Puttin’ on the risks
In 2010 Russia imported about 400 million bottles of wine – a huge number. Oddly enough it’s not too much for a 142-million nation that has no real experience and culture of drinking fine wines. During Soviet times Russia was producing lots of domestic cheap wine made in the south of the country, not far from the Black Sea. Wine consumption once was peaking 20 liters per person a year. Currently Russians drink no more than 3-4 liters of wine a year.
Margin tactics
Last week I visited one of the nicest Moscow restaurants – centrally placed Argentinean “El Gaucho” – and I couldn’t help but noticing that almost every table had glasses full of wine and wine bottles on them. I was double amazed when I reluctantly opened the wine list. You could notice Argentinean Luigi Bosca Finca Los Nobles for 11 000 RUR (it’s 300 USD). This is about 4 times higher than you can normally buy directly from the wine importer in Moscow. All other wine prices were similar and the 300 USD threshold was stepped over many times.
I’d also advise you to read the recent article on the Russian market in Wine Business International. In the article Dmitry Pinsky, the head of DP-Trade wine importer, blames astronomic wine prices in restaurants on greedy sommeliers. “We blame it on sommeliers – in most restaurants they are fully dependent upon commercial listings and demonstrate no opinion of their own. Moreover, commercial suppliers pay them cash for recommending their wines. Thus sommeliers of certain restaurants can simply lie that wines sourced elsewhere are currently not available”, – he says. Honestly I’d strongly disagree. There’s nothing sommelier could do if he had no OK from the restaurant owners. This means that the whole restaurant system is intentionally building up margins never mind the sommeliers who have no their own voice and no courage to stand up against the margin tactics and the people who pay them salaries. Obviously sommeliers are rarely considered to be an asset of any restaurant in Russia. Big restaurant holdings like Novikov Group are driven by pure brand business that doesn’t care much about the diversity and affordability of their wine lists.
Built-in risks
The math is pretty basic. With unstable economy fully dependent on natural resources like oil and gas any Russian business is ready to disappear at any given moment. The risks of running business in Russia are enormous, restaurant business is no exclusion. The most dangerous factor is the government control and desire to make money on the business owners. As a result these people are always ready to flee to safe London and take all the money they could earn here together with them. Would you bother about any long-term restaurant business in a situation like that? And yes, you’d better have all the possible risks and margins built into your wine cost. By the way the food prices in “El Gaucho” were quite acceptable and on the European level. This is also a small trick – most of us judge restaurant prices by its food prices, not by wine. By the way, that day we were drinking nice Czech beer and never got to taste wine.
