Russian wine lovers are flexing their wine palates

The Russian wine market has been in turmoil since the events of 2014. But, says Sergey Panov, the fallout has opened up new opportunities for wine producers.

Position, Importer, Share in national still wine import in 2017 by value
Source: russian federal customs service

Anyone visiting a Moscow restaurant in 2013 would have found a wine list full of Pinot Grigios and Chiantis marked up by 300%, along with some super Tuscans and Premier Cru at the high end. Then came the shock of 2014, when the ruble collapsed following the Russian-Ukraine conflict and a drop in the oil price. In January 2014, one dollar could buy 32.65 rubles; in December that year, it was 67.78.   

In order for wine businesses to survive, they had to adapt by offering wines of better value. In the years since 2014, there has been a dramatic increase in the number of smart wine bars offering good value and interesting wines – places where you can buy Timorasso and Lemberger by the glass – while some are offering Burgundy Crus sourced directly from the producer. By 2017, the situation had stabilised and there was limited growth in 2018. 

The future is still gloomy, despite the state-owned Sberbank forecasting that Russian GDP growth for 2019-2010 will be 1.4% to 2%. Two factors will limit Russian purchasing power, the first being inflation which is expected to remain high at 4% to 5% (it was 3.9% in 2018). The second is the VAT increase to 20% from 18% that came into force on 1 January 2019.

Nevertheless, wine imports to Russia rose in the first half of 2018, with European producers reporting that Russia is an increasingly important market for them. Paul Kiefer, export director for Austria’s Mayer am Pfarrplatz, says Russia can be a great market to work with. He recalls that the CEO of Centrobalt, a Saint Petersburg distributor, “tasted our wine by accident” during a ski holiday in Austria. “The first contact happened at ProWein and after a one-year negotiation we signed the contract,” Kiefer says. “After five years, Russia is our second biggest export market after the US. At the beginning we had no experience with this market, which is why our expectation was quite low.”

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