Importing wines to Russia: easy to start, difficult to handle

I sit down with Maxim Kashirin, one of the owners of fine wine importer and distributor Simple Wine Co and the owner of the Grand Cru wine boutiques in Moscow to talk about the structure and current performance of the Russian wine market.

«I’d say the overall structure of the wine trade in Russia is more similar to that of Japan. First, Russia imports virtually all of its wine, although it possesses its own production. Second, we have no historical preferences to wines from specific wine regions like some other countries. The rest of the system is fairly traditional: there are importers who have the right to sell wine to retailers or directly to final consumers and to the on-trade. If a company wants to sell wine in the regions then it has to look for a distributor.

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Russian wine importers go bankrupt

Magister Bibendi logo

The global financial meltdown caused a serious damage to some of the major players in wine imports in Russia. Several small and middle-size wine importers have already stopped their operations and the producers they deal with have to seek new importers. Quite a known company Magister Bibendi used to import New World and Spanish wines and stopped operating on the market some time ago. Its director, Oleg Osipov, a former head of a leading wine importer Whitehall, had to close the business down and even sell some of the private assets to cope with the situation. The Saint-Petersburg importing company Svarog seized its operations in Moscow too. Some of the other leading wine importers do lose their producers to the crisis natural selection – if you can’t sell the wine, get rid of it faster.

Financial crisis hits high-end wine sales in Russia, Decanter says

decanter_a_passion_for_wine_logo1As Decanter puts it:

«High-end wine sales in Russia have plummeted due to the current economic crisis, traders say. Wine sales plunged 50% compared to the same time last year, said Yana Jelvanova, import manager for Keider, a wine importer in Russia since 1998. The shrinking value of the rouble combined with a troubled economy is being blamed for the fall in sales of fine wine. Simple Wine Co – one of the largest wine importers in Russia – recorded a more modest 15% sales drop from January 2008 to January 2009, but a company spokesman stressed that consumers are drinking just as much if not more, but they are opting for less expensive wines. ‘We should just mention that consumers are simply trading down and turning to brands with good price/quality ratios,’ said Anatoly Korneyev, cofounder and vice president of Simple Wine Co. ‘It does not mean that consumption will fall in 2009 compared to 2008,’ he added.

And it seems it’s not just the mass market who are neglecting the more expensive brands.

‘Even big spenders are looking for bargains,’ said Kirill Drozdov, manager of Vinoteca Grand Cru, a popular Moscow fine wine retailer, also owned by Simple Wine Co. ‘They are buying less Montrachet and more Pouilly Fuissé.’

However, the forecast for the Bordeaux 2008 futures is mixed. ‘In this difficult market, we are not interested in buying futures, even if the vintage is excellent,’ Jelvanova from Keider said. For his part Korneyev said Simple Wine Co has already stocked up on 2008 Bordeaux. ‘We follow ratings and our own opinion about the vintage but we have not taken into account the current market situation,’ he said. ‘We are sure that the Bordeaux top growths will sell anyway; if not in 2010 or 2011, they will be demanded in subsequent years when everyone will have forgotten about the crisis.'»

Wine press in Russia seizing

MagnumRussian wine magazines continue to disappear. At the end of 2008 several wine magazines were struggling to survive in a crisis meltdown and lack of advertising. If we look into the past we can categorize the wine magazines in Russia as virtually “independent” and the ones belonging to big wine importers. Obviously the latter always have been using these magazines as their PR and educative force on the wine market. But among their advantages always were good quality and circulation consistency. Because of their big supporters they could survive during all the uncertainty of the Russian financial policy.

The most known “independent” wine magazine Magnum was gone in the beginning of 2009. It was the last time I saw it. Its editor in chief and co-owner Igor Serdyuk is now writing for lots of glossy magazines not related to wine and also for some leading Russian business newspapers. Which is good: at last some wine knowledge will go into the masses.

VinomaniaAnother long-living project – Vinomania – had to reduce the magazine volume dramatically. Its March 2009 issue is a 64-pages-only edition compared to 100+ in the recent past. Not only the magazine has decreased in volume – it is obviously economizing A LOT on the quality of photographs and articles. Almost a third of the magazine is devoted to a rewrited translation of a Wine Business International article and trying to repeat the article experiment in Moscow wine shops. Good idea with actually a very bad implementation. Being unable to attract any top-notch advertisers the magazines fall into pieces: the magazine contains 4 (!) full-page advertising modules and a dozen small modules. Not sure, how many of them is actually paid advertising.

The third young project that suffered the economical grip is the one belonging to a wine importer – United Simple Wine NewsDistributors – based in Moscow. Honestly, the magazine called Fine Wines (a reference to the wine world famous The World of Fine Wine?) was a concept plagiarism of the existing Simple Wine News magazine, published in collaboration with another well-known importer Simple. Fine Wine started at the end of 2007, made four issues in 2008 and… vanished despite the financial support (or failure to support) of UD.

I would say the only quality magazine that’s left on Russian wine scene is Simple Wine News. For now it’s the only edition successfully going through the economic situation without any significant quality / circulation loss and without firing its own editors.