HOSKOY, Turkey, Aug 29 (Reuters) - As harvest arrives, Cem Cetintas tends lovingly to his vines, hoping they yield wine popular with foreign palates to boost his exports in the face of a harsh climate in the Turkish market.

"Look, the quality is good. In this work you can't force nature, you have to work with it," he says, handling a bunch of red Tempranillo grapes which he imported from Spain's Rioja region to enrich his range of wines.

From the sun-kissed vineyards of Tekirdag, overlooking the Marmara Sea, Turkey seems blessed with the potential to become a major wine-producing nation. The hard part, says Cetintas, is working with the limitations of the local wine industry.

Winemakers complain of a heavy tax burden and a government which they feel is unsympathetic to the wine industry in a Muslim country, although many Turks drink alcohol.

Despite its ancient history in Anatolia, where Hittite and Greek civilisations have produced wine for thousands of years, the industry has made only faltering progress.

Wine-making in the Ottoman Empire was controlled by the Christian minority. In modern Turkey the state began production in 1942 and continued production until 2003.

Winemakers fear the industry is now being held back by opposition to alcohol within government and municipalities run by the ruling AK Party, which has roots in a now banned party with an Islamic agenda that frowned upon alcohol consumption.

They point to government increases in wine taxes, which now amount to 1.87 euros ($2.56) a litre, nearly four times the EU average of 0.48 euros.

"The wine sector has reached a stage where it could be a key source of foreign currency. But because of the 400 percent tax hike three years ago the sector is crumbling," said Cetintas, whose Melem Wines company aims to export some 60 percent of the 250,000 bottles planned for production this year.

Against this backdrop, winemakers aim to raise the profile of Turkey's little-known wines abroad with a branding campaign capitalising on the ancient history of winemaking in Anatolia.

"Turkish production of quality wine is increasing and foreigners have started to show an interest. We must act as a country, not as individual companies," said Taner Ogutoglu of Fidelity Consultancy, which is coordinating the campaign.

He said 10 Turkish producers had reached an agreement in principle on a project to market their wines internationally under the brand of "Anatolian Wines".

Foreign doubts about quality remain an obstacle to promoting Turkish wines but mounting consumer awareness and technological advances have lifted the quality of more established winemakers.

Turkish producers initially focused on lower to medium quality wine exports but now want to compete in the premium segment.

BLACK MARKET

Turkey's wine industry has huge potential: the world's fourth largest acreage of vineyards and a good climate and soil conditions. But a large black market is holding back development and harming competitiveness.

The Wine Industrialists' Association estimates wine supply at 110 million litres, of which only 30 million is registered.

Authorities are now looking to squeeze the unregistered sector by requiring official stamps on bottles from November.

A report produced by the State Planning Organisation (DPT) said a lack of training, limited local promotion and an inability to compete globally also held the sector back.

Local producers are protected by high customs duties on imports, a practice which they say is necessary.

"Companies in Turkey that haven't achieved economies of scale can't compete with international ones," Ogutoglu said.

Limited domestic demand is also encouraging winemakers to look to exports. The amount of wine drunk is sharply lower than in Western countries. Per capita wine consumption amounts to around one litre annually against some 65 litres in France.

The value of registered wine produced in 2005 by some 70 wine companies was around 65 million lira ($50 million).

FRUSTRATED POTENTIAL

The DPT report also highlighted municipal restrictions on where alcohol can be sold and difficulties in securing licences to sell alcohol. Winemakers say the country's Muslim identity also affects efforts to market wines abroad, hence the fresh bid to create a shared marketing brand.

"Turkey is known as a Muslim country rather than as a secular one and this is a serious obstacle to exports," said Hakan Ilkkutlu, sales manager of major wine producer Doluca.

However, the industry can capitalise on a large tourism sector to boost sales and the image of its wines to increase exports from $8.3 million in 2005. Growing awareness also gives local producers reason for hope.

"In the past, people in restaurants just asked for white or red wine. Now they are more discerning and are asking about the brands as they look for higher quality," Ogutolgu said.

On the shores of the Marmara Sea, Cetintas has been involved in setting up a wine school amid efforts to raise the industry to a level befitting its importance to the development of wine.

"This landscape is where grapes were born. It is the homeland of wine," he said.