Two-points wine rating system could be great for Russia

Only 5 per cent of people are exposed to fine wines in the Russia’s capital, and I mean fine wines, It’s much less in the regions, where people don’t tell their whites from reds. So, say I, why should we even bother the general common sweet Lambrusco drinkers with the 100-points wine ratings? At the current stage of our wine culture development Russian consumer needs a clear understanding which wines are drinkable and which are NOT. As simple as that. Continue reading

Drinking it easy in Moscow

It’s a happy time of year in Moscow: everyone’s stuck in huge traffic jams caused by snow and officials’ lousy road planning abilities. But the holiday spirit is here, everything is sold, everything is bought. Our mailboxes are full of spam messages of every sort. Sometimes it feels like we are living in the country of the richest people in the world. The only problem is we are not. The simple fact that we are overpaying for every product we buy doesn’t make us richer – or smarter. Still, they say more than 40% of all alcohol sold in Russia is sold during this hot pre-New Year season. Continue reading

The castaway market

In the second half of 2011 I was consulting a well-known British wine merchant. The topic was entering into business with the Russian wine distributors and have wealthy Russians buy wine stocks and hold them in Britain — an understandable desire.

It is widely known in Russia that the best wine distributors in Russia are usually those who actually import wines themselves. So, it’s kind of a vertically integrated business structures — one department imports wines, other department sells wines, and another one promotes and markets wines. Another company or department might be a structure owning a network of wine shops, but this is not a necessary thing.

The mere nature of this interest from the British side was the desire to make business on those wealthy Russians who are wise enough to be aware about the price margins they pay when they buy expensive bottles in the country. Yes, it usually is minimum 50% higher than you expect to pay in Europe, even in restaurants. This figure becomes completely volatile when we move away from Moscow where savvy consumer restrain those margins from skyrocketing.

What the British didn’t consider seriously was the amount of government control and beaurocracy involved in any Russian business, as well as the economy instability and political situation that pushes business risks in the country to heaven. I might say that the resulting extra margins one can make in Russia are what often attract foreign investors to the country. Yet, wine business seems to be one of the most regulated and hard to deal with in Russia.

After some meetings with the importers we seemed to find several major problems in regard to supplying wines from UK to Russia: first of all, weak legal basis and competence of Russian wine importers’ lawyers — they know how to work in the Russian market but they usually have no idea how to build international contracts with third parties (not direct wine suppliers like negociants in Bordeaux). Russian import legislation requires lots of documents to support any bottle entrance and you cannot send a bottle via DHL or any service of that kind.

Secondly, wine importers here would rather prefer less headache and maybe less money than establishing a brand new service for their clients wishing to buy wines abroad — but with lots of paperwork and worries about keeping the client. At last we can imagine that a wealthy person would finally decide to exclude a middleman from the chain. This also corresponds with the competence of the sales staff that is simply not ready to deal with such cases on the regular basis.

And, third, Russian consumer is still buying wines for immediate drinking in 99% of cases rather than for the purpose of laying down. There are, of course, big cellars here — bit these people are usually kept by the wine importers as their golden reserves and the contacts are held in top secrecy. Afterwards, maybe they prefer to buy wines at much higher prices and have much less choice, but to have a good local supplier who speaks their language.

Frescobaldi takes advantage of Russians’ passion for Italy

An interesting piece of information about the market dynamics of the Frescobaldi wine family in Russia, composed by Paola Perfetti from ItalyNewsWeek.

“The Frescobaldi” is an Italian winemaking dynasty that produces wine for more than 700 years. Their barrels used to enjoy the British Royal Court and popes in Rome, during the centuries. Nowadays, the Marchesi de’ Frescobaldi group exports 65 percent of its 9 million bottle annual output to 85 countries and is looking to win over consumers in Russia and other new markets.

In this period, Frescobaldi’ strives to reach some main markets such as the United States, Germany and Switzerland but it is also concentrated on Russian markets, where sales of the Frescobaldi wines (whose retail price varies from 10 euros to 200 euros ($280) per bottle, with the exclusive Masseto red fetching up to 500 euros,, ndr) have been brisk in south eastern Asia and Russia.

“Russia has been the best performing market this year for us,” Lamberto Frescobaldi, vice president of the group, told Reuters at one of its main estates perched among the hills 30 km northeast of Florence.

Even if Russians go on loving vodka drinking tradition: “There are lots of consumers there with a strong desire for high quality goods … Russians are very open to Italy, to our lifestyle,” said Frescobaldi, who is in charge of production at the group.

Why Russia and not Asian markets? Japanese and other Asian consumers are interesting for Frescobaldis, too, but the group admitted to be cautious about approaching the Chinese market where its French rivals have been rapidly expanding.

For Reuters, Italy’s wine makers have been slow in conquering the immense Chinese market, but Italian wine exports there have surged 242 percent so far this year, Italy’s biggest farmers association Coldiretti said this month. “We want to have clients spread in various markets to give a security to the company future … We want to make wine today, tomorrow and the day after tomorrow,” said Frescobaldi, 47, who represents the 30th generation of winemakers in the family.

Group total sales are expected to rise 15 percent this year from 71.2 million euros in 2009, driven by top-shelf wines including the famous full-bodied Brunello and SuperTuscan Ornellaia reds, he said. The group, fully controlled by the family, owns seven main wine making estates in Tuscany and one estate in the northeastern region of Friuli, each producing wine with its distinct character formed by local climate and soil.

“Our philosophy is to express to consumers the diversity of every area where we have our vineyards, to make wines which identify their land of origin,” Frescobaldi said. But also, a new vineyards on recently acquired estates reach the top of production strength after a long growth period, the group plans to boost output by one million bottles in the next 10 years. “We have more than 30 generations, we have enough patience,” Frescobaldi said. “I hope we’ll have 60 generations.”