Georgia ranks first in wine supplies to Russia

Georgian wines continue to strengthen their positions in the Russian market through direct imports of chains. In the first five months of this year, supplies increased by 63%, to 24.15 million liters, which allowed Georgia to take the first place among the exporters of still wines, ahead of Italy. This can further complicate business for local winemakers, who mainly compete on the shelf with Georgian products.

According to the results of January-May 2023, Georgia came out on top in the supply of still wines to Russia, ahead of Italy, follows from the customs data available to Kommersant. During this period, 24.15 million liters of still wines were imported from Georgia, 23.36 million liters from Italy, year-on-year imports from countries increased by 63% and 31%, respectively. As a result, the share of Georgia in the supply of still wines to Russia in volume reached 19.1%, and Italy – 18.5%. Imports of still wines from Spain over this period increased by 25%, to 20.46 million liters, from France – by 23%, to 10.04 million liters, from Portugal – by 69%, to 9.61 million liters year-on-year .

In the first quarter of this year, imports of still wines from Georgia increased by 49%, to 13.1 million liters, which corresponded to the second place among the supplying countries (see Kommersant of April 28). Alexander Lipilin, executive director of the wine trading company Fort, says that imports from Georgia began to grow at the end of 2022 due to the absence of problems with payment and logistics. According to him, the growth in the share of Georgian wines is mainly due to the own imports of retail chains in the low and medium price segment. Chains have switched to direct contracts with manufacturers and can offer minimum prices on the shelf, says AST CEO Leonid Rafailov. Luding Group Executive Director Ernest Khachaturian notes that wines from Georgia and Armenia are distinguished by low volatility in value. In addition, wines from Georgia are subject to zero import duty, adds Alexander Stavtsev, head of the WineRetail information center. Deliveries from Italy, he said, could be constrained by difficulties with payments, rising exchange rates and higher prices for certain items.

According to Kommersant’s data, retail chains occupy three of the top five places in the import of still wines. X5 Group (Pyaterochka, Perekrestok) in January-May 2023 increased imports by 24%, to 13.43 million liters, the structure of Magnit Retail Import – by 94%, to 10.83 million liters, and Bristol Retail Logistics, which is part of the same group with the Krasnoe & Beloe and Bristol networks, by 109%, to 9.35 million liters year on year. The companies did not provide comments. Roskachestvo, which publishes the Wine Guide of Russia, calculated that sales of still wines from Georgia are growing by more than 20% year-on-year in the face of declining interest in wines from non-CIS countries. It is Georgian wines in retail today that compete with Russian ones in the middle price category, experts pointed out.

One of the major winemakers notes that the general dominance of imported wine creates a problem for local producers.

In the case of Georgia, Kommersant’s interlocutor says, there is a question of a sufficient amount of raw materials to increase supplies, or is it the transit of European wine in bulk through a Georgian bottle. The International Organization for Viticulture and Winemaking (OIV) estimated wine production in Georgia in 2022 at 210 million liters, up 2% year-on-year. Roskachestvo noted that the raw material base of Georgia may not be enough for red wines, which, apparently, is connected with the supply of wine materials from Moldova to the country. The National Wine Agency of Georgia did not answer Kommersant.

Simple Group Vice President Anatoly Korneev expects the trend to change by the end of 2023, noting that the market is overstocked with chains’ own imports, mostly from Georgia. Ladoga President Veniamin Grabar predicts that the dynamics of imports from Georgia will remain at about the current level. And Leonid Rafailov believes that due to prices, optimal logistics and ease of payment, Georgia will be able to keep the first place in the import of still wines to the Russian Federation. According to Mr. Stavtsev, the industry is now discussing the possibility of imposing restrictions on the import of wine from some countries, and such measures may lead to a consolidation and increase in the share of Georgian wine.

Anatoly Kostyrev