The Russians were warned about the imminent rise in price of foreign wine

Ecology and logistics will raise prices for overseas gifts of Bacchus by 30%

In 2023, wines from Chile, Argentina and other countries of the New World will rise in price by about a third. Their share in the Russian market, which is already very modest, can be reduced by the same amount. Basically, the situation is connected with the complication of logistics, while domestic producers will not be able to take advantage of the chance and replace the lost volumes of imports due to the acute shortage of their own vineyards and wine materials.

In the first quarter, the largest suppliers of wines to the Russian Federation among the New World countries – Chile, South Africa and New Zealand – reduced their import volumes by 19%, 32% and 30% respectively. It looks like this trend will intensify next year due to new International Maritime Organization (IMO) requirements to reduce CO2 emissions. Which, in turn, is fraught with a decrease in the speed of delivery of containers by sea and an increase in logistics costs by 5-10%, the Fort wine trading company notes. Since the beginning of the current crisis, New World wines have been imported to Russia mainly through the ports of Turkey and Georgia. In general, the difficulties with deliveries from distant parts of the world began during the pandemic and worsened with the departure of some transport companies from the Russian Federation in March. Problems are also associated with the refusal of many banks to make payments from Russia.

In the spring of 2022, export restrictions at the country level were imposed by the United States and Australia (for all wine products), as well as all EU members. But the Europeans imposed a ban only on the supply of wine over €300 per bottle (this is only about 1% of total imports). Meanwhile, almost half of the wines consumed in Russia are imported. The top five supplying countries are Italy, Spain, Georgia, France and Portugal, together they account for almost two-thirds of still wine imports, which amounted to 282.6 million liters in 2021.

“Noviy Svet wines account for only about 10-12% of total imports,” says Vadim Drobiz, director of the Center for Research on Federal and Regional Alcohol Markets (“CIFRRA”). – Their main consumer is the Russian middle class, or rather, a small part of it. Of course, prices will rise, since transportation from these countries to Russia has risen in price by almost three times. Yes, it is unpleasant, yes, it hurts business and limits the freedom of the consumer. However, the scale of the problem is not so great, given the share of these products in the domestic market of the Russian Federation.”

It is not known what will happen to the dollar exchange rate: today it fluctuates between 60-65 rubles, and by the end of the year it may well rise to 75-80. But this theoretical, higher rate, according to Drobiz, is already included in the current price of imported wines. Accordingly, no future currency fluctuations will affect their value: everything will depend on the situation with logistics. As for Russian producers, their products (in the middle price segment) are often not inferior in quality to table wines from Chile, Argentina or South Africa.

“But the problem is that the country has an acute shortage of raw materials – vineyards and wine materials, and this year we will almost certainly reduce the production of still and sparkling wines,” says Drobiz. – It’s simple: to replace imports, you need to harvest more of your own grapes. However, we will produce high-quality, elite wines in large volumes, and they will partially replace imported ones of the same rank.”

According to Leonid Popovich, President of the Union of Winegrowers and Winemakers of Russia, the products of the New World will be sold at prices 30% higher than the current ones, that’s all. “How much they bring, so much they sell, it’s just a third more expensive. I don’t expect any other changes in the market,” Popovic laconic.

So far, it has not been possible to eliminate dependence on imports in the wine industry. Moreover, the operational fulfillment of the task proposed in mid-July within the framework of the competition by the Ministry of Agriculture, to create a concept for the development of Russian wine exports, is called into question. In recent years, about 50% of grape seedlings have been imported to Russia from abroad, in particular, from nurseries in France, Austria, and Germany. And until the state resolves the issue of replacing seedlings, fewer vineyards will be planted. At the same time, most of the domestic nurseries are tied to foreign equipment, which was supplied from Europe, and the prospects in the context of breaking ties with the EU in all areas are not clear. In Russia itself there is no modern mechanical engineering for winemaking. According to experts, it is possible to fully replace imports, but not earlier than in five to ten years. This will require planting about 100,000 hectares of new vineyards.