* Sex shops say business has plummeted
* Greece imports its erotic toys
* Return to drachma could spell death of industry
By Harry Papachristou
ATHENS, May 27 (Reuters) - Greece's once-thriving sex industry has become the latest victim of the country's debt crisis as Greeks spend less on erotic toys, pornography and titillating underwear.
About 50 people, almost all young men, lined up on Friday as the Athens Erotic Dream - Greece's biggest sex fair - opened its gates in a nondescript building squeezed against a highway on the outskirts of the capital.
The annual show attracted big crowds when it opened in 2008, at the height of Greece's debt-fuelled economic bubble. But interest has wilted alongside the Greek economy, mired in its fifth consecutive year of recession.
The austerity measures Greece adopted as part of the country's international bailout deal have led to record unemployment, while wage cuts and tax hikes have throttled consumer spending.
The sex industry is feeling the hit. The number of exhibitors has fallen by half since 2008 to about a dozen, said the fair's organiser George Chrysospathis - a grey-bearded, corpulent man whose jovial manner changes quickly if he spots anyone who has failed to pay the 15-euro entry fee.
"We used to get 20,000-30,000 visitors, but this year I don't know, we'll just have to see," Chrysospathis said.
Only a quarter of the 300 to 400 sex shops that once existed in Athens have survived the crisis, and business looked bleak for those who brought their wares to the sex fair.
"Things look really bad, buddy," said stall holder Donatos Passaris, 38, standing in front of a long bench of vibrators, lotions and other items.
Shoppers at the stands were few and Passaris brushed off questions quickly for fear of losing a rare customer.
"We're making just 20 euros ($25)a day, if at all," said Marianna Lemnarou, another retailer. "Some customers just don't feel like having sex - others can't afford to buy our stuff in the crisis."
An inconclusive general election on May 6, which plunged Greece into fresh political turmoil and fanned fears that the country might leave the euro, has worsened matters. "Since the vote, business has completely tanked," Lemnarou said.
The troubles of Greece's sex and pornography trade echo those plaguing its wider economy.
The industry largely consists of small family businesses that depend entirely on foreign suppliers and face tough competition from abroad. "There's not a single wholesaler," Chrysospathis said.
Unlike other western European countries, where sex shops can be found in central avenues and shopping streets, Greek sex shops have failed to go upmarket and struggle to shake off their seedy image.
Almost all are in ugly concrete blocks or perched on top of car washes or fast-food joints in rundown areas of town.
Just as other manufacturers have suffered from soaring wage costs since Greece joined the euro, local makers of erotic underwear have found it difficult to compete with cheaper rivals abroad.
"The Chinese and the Turks are killing us," said Lefteris Papadopoulos, 55, who offers discounted hot pants, garters and stockings for 5 to 10 euros apiece.
Appealing to customers' patriotism, he has called his stand "Products Made in Greece", with plastic Greek flags stuck on the shelves.
Greece was once home to a small but successful pornography production industry that employed about 1,000 people, including actors, photographers and cameramen.
In the 1980s, sex films were usually shot on remote, sandy beaches on some of the country's many islands and dubbed into English for export.
But much of that scene has disappeared after local producers were undercut by free internet pornography and movies from Eastern European countries. "Five out of the seven porn stars in Greece are Hungarian," Chrysospathis said.
Only one company is left at the fair to promote its latest production. With an eye to the export market, the movie is called "Seduction on Santorini" - in a nod to one of Greece's most popular tourist islands.
Yet not everyone is gloomy. Antigone Koi, a 33-year old U.S.-trained psychologist, said she found a successful niche two years ago by offering pole dancing lessons to women - and most recently also to men.
"Only a tiny minority take classes to become strippers," she said.
But a return to the drachma currency - feared by many - would deal the industry a further setback. Almost all sex toys sold in Greece are imported from countries such as Germany or Poland, and a devalued drachma would make them unaffordable.
"A vibrator that now costs 20 euros would then cost 50," said Passaris.