Russia: Wine in Crisis Time

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Russia: Wine in Crisis Time

At the Slow Wine presentation in Moscow, we discover a less-than-rosy picture for the country’s wine market…
by Fabio Giavedoni

Just a year ago, when we came back from our first visit to Moscow to present the Slow Wine Guide, we felt quite positive about the market for wine in Russia. Twelve months on, we don’t feel so optimistic.

 

Russia is experiencing an undeniable moment of crisis. The financial sanctions imposed by western countries and embargos for certain products have created a difficult economic situation, seen above all in the devaluation of the rouble which over the last few months has lost 30% of its value compared to the euro and the dollar.

 

At the Slow Wine presentation this week, organized together with Vinitaly International, a round table addressed the currents situation of the Russian wine market. All present agreed that the Russian market for spirits and beer is saturated; there is no room for growth since consumption is already extremely high. The market for wine on the other hand still has potential, despite consumption having more than doubled in the last 15 years, accounting for around a billion bottles consumed annually. Italy remains the biggest importer of wine in Russia and continues to increase its share of the market despite the fast that sales are almost stagnant.

 

The current wine market of in Russia seems to be structured like this: 70% of consumption is wine that costs less than 200 roubles a bottle (around US$4). This sector is in great difficulty, where the already-narrow margins are completely cancelled out by the devaluation of the rouble. It is also predictably concentrated on the national production, which is in strong growth, particularly in inexpensive sparkling wines. In the near future cheap, low-end wines will be produced by the Russians themselves.

 

Twenty-five percent of consumption is of bottled wine which costs 200 to 500 roubles (from US$4-10), a segment that everyone agreed has the best margin of growth regarding Italian wine. The remaining 5% are bottles costing above 500 roubles, a segment that is contracting, largely because the restaurant industry is suffering the crisis.

 

Italian producers who listed in the Slow Wine Guide were at the presentation nonetheless, to showcase their products. Their product profiles in line with the market trends: very few cheap-and-cheerful wines were present, and even fewer top-end expensive wines. Instead, the range of producers represented excellent wineries that produce quality wines at affordable prices.