased quality of wine and offered the producers the opportunity to export to new markets, like the ones of the European Union, Israel and Japan. The main problem is that only the big producers (“Purcari”, “Chateau Vartely”,„Aroma”, „Mileştii Mici”, „Maurt”, „Vinaria Bardar” „Ever-Vin”, „NIS Struguraş”, „Vismos” , „Vinia Traian”) have obtained the ISO certification, while small producers still use old practices on sanitation, management, process control and quality control (“ISO certification of companies in Moldova”, 2012), (“The report on the activity of Cricova”, 2012), (Turcan, 2006). It is generally considered that for developing economies, especially in the wine sector, small producers can make a difference in the sector, since they are more open for innovation and can adapt quickly to new trends on the market. However, it is very difficult for small producers to implement complex quality systems like HACCP. Even in the European regulation 852/2004, it is stated that small businesses can avoid the implementation of HACCP, since for certain industries it is hard to identify critical control points. In such cases good hygienic practices can replace the monitoring of critical points. Therefore, for small wine businesses the principle of HACCP flexibility would be recommended (“Guidance document on the implementation of procedures based on the HACCP principles, and on the facilitation of the implementation of the HACCP principles in certain food businesses”, 2005).

  Wine quality control in the light of TQM philosophy

Note – Total Quality Management is an integrated management system for creating and implementing continuous improvement and eventually producing results that exceed customer expectations. It is a process and strategy that in certain situations can improve an organization’s effectiveness and efficiency. The objective of TQM is the continual improvement of processes, achieved through a shift in focus from outcomes (or products) to the processes that produce them. It uses a lot of quality tools from which a better understanding and improvement of processes can be achieved.

If wine quality control in Moldova is analyzed, using TQM principles, many deficiencies in the system could be identified. It can be noticed that the Moldovan system has developed from the extremely centralized Soviet system, where the main responsibility for quality was attributed to laboratories.

When application of TQM in wine industry from other countries is analyzed, it can be noticed that an integrated approach to quality is used, while responsibility is shared by all the participants of the branch, especially the winemaker and, more new, the winegrower. The relation between the two is a classic supplier-customer relationship and an appropriate application for TQM.

In Moldova, the relation between producers, certification bodies and governmental authorities should consider the TQM principles, in order to have a holistic and integrated view on quality. All the participants of the system must form a team. The team will determine together the current state of the quality, and after come with an improvement plan. Finally, all the participants of the chain should continue the process of planning, doing, checking, and analyzing the results to develop the plan for a future period (Alderson et al., 1994), (Pociovalasteanu et al., 2012). Some work in this direction is already done, e.g. training and education of wineries’ personnel by certification bodies and authorities. Still, more comprehensive cooperation and improvement of communication are needed. Furthermore, the experience of other countries of TQM implementation in wine industry demonstrated  benefits such as decrease of the cost of quality, lower number of mistakes, higher quality of the wine, reduced waste, improved productivity, etc. (Pociovalasteanu et al., 2012). All these benefits can be a motivation for the Moldovan wine industry to continue the process of quality improvement.

Conclusions

  • The geo-economical position of the Republic of Moldova and its access to different markets impacts greatly on the quality approach of the government and different producers.
  • In the planned economy of the Soviet period, Moldova had a very centralized and strict wine quality control system, including a great number of laboratories.
  • The legislative system and the practices used for wine quality control is complicated, continuously changing, with reminiscences from the Soviet past and needs serious revision, improvement and harmonization with international standards, in particular with EU legislation.
  • There are too many governmental bodies with overlapping functions involved in wine quality control.
  • The existence of a single certification centre was a good short-term solution, but it created problems for producers in terms of time and expenses. Only recently the authorities and the producers realized the necessity of a liberalized market in the process of wine quality control, which lead to the appearance of other certification bodies and accredited laboratories.
  • Even though some producers have implemented integrated quality systems and have obtained ISO certification, all the participants of the Moldovan wine industry should consider the TQM principles in their approach to quality. Also, the experience of other countries in the application of TQM principles must be taken into account.

 

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