After frenetic 2006, when the government drastically changed the rules of the game for the Russian wine trade, imposing new regulations, an automated control system (that even after two years doesn’t function as it should) and new excise banderols for all alcoholic beverages, 2007 seemed quite smooth and “sane”. The huge gap created by the government in 2006 when the 50% of the wine market that represented by wines from Moldova (40%) and Georgia (10%) were in a minute cut off (the imports were banned, technically because of fraud, unofficially for political reasons) defined the dominating trends in the market.
First of all bulk wine imports grew drastically. Local bottlers quickly filled in the gap with cheap “substitutes”, “fine-tuning” (i e sweetening and diluting) the liquids processed at the huge industrial wineries mainly in Northern Russia where grapes do not grow but which are conveniently close to the major markets. Of the total 616 millon litres of imported wine the majority – 370 m l – was bulk wine. Most important sources were Spain with 136 m l (37% share), Argentina (24%) and France (12%)*. Russia is absorbing a fair part of the wine glut in those countries. Even Uruguay made it into the top 10 shippers of wine to Russia with 6.6 m l. When I asked a friend of mine who works in the Russian Embassy in Montevideo how come that happened he said that all the producers had to pool their wine in order to satisfy Russian demand.
Bottled still wine accounted for 230 m l with Bulgaria leading for second year running (64 m l, or 28%) followed by France (19%) and Spain (11%). The majority if the wines of the top 10 countries are filling the gap left after Moldovan exports were banned, and there are often special products for Russia as they contain higher than normal percentages of residual sugar.
Combining bulk, bottled still and sparkling wine totals, the top 10 wine exporters to Russia are: Spain, Argentina, France, Bulgaria, Italy, Chile, Portugal, Uzbekistan, EU (bulk only) and Uruguay. The New World accounts for a total of 144 m l, or 23% market share, which seems to make Russia an “Old World” aficionado.
There are no exact figures on local wine production (as imported bulk that is bottled locally counts as a local product), but by simple calculation, based on 7.2 l per capita wine consumption a year, we can assume that Russia produces just over 420 m l of wine from Russian-grown grapes. According to official OIV data, Russia is the 12th largest consumer and 16th largest producer of wine in the world (in absolute figures for 2005).
If you look at the top 20 companies importing bottled wine into Russia (which constitutes more or less all the serious importers in the country – quite a tiny figure compared with the country’s size) you will notice that the top five importers tend to dominate the low-end market. Number one for the third year in a row is the Armenian owned managed company Luding (a regular exhibitor at the London International Wine and Spirit Fair) with 35 m l, very cheap Bulgarian and French wines being their core business (13 and 8 m l respectively). The only exception to this “low-end” phenomenon is the fifth biggest importer Whitehall (LVMH exclusive) but their main supplier is Concha y Toro (Sunrise and Frontera making up the majority of their 8 m l of Chilean wine, 10,5 mln l being Whitehall’s total imports). If you exclude the “cheap guys” that lead by quantity in practically every country’s imports (Luding, Megatis, partially Rusimport and Alianta), Whitehall is also the most important importer of Argentine and American wine with just over 1 m l of each. Unlike other countries’ wines where “cheap” wine importers lead the market, the biggest importer for Italian wines is Simple (3.7 m l), one of the 5 best on-trade suppliers in Russia (the others being MBG, Vinicom, DP-Trade and UD but all of them are far behind the top 10, my company Simple being eighth). The leader in Spanish wines is Torres’ importer Svarog (after Luding) that also leads with South African wines (0.8 m ‘) but chiefly in the low-price segment. The top 10 importers are ranged as follows (by volume): Luding, Megatis, Rusimport, Alianta, Whitehall, Mosel, Svarog, Simple, Erdin, Fort.
Imported bottled wine is still mainly consumed in Moscow (60 to 70%) of it with Saint Petersburg far behind (not more than 10-15%). Those are the two biggest Russian cities with 12 and 4 million inhabitants respectively (145 million being Russia’s total).
Speaking of the “Russian taste”, according to some research (the exactness of which I can’t confirm but its results seem to reflect the general picture), about two-thirds of wine consumption outside Moscow consists of semi-dry or semi-sweet red wine (sic!) that costs less than 100 RUR (£2) on the shelf. Unfortunately (for fine wine producers) this is the fastest growing sector of the market and Moscow is more or less saturated with wine (which makes entering the market quite a difficult task if you do not produce cheap & sweet plonk).
* all figures are for volume only as the value figures are not exact due to the specifics of Russian import taxes and laws.
