One important group of wine importers and distributors in Russia caught the wave early and seriously set out to service private clients and corporations by establishing dedicated sales departments that proved to be much-needed additions to the companies’ existing sales channels. While far less significant in financial terms than the HoReCa and off-trade, they offered features that are lacking in those sectors. Among these, says Ilya Veinberg, head of private and corporate sales for wine importer and distributor Classica, is rapid cash flow which “makes the department extremely important”. So, too, is image-building among a very valuable target audience.

The leaders

The major players with established private and corporate departments are importers whose history stretches back to the 1990s: Simple, MBG, Eurowine, FORT Wine & Spirits, DP-Trade and a number of smaller players. Of these, one company has shaped the face of today’s private and corporate sales in Russia. With a department employing more than 50 people and a good grip on the most important corporate wine consumers in Russia, Simple has raised the bar for its competitors, outweighing them by salesforce, PR, market aggressiveness, and the scale of its ambitions. As Russia’s economic situation stabilises and rules covering online sales are expected to be relaxed, that competition is likely to become fierce.

Mid-sized companies like Classica, Grape, and Vinoterra are paving the way to further growth. Another new phenomena of recent years has been efforts by vodka producers and distributors to tap into the wine market. The St Petersburg-based Ladoga Group, for example, has sought to build a serious wine portfolio, attracting names like M. Chapoutier and expanding its operations to Moscow.

At the other end of the scale, smaller companies like Wine & Only manage a compact portfolio of French wines and are dealing directly with private and HoReCa clients. “We generate new clients mostly via word of mouth,” says Natalia Zubova. “Our wines are mostly recognised thanks to the specific winemakers who produced them.”

In attracting private clients, some companies rely heavily on famous brands, communications, PR, and educating both private clients and sommeliers. Others focus on building stronger personal relations, offering niche wines and more flexible payment terms. Pricing is another crucially important factor for wine importers seeking to succeed in the private and corporate channels. One way to get this right has been by managing currency exchange rates in a period of severe fluctuations. As of mid-April 2017, several wine importers declared considerable price reductions due to exchange rate stabilisation and a steadily strengthening ruble.

Where did all the oligarchs go?

Back in the 1990s and 2000s, it was sommeliers who were pouncing on the new wealth. For better or worse, the anecdotal days when oligarchs bathed in Pétrus and Château Margaux and barbecued with grand crus are over. Those businessmen have virtually disappeared from the modern wine scene. “Private clients have evolved. They travel, they speak foreign languages, they know the wines,” says Vladislav Volkov of Vinoterra. “People who drank Super Tuscans and grand crus had no choice but to switch to less-expensive bottles,” observes Liudmila Mamontova, head of the private and corporate clients department at MBG, a key fine wine player in Russia.

With the political crisis of 2014 and subsequent collapse in the value of the ruble, many clients with thick wallets fled the country and now only visit to check their remaining assets. “Even for those rich people who are still here, it’s not good to consume the way they used to. It’s not only about the money, it’s about the evolving culture,” says Alexander Lipilin, the CEO of FORT Wine & Spirits.

The reasons to drink wine are also changing. Private consumers are moving away from drinking for status to drinking for pleasure. “They now realise that it’s not necessary to drink expensive wines. Wine is not Rolex anymore,” says Elena Kuznetsova, head of the private and corporate department at Eurowine.

As for the corporate side of the wine market, that normally stays hidden from prying eyes and ears – a secret carefully kept within their companies. But there is no doubt that if anyone is spending heavily on wine in Russia, it is the corporate clients, who are satisfying the wine needs of holiday gifting for their employees and business partners.

The oil, gas, construction, financial, and mining sectors and top consulting companies are all desirable targets for wine distributors seeking to secure important seasonal sales during the New Year period. Hardly surprising, some players estimate about 30% to 50% of fine wine is sold during this time of year, but national holidays such as Defender of the Fatherland Day on February 23rd and International Women’s Day on March 8th also offer lucrative opportunities. “It’s an important part of the sales,” says Volkov. “With these clients it’s quite simple: the major thing is to have the right price.”

Many corporate clients buy and spend enough to create fierce competition for their business. Tenders are a common way to select wines for corporate gifting, especially since harder economic times drove corporations to tighten their budgets significantly. “They want 50% to 60% less than before the crisis of 2014,” estimates Mamontova. Nevertheless, according to most market players, wine remains an important option for corporate gifting. “Everything counts in the corporate game: wine prices, and brands, and relations with the person who makes purchasing decisions,” says Alexander Lipilin of FORT. Eurowine is watching the regional corporate market closely. “With the crisis, many Russian companies are moving their headquarters outside Moscow. We have to pay attention,” says Kuznetsova.

The wine distributors’ representatives agree that Russian clients of every income level are counting their rubles carefully before spending them. “Nobody takes prices for granted anymore,” says Olga Taipova, who is responsible for private and corporate sales at AST International Environment. What this also means is that the desire to experiment with new wines is growing.

The exchange rate fall that slowed wine sales in the end of 2014 also ignited interest in Russian wines produced in the south of the country, and especially in the annexed region of Crimea. Most wine distributors who initially resisted adding Russian wine to their portfolios now carry at least one brand. “High-quality Russian wines are rare and they are in demand, especially as gifts for foreign friends or partners,” Lipilin says. The overall interest in Russian wine and its share in wine sales across all channels has certainly grown significantly, and Lipilin attributes this to the value for money they offer rather than patriotism. “As the ruble gets stronger, demand for Russian wine goes down,” he observes.

Bordeaux grand crus, by contrast, have suffered because of the ruble exchange rate. “We carry nice second- and third-growth Bordeaux grands crus – wines offering better value for money. Top chateaux are too expensive; it’s hard to guess the best vintage,” says Ilya Veinberg of Clasisca.

The new generation

Step inside one of the Moscow’s many wine bars and you will be surprised by the number of young women chatting and having a good time. There are definite gender shifts among modern urban wine drinkers. The Russian wine market created in the ’90s by and for men is changing rapidly. While serious wine buyers still tend to be male, women are now making many more wine purchasing decisions. “Ladies are often leading wine buying, especially in restaurants. It’s also easier for them in terms of image since wine has been traditionally thought of as a drink of choice for women,” comments Veinberg.

Even so, the buying power of Russian males still lies largely in their business activities: men are more exposed to sophisticated gifting situations and negotiations that require a quality dining experience with business partners.
“Among older consumers, men are still dominating, while 35- to 45-year-old urban men and women are more evenly matched when it comes to selecting and buying wines. They are having fun and advising each other,” says Sergey Podporin, owner of LEO Wine & Kitchen restaurant in the southern Russian city of Rostov-on-Don. According to him, female customers’ interest to wine is also connected to the end of their maternity leave. “Women who start thinking about themselves again are literally hungry for wine,” he notes. Lipilin also refers to the way decisions tend to be made within younger Russian households: “The person with more time and knowledge normally leads.”

Ageing with grace: the generational change

The new generation of young people in their 30s is already defining the future shape of the Russian wine market. They don’t yet have the means of the wealthier over-45-year-olds who were raised on labels like Sassicaia and Tignanello, but their habits and openness to new tastes and new wines are already very apparent. And it is not only Moscow and St Petersburg that are experiencing this trend. Sergey Podporin says his clients are no longer satisfied with discussing a single red or white. “They want to sit down with five to six glasses of different wines.”

Keeping younger generations in mind, some forward-thinking Russian companies have decided to be more open-minded and friendly to this group of consumers than others. While traditional wine marketing includes traditional ways of doing things: discounts, wine dinners, direct calls, and even various forms of financial inducements, companies like Invisible and WineStyle are putting their efforts into aggressive forms of online strategy. Invisible, in particular, is noted for using youth-oriented internet slang and hipster-style graphics, while WineStyle has built a reputation for its extensive online wine catalogue that incorporates wines from many different wine importers. Both firms’ sales are rising.

Being in the game

Wine distributors understand that their private and corporate departments are not just about making sales. Today they act as private sommelier services that guide clients through the world of fine wine, sometimes on a 24/7 basis. In order to tap into the private and corporate wine market, Russian professionals recommend a proactive approach: first, visit the market often and talk to the potential consumers face-to-face. “It’s important how charismatic the winemaker or the owner is. People tend not to remember the names of wineries, but they do remember the other people,” says Lipilin.

Private and corporate client departments are not just meeting needs – they are creating them. Being a direct connection to wine producers and the whole world of wine ratings and critics, they can influence and educate, shift preferences and tastes. “The vicious circle is that where there’s no supply, there’s no demand,” says Kuznetsova. With the improvement of the economic situation, and especially the gradual improvement of the value of the ruble, these parts of the business will become even more important.
Anton Moiseenko

This article first appeared in Issue 2, 2017 of Meininger’s Wine Business International.

Запись Meet the new Russian wine consumer впервые появилась Wine Report Russia.

Weather you are a famous niche small-size winery or a medium company with a wider range of fine wines, you need an introduction to the market. Not me, introducing the market to you (well, I can do that too), but me introducing you to the market.

There’s no easy path into the Russian market. The market, let’s be honest, is more consolidated than ever, leading to just a handful of importers and distributors to stay alive. Those, who survived — they do have strong representation in all the channels for quality wine distribution: HoReCa, private clients, specialised retail, off-trade.

The trick is — well — to get to those few

Some of you already got there, others, quality wine producers, some medium-size, some — smaller ones, just have no chances to be seen and heard in the crowd. I personally know how many e-mails wine distributors get per day from those willing to be a part of their portfolios. Why is it that way? Because in here, companies seldom fight for wineries (there are exceptions, though), but mostly the other way around — wineries have to find their right partner, who will build their brand from scratch. It’s your game, the game of making them hear you.

There are hard ways and easier ways to do so (I never use the word “easy”, ok?). The HARD way is the common way: knock on their doors, ring them when they are having lunch asking “Have you seen my price list?”, pull them by the hands to your stand at Prowein and Vinitaly. It could work, you know. Persistence is important in these matters. There’s another way, though. Let’s say, a bit less stressful and a bit more creative.

The easier way is do be a bit smarter. Yeah

And go beyond these common filters. I suggest you think in this direction: establish a bit of PR presence in Moscow — first. Have an article written about your winery, have this article seen by wine professionals, present the winemaker and the owners in a non-intrusive, humane way. Finally, do a small tasting for top somms and selected trade, be selective. Be gentle, be intelligent, be focused. THEN — hit them with the price-list! THEN — hopefully, go!

You will have a thousand questions for me by now — ‘how», «what», «why», «are you sure». Well, I am sure the direction is right and the right direction leaves no doubts.

Now, how to accomplish all that? I’m thinking ahead of you here. Get in touch, let’s talk: anton.on.wine [AT] gmail.com

Do you want to know more about the Russian market? Here are some of my articles:

• The last ten years: Russia
• The Russian market in crisis
• Russian sommeliers go back to school

Запись So you’re looking to get to wine importers in Russia? впервые появилась Wine Report Russia.

But, frankly, the essence of wine graphics is the opposite of what wine is. Or, at least, is for me.

Bear with me for a moment.

You meet a whole lot of WineFolly graphics on the internet and — especially — in social media. No doubt a nice person in real life, Madeline Puckette made herself a name presenting an extremely complex subject — wine — in a simplistic way that appeals to many of those of us who need a crystal clear answer for everything, chewed and served on a nice white plate. But it’s probably a good time to step up and say: “This emperor has no clothes!”. The empress, to be precise. It’s not easy to swim against the flow: with tremendous following which WineFolly has these days. How can it be bad?

While I do find these pieces of art visually pleasing, I don’t have any illusions about their practical significance. Putting in one word, nonexistent.

Just look at those graphs, the lines, the connections. Does anyone in their right mind is capable of applying them to real life? Does anyone want to deprive themselves of the joy of personal discovery and surprise which unknown wines often bring us?

One might argue there are food recipes out there and nobody can say they are useless, so why not apply the very same principle to wine? Wait! I’ve got my answer. Even using a web recipe, cooking involves so many personal details that can’t be put into any recipe that practically leaves you a lot of space to experiment within a specific cooking instruction. You can always alter it, you can use your own way of doing things, you can taste and amend it on-the-fly. Talking specifically about pre-selected wine pairings doesn’t leave you much choice, besides the choice of a specific producer (thanks God, some freedom).

It eradicates “wine discovery” and turns wine selection from bumpy safari into a guided tour with a group of pensioners.

And who loves guided tours? Do you, really?

Simplifying wine is not good. And not only for consumers with advanced wine knowledge, as one might think. Wine graphics are too loaded and saturated with connections and useless information for beginners, on the one hand, and presents wine as facts — which it’s definitely not with so much ongoing research, experiments and new discovers every day.
As the name of the article implies with a little help from Kurt Kobein, I believe wine graphics dumbs us down to the extent that we think wine world is well-structured and researched. Hundreds and thousands of wine and food combinations might work. There are hundreds varietal expressions of a single variety.

Infographics can be good — and visual! Wine aromas wheel is hard to underestimate, but anything that pushes us to making wine selection based on a certain dominating stereotype — and WineFolly graphics are a bunch of stereotypical views on wine — have to be questioned. There’s no black or white. There are only shades of grey.

I still believe WineFolly’s book is a beauty. And if you have it, let it rest in a proper place — in between The Homes of England and 100 Wines To Taste Before You Die.

Запись This emperor wears no clothes впервые появилась Wine Report Russia.

Once in a while you meet people unspoilt by the great names they work with and greatest wines of the world they drink on a daily basis. Well, Mrs. Grassini who has to professionally spit most of Sassicaia she tastes, is a pupil of the legendary winemaker Giacomo Tachis who passed away after a long fight with illness in 2016.

The Italian press prefers to call her nothing less than “Lady Sassicaia” and here she is, “the Lady”, to talk about wine and her philosophy, kindly reminding me not make a mistake if mixing Tenuta San Guido with the other wines she produces. Like this is a possibility.

Graziana is sitting next to me on a cool March evening, Maremma vineyards are still sleeping, some final pruning takes place here and there, some new vineyards are being planted. She talks in a charming voice, rom time to time asking for help with her English, but visibly enjoying a chance to practice the language.

Of course, I asked about Giacomo Tachis, the famous winemaker who’d put a great part of his life into Sassicaia bottles. “Giacomo Tachis and myself were very similar, he was keen on biochemistry and the chemistry of wine. We didn’t only work together, but were also friends”.

I’m especially interested in the way Graiana approaches winemaking and in her philosophy. The answer is surprisingly honest and clear. “I believe winemaking is both art and craft. Technology and talent are combined into one. In the end it’s us, humans, who make wine. But the fact that you have all the technology on your hands does not mean that you will produce great wine. There are many oenologists who are technically too savvy, but one should also be capable of feeling the wine”.

I’m very keen to understand what it means to “feel the wine”. Graziana is explaining with a smile: “When I taste the grapes I already know what kind of wine I can produce from them. Advanced tastings skills and technical background are also the must-haves. You can call it the ability to find out what the grapes want and need. They are asking you to help make good wine out of them. And blending different grapes is like a mosaic that comes to form a single image. This ability to imagine the finished product — is the very heart of the art of winemaking”.

Knowing the prices for Sassicaia I’ve always wanted to know how it makes the winemakers feel that only a bunch of people can afford their wines, needless to say, to understand them. “I do hope that those who drink Sassicaia are capable to understand the wine. And if they understand what they are drinking, that means they are drinking emotions. In the end, human taste is not yet fully researched. Different people have different tasting abilities. Me personally — I have a very strong sensitivity to bitter, this is determined by genetic factors, some people have it, others don’t”.

Speaking about the relations between Marquis Incisa della Rochetta and Giacomo Tachis, she explains: “Sassicaia came into being in the mind and with the efforts of Marquis Mario Incisa della Rocchetta, not Giacomo Tachis. The latter rather confirmed the Marquis’ assumptions that the wine would have had great potential. The wine was aged in oak and Tachis was truly the oak master, he greatly helped Mario in working with wood. In 2009 Tachis retired, he was feeling too bad to fully participate in the winemaking process. The Marquis and the estate manager came to me to taste the wines and talk. In 2009 I started my work as their oenologist”.

With prominent wines of that caliber I’m curious if there actually was something to improve in the cellar when Graziana took over Tachis. “Back in 2009 I did things to change some processes in the winery, especially when it comes to cleanliness and the selection of grapes. We tasted wines with the Incicas selecting only the best quality which was not the practice prior to that. We later began to make grape selection for the second and the third wine, Guidalberto and Le Difese. Before that all the grapes were going into the main wine”.

Besides Tenuta San Guido Graziana works with several other wineries which makes me curious about the style she applies to them in relation to the infamous wine. She replies: “Simply because I know the style of Sassicaia so well and have been working with it for so many years, doesn’t mean I aim to copy it in my other projects. Other wines that I do — they are like kids, each one is different from the others and I love them all. Tenuta San Guido didn’t hire me exclusively, there is no such tradition in the area. Tachis could work with any winery, he was free in this respect”. She then adds: “I think Marquis Incisa doesn’t want to hire “winemakers”, for them it’s rather a wrong word, implying that the style of his wine is determined by someone else. He wants to make his wine according to himself”.

Remembering how difficult it is sometimes to work with charismatic people, I asked Graziana how they treat the disagreements if those happen at all. “For Marquis Incisa I am a wine consultant. I inform — he decides. We normally agree with each other; of course, we had our disagreements too, even some tension, which we managed to resolve. After time has passed Marquis began to trust me much more”.

Before she leaves Graziana shares a little secret about the last moments with her teacher Giacomo Tachis. “What makes a great wine?”, I asked him when he was already fading away. “Great wine is when you close your eyes and see the infinity”. These were some of the last words I heard from him”.

Запись Catch her if you can впервые появилась Wine Report Russia.

Valery Filatov is CEO of wine importer United Distributors. The company — like its CEO — is no ordinary one: with its many wine outlets and aggressive regional strategy, it’s managing to ride Russia’s turbulent business conditions, while slowly evolving from ‘wine’ to ‘wine business’, as Filatov puts it.
Indeed, wine started with water for Filatov, when he became involved in importing French water in the mid-1990s. “Water is a weird thing to import: it costs seemingly nothing, but weighs a ton,” he says. “In order to make it economically viable we had to add other goods to our containers and the French guys decided it had to be wine.” It didn’t work out as planned: the French company was scared of the possible market consequences of the 1996 Russian presidential elections and ceased operating in Russia. But the idea of doing business with wine stayed in Filatov’s mind.

Into distribution

United Distributors’ head office, 20 minutes’ drive from the Kremlin, is a typical mid-sized B-class office; cost-cutting means a lot in this business. The CEO’s spacious office is full of bottles from the company’s portfolio, and Filatov speaks calmly and confidently, occasionally checking to see if you understand what he says.

Originally, Filatov’s idea was to bring in top wines to supply the rapidly growing number of restaurants demanding “the very best”, although at that stage he had neither experience nor wine knowledge. Slowly, the portfolio grew and names such as Ornellaia, Fontanafredda, Poggio di Sotto, Bodegas Roda, Dr. Loosen, Lapostolle, Achaval- Ferrer and Torbreck found their places in United Distributors’ portfolio. Many others followed. Until 2006, the company also imported foods, until finally deciding to focus solely on wines and spirits.

Today, United Distributors has offices in 20 Russian cities, plus 9 Aqauvita wine outlets in Moscow and four more in other regions. Filatov expects this year’s turnover to be twice that of 2013, when it was 3.6bn Rubles ($57m), with the steady growth highlighting that the company’s turnover has risen tenfold since 2010.

Filatov keeps himself busy: not only is he head of the importing business, but he also oversees wine distribution throughout Russia. United Distributors, in fact, consists of a number of companies, only one of which is the importing business. Others include distributors within a group of companies that are divided by region: Moscow, St Petersburg, Siberia, the Urals and the Far East. Each region – except Moscow and St Petersburg – includes several major cities.

From 2010, he says, United Distributors began to rethink its strategy. At the time a niche on-trade player, it had ambitions to become a national distributor with strong brands, capable of thriving in the harshest of retail conditions The world outside HoReCa was a revelation for Filatov. “If you want to build something notable, you ought to work with big brands,” he says. “It’s not easy to deal with the retail segment, but staying in a single niche wasn’t very interesting for us.”

Going beyond high-end restaurants and bars was an important step in United Distributorsʼ strategy. Expansion, new regional markets, mass consumers — all of those needed to be won over with new brands, new approaches and new fuel. United Distributors may not seem an active market player to the ordinary Moscow bar- goer anymore, because they seem to have disappeared. Yet while the company has been slowly fading from the wine lists of the A-class restaurants, an aggressive plan has come to fruition. From 2010, United Distributors began to expand rapidly – at the expense of established, but weaker players.

Aggressive approach

The multiple crises in the Russian market o ered an opportunity to acquire assets and brands from those in trouble. Step-by-step, Filatov was able to gather a group of very strong brands under one roof, while cutting management costs and expanding distribution, thanks to taking over the capacities of other companies. Among the notable companies whose assets were partially acquired were Vagr Vina Vita, Kazumian and Mozel. “We never buy companies themselves,” says Filatov. “It’s normally too expensive. What we do is negotiate the purchase of di erent listing obligations and speci c brands.” He adds, casually, “With some of the acquired brands we had success, with others we had to discontinue collaboration.” Among the successful acquisitions were brands such as the Chilean winery Viňa San Pedro and Gonzalez Byass’ Tio Pepe.

Given the current economic downturn in Russia, Filatov thinks consolidation is the only possible market response. “The wholesale wine trade is not e ective in the current conditions,” he says. “There are lots of players in a small market, the exchange rate is unstable, and companies need big margins – but even then can’t cover today’s [ nancial] risks.” Retailers, on the other hand, he says, “are not denying themselves anything and put margins on from 35% to 100%. Our customers just cannot bear it.” This means, adds Filatov, that further market consolidation is inevitable. “The big ones will be getting bigger and the small players must leave. Fifty healthy importers is what this market needs.”

United Distributors is currently looking for ways to cut costs and expand, all at the same time. As paradoxical as it sounds, there are opportunities to do this. Retail wine trading in 2014 was a mess for everyone: when the value of the ruble fell 50% to 80%, retailers forced their suppliers to absorb some of the exchange rate losses, to ensure that prices rose as little as possible; in some cases this was only 20%. Overall, according to Filatov, while the ruble lost 80% of its value against the Euro, European wine prices in Russia rose approximately 32%. “This means severe margin trimming for us,” he says. “We have to ght back with increased volumes and decreased expenses.”

The spirits and beer markets are also undergoing a series of mergers and acquisitions. The Central European Distribution Corporation (CEDC), one of the world’s biggest distributors of vodka, was sold in 2013 to Roust Inc., a division of Russian Standard. “Russian wine producers are going through the same business phase,” says Filatov, pointing at examples like Abrau-Durso, one of Russia’s wine producers, which acquired a majority stake in the small and artisanal Vedernikov Winery earlier this year.
The consolidation of wine importers isn’t easy. “It’s like putting two artists into one room,” says Filatov ironically. “Each one has his own vision, each one is an artist of his own. It’s hard for us too, even though we realise it’s inevitable”.

Day-to-day business

Unlike Russian wine distributors like Simple and MBG Impex, United Distributors puts all of its brands in a single portfolio, enabling them to cut operations costs, as they don’t have to run multiple companies with di erent brands. “We are, of course, trying not to put competing brands together,” says Filatov. “Our portfolio has to be e ective and work in our channels and in di erent local markets.” However, he says that the United Distributor approach is di erent for di erent cities. “The two major principles that we respect are: meeting demand, and rotation. We have niche wines in our portfolio, but we understand fully that we need sales. If we send fantastic niche wines to Vladivostok and they don’t sell — we are in trouble.”

For obvious reasons, the Moscow company showcases the full portfolio, while small cities like Khabarovsk — a staggering 6,000 km to the east — only have a selection, with Ekaterinburg (Urals) and Novosibirsk (Siberia) being somewhere in between.

Market players believe United Distributors made a clear choice in moving away from the niche A-class market of Moscow towards thinking about retail and distribution throughout Russia. “That’s right, we are in wine – but in the wine business,” says Filatov rmly. He says that back in the early 2000s, the company was doing ‘wine’. “We were selecting wines rigorously and e ortlessly, so
as not to compromise anything. We didn’t really see that the wine market can be very diverse,” he says. “We ignored the mass market, where few consumers know anything about wines. We now see that the market is much wider and we work through all the channels.”

Being a legal company in Russia means complying with wine regulations, which include the controversial distance sales ban. This requires the buyer to see the actual bottle in vivo prior to paying for it. This means that the only legal way to sell wines directly to Russian consumers is through a wine shop with a retail sales license. “Because of these legal boundaries, we believe the best way to manage direct sales is to have our own outlet in each major city,” says Filatov.

United Distributors’ shops are called Aquavita, which is ironic: consumers won’t nd any vodka on sale. Each outlet is situated in a business centre, not in the city streets. “Business centres are attracting paying customers,” explains Filatov. “They don’t have as much tra c as central locations but the demand is steady and the sales are growing. We are actually planning to open two more by the end of the year.”

Filatov clearly understands that being passionate about wines and doing wine business don’t have to be connected, especially in Russia. “About ten years ago, I suddenly realised that you don’t have to run a wine business in order to enjoy ne wines. You don’t have to bear all the costs of such business.” He says his philosophy has changed a lot. “I am now doing more management, consolidation and integration, than ‘wine’. I am solving purely managerial tasks, the same as in every industry.”

Yet despite him saying “from wine to wine business”, Filatov insists he hasn’t lost his passion for ne wine. “I still try to taste all the wines from our portfolio,” he says, indicating the rows of wine bottles in his o ce. “Have I changed my attitude to wines? No! I love great wines. It’s just that I understand that not everyone can a ord a $100.00 wine. There are people who want to pay $10.00. Is this poetry or prose? I don’t know.”

This article appeared in 5/15 Meininger’s Wine Business International

Запись Water into wine впервые появилась Wine Report Russia.

While fine wine bills have soared across the country due to the twofold weakening of national currency and economic turmoil, the question restaurant owners, sommeliers and wine traders ask themselves is why on Earth the rich man’s wine wardrobe remains so clearly driven by a small group of overpriced wines. And the broader one: why doesn’t wine culture flourish yet, after 25 years of open market?

Back in the 1990s it was looking so promising for the wine trade. Opening the market for imports and new wealth came smoothly together. What attracted Russian wine importers and sommeliers at first were classic wines. “Companies were willing to bring crème de la crème of the fine wine world”, recalls Dmitry Bazashvili, a Moscow sommelier with extensive experience in the city’s top restaurants. This meant exactly what it sounded like: Bordeaux, Burgundy, Tuscany, Piedmont. The blue-chip stuff of fine wine world. It hasn’t been until the 2000s when the practice of using top wines to show off took off: the talks of Petrus’ baths had already been in the air. Until recently “resolving issues” (reshat voprosy, in Russian) while drinking top Bordeaux was a common practice.

The luxury consumer

Expensive bottles which get two-three times more expensive when they reach the Russia’s capital, attract a well-defined clique of consumers. They are top managers, businessmen and, not the least, officials of all sorts. Top wines sales have often been fuelled by the money coming from the government-affiliated structures. Oil, gas, mining, construction businesses, everything that turn around tremendous amounts of money, are the most desirable clients of all, often willing to pay ridiculous money for the “right” bottles. I drink Tignanello, you drink Tignanello: like two submarines call-signs it’s a way of telling foes from allies.

Ironically, it’s not the desire to enjoy the aroma and taste of top wines that is the main driving force behind the demand for the “blue chips”. “Up to two thirds of such wines are destined for gifting,” says Vladimir Basov, running wine importing business and managing several wine bars in Moscow and St. Petersburg. “Most consumers of top wines regard them as status symbols rather than something to enjoy”. Sounds familiar: think China or Brazil. Doesn’t any developing country follow the pattern? When it comes to label-drinking, Russia has some specific features.

Label-drinking “a-la Russe”

As the rich became introduced to what sommeliers and Russian wine trade referred to as “best wines”, the interest to other wines quickly faded. Feels like the vici part of veni vidi vici never happened. At a certain stage top wine drinkers decided that they know wine because they drank the “best” ones. The will to discover new things rather than seeing to the old habits is something that never became a healthy habit in the country. Selecting wine is intimidating to the rich ones with too much at stake: their image, personal and business relations. With each new bottle a Pandora box, label-drinking came in handy.

“Around 60% of our Russian guests want famous labels like Ornellaia, Masseto, Solaia, Tignanello. They are looking for rich, full-bodied, rounded wines with universal powerful taste,” says Quadrum restaurant manager Fabio Borgianni at Four Seasons Moscow, overlooking Kremlin. To encourage guests to break away from their habits Fabio has to go round and about and make use of tricks of all sorts. Guaranteed return of an already open bottle if the wine does not fit the guest’s taste is one of those that regularly works well.

One might think that Tuscany example is the only that of brand-driven, mindless consumption in Russia. It’s not. Burgundy, the Holy Cow of wine aficionados, follows almost the same consumption pattern. Even assuming the consumers of Burgundy should know more about wines they still choose the famous labels. “Half of those who prefers Burgundy in restaurants do so to make an impression,” points out Basov.

Professionals like an expat in Moscow Fabio Borgianni are in low demand these days: sommeliers prefer to think less, sell more and are often tied up by restaurant owners who control the wine list and benefit on specific agreements with the wine traders.

R.I.P., Mr. Sommelier

With wine advertising ban closing the possibilities to deliver the wine-related information to the final consumers in 2013, sommeliers remained one of the few legal channels to convey the wine knowledge. But the hopes that sommeliers could somehow replace media vanished fast. It’s sad to admit that “sommelier” in Russia has turned into a curse-word. It was in this decade when restaurant lists became dominated by commercial wines and regulated by the contracts between importers and restaurant owners. Money agreements, that is. Sommeliers slowly evolved from deciders to what’s called in Russian vinocherpiy — a guy who simply pours your wine. The “labels” — expensive, famous, promoted by sommeliers and wine businesses — became just the right tool.

Designed to be the guides into the immense wine world, Russian sommeliers quickly became something else: a tool for promoting a limited number of fine wines, expensive and easy to sell. Driven by the desire to serve best to their nuveau-riche guests, sommeliers seldom dare or care to persuade those to enrich their wine vocabulary with a bit cheaper wines of the similar quality as the top ones.

Nobody trusts anybody

Russian sommeliers seem to have lost unconditionally in fight against label drinking. The clear lack of trustworthy local experts added a lot to it — no Russian Robert Parker has yet been born to influence, guide and inspire. Journalists are moving to make their own wines and wine writing is still widely banned from papers by law, making the profession extremely rare and non-rewarding financially. Besides, top drinkers rarely listen to experts of any sorts and, especially, the younger ones. Prices of wines sold are directly linked to the seniority of those who sells them.

It’s not only about the sommeliers per se. As a famous Russian proverb puts it, fish begins to stink at the head. Trust between the Russian venue owners, directors and sommeliers leaves much to be desired — at best. The anticipated restaurant life cycle of virtually any given restaurant is short and is a major reason behind the lack of inspiring wine lists. While most restaurants in Russia are run by businessmen rather than chefs, exclusions only make the rule more obvious. And then business goals step in: “You’re a good sommelier. Look, I’d pay you a basic salary and you go ahead and do business of your own,” the owners say. It is also about the money. Expensive wine requires expensive service — stemware, specialists, storage facilities and more importantly, time to store top wines.

Russian restaurateurs generally want quick returns, which is not good news for wine consumers. Unwilling to invest in wine cellaring, restaurants are managing smaller lists of no more than 150 wines. “As a result, we have reduced the interest in wine among guests. We stayed at the level where we like to drink Chablis but still think it’s a grape variety”, says Alexander Khatiashvili, special projects director at Simple, the fine wine importer based in Moscow. And if the lists are so limited they are bound to be filled with self-selling labels that turn around fast with virtually no effort from the sommelier side.

It’s possible that for this exact reason the most expensive wines like those of Domaine de La Romanee-Conti, distributed in Russia by Dmitry Pinsky’s company DP-Trade are among those that seldom suffer from crises. “In troubled times our best-selling wines are those of DRC. Their consumers don’t change their habits, ever”, says Pinsky puzzled himself.

Psy-factors

Back at Anatoly Komm’s restaurant Roman Smirnov says wines with a price tag of 5–35 thousand rubles a bottle (€70–450) are the backbone of top venues’ sales. Unfortunately for leading wine producers, the number of places capable of offering expensive bottles is declining fast: dealing with them proves to be psychologically hard to match short-term goals of restaurant owners.

Psychological observations of wine consumption are interesting and noteworthy. Insiders point out the Russian wine market is distorted by itself: it generates an extremely narrow interest towards a dozen of wine labels. “The rich ones start their wine journey with top commercial wines and are forced to believe that drinking such wines is a matter of prestige. In 95% of cases they will continue to drink full-flavour, commercial wines”, notes Mikhail Volkov, the co-owner of a wine bar downtown Moscow promoting more subtle wines of Burgundy, Germany and Austria. Unable to attract enough consumers in long term venues like his one rarely survive in the city.

Driven by stereotypical wine beliefs Russian restaurant-goers often categorically reject certain wines (“all Rieslings are sour” or “I only drink Italy”). They limit themselves to a certain label: even the harvest year is not important anymore. The only thing that matters is the familiar name on the bottle. “For the fun of it, take a Sassicaia bottle and add another producer on the label with smaller font — no one will ever notice”, says Roman Smirnov.

Two ways it could end

So it’s a bit thick, all of that. There’s limited wine information flow, sommeliers are bound by restaurant owners, who are, in turn, bound by short-term thinking and depressing economical conditions, which are, in turn, bound by political situation. And drinkers are pressed down by psychological issues connected to the general interest to life and living. Label-drinking is a minuscule part of the wine-trade business complications and could be perceived as a natural market response to squeezing, tightening and red-tape control of the sector.

Some say it’s time for new wines for reasonable money. “The best wine bars in Europe aren’t full of wine connoisseurs, it’s just people who came to have a good time,” says Vladimir Basov. Importers and restaurateurs are seeking to bring new trends: those who don’t feed on Super-tuscans, promote subtle German and Austrian wines and the word “Riesling” sounds more often than “Supertuscany”.

“Wine is an element of culture. The more you travel, the more you learn. At least people are now taking pictures of wine labels,” says Mikhail Volkov. “We need another generation that would replace the current one, that have traveled the world and came back. Only then something will happen in this market,” dreams Khatiashvili.

Запись Mindless drinking впервые появилась Wine Report Russia.

At the beginning of 2014, Moscow’s restaurant market was still embracing western values by the book, with venues growing like mushrooms after a warm shower and gastronomic life flourishing with food festivals and mini-markets. But now changes seem imminent.

The breaking news of the government banning imported foods took the ‘new middle class’ by surprise. Television and social media exploded with questions ranging from the selfish “How can I survive without Camembert?” to the scary “What’s next? Wine? Cars? Being able to travel abroad?” The final question was: “How will restaurants handle it?”

Despite the food import ban, which was damaging at first sight, most Russian chefs and restaurant owners managed to overcome the problem and find local suppliers, in many cases changing recipes and restaurant concepts. “We totally switched to local meat including chicken, turkey, goat meat and lamb,” said Ivan Shishkin, the chef at the Delicatessen in the center of Moscow.

Moscow, which has around 3,000 to 4,000 restaurants, bars and cafes, is dominated by big groups rather than big chefs. Novikov Group, Ginza Project, Restaurant Syndicate and Maison Dellos have already grown beyond the two Russian capitals, Moscow and St. Petersburg, and some have launched restaurants in London and New York. Their business schemes include posh design, trendy musicians and a couple of celebs, and they’re set in the right locations and shaken up with a powerful PR blender.

The truly unique skill of Moscow restaurateurs has always been problem-solving. The fact is that any Moscow restaurant can be instantly closed down simply because the outdated restaurant regulations are extremely hard to comply with. It is the restaurateur’s role to manage everything from landlords and health inspections to specific recipes.

Moscow chefs, too, have developed skills uncommon among their western peers, and they have to think outside the box in order to make it. Anton Kovalkov, born in the city of Nizhny Novgorod, just 250 miles away from Moscow, was the first Russian to get training at Noma. Ivan and Sergey Berezutsky, Vladimir Mukhin, Ivan Shishkin, Dmitry Zotov, Anatoly Kazakov, Dmitry Shurshakov are notorious examples — the list not being exhaustive. “Chefs are now both capable and willing to do great things,” says Andrey Fedorin, who manages MariVanna, Ugolyok and Uilliam’s. “They are more involved in business than ever before.”

Restaurant owners are changing, too. Once obscure investors who told chefs what to do, they have now become clever foodies, giving interviews and hanging out in open kitchens in front of their guests. White Rabbit, Zodiac and Selfie founder and managing director Boris Zarkov is widely considered a new type of restaurant CEO, forming close partnerships and friendships with creative and modern chefs like Vladimir Mukhin of White Rabbit.

Famous chef Anatoly Komm has been struggling to prove Russians are ready to enjoy complex gastronomy — including molecular cuisine — on a regular basis, seemingly dreaming of himself as a Don Quixote of the Russian culinary landscape. While Mr. Komm is certainly seen as an influential chef, his ideas of introducing Moscow’s population to experimental fine dining are generating mixed responses from both professionals and visitors, with mockery and worship forming intricate patterns.

It seems that what Muscovites are expecting these days is a more down-to-earth approach, and that’s what the major groups are coming up with — just take a bite of the burgers at the new Novikov place, #Farsh, (literally meaning “ground beef”), for an example. We’ll have to watch this space to see how it plays out.[bs_icon name=»glyphicon glyphicon-leaf»]

This was initially published in the World’s 50 best Restaurants Blog

Запись Moscow restaurants: hard times in a changing landscape впервые появилась Wine Report Russia.

Back in 2007 when Meininger’s did the report on Russia the word “best” was being used in almost each category, showing the result of 250 market players poll. Unlike 8 years ago, the leaders of today can be hardly described with the word: it all depends from which side to look at the company and its actions. Instead of statistical approach this review is based on several in-deep interviews conducted over the course of May 2015, revealing not only who the market leaders might be, but, most importantly, why.

The overall maturation of the wine market and wine consumer is noted by many market players, and yet, in 2015 wine is still on the sideways of the consumption mainstream, leaving a lot of space to spirits and beer — and a lot of space for wine market to develop. Many pointed out that serious fine wine business based on consumer maturity and knowledge may be conducted in only a few major Russian cities with 1m+ population — at best. Among them are St.Petersburg, Ekaterinburg, Novosibirsk, Kazan, Chelyabinsk, Rostov-on-Don. Moscow is largely dominating the wine sales for many fine wine distributors, being the financial and lifestyle capital of the country.

At a broader sight the market, like years ago, is continuing to be heavily regulated by the government, imposing numerous taxes and duties as well as demanding import and sales licences and duty excise stamps management to run the import / distribution business. Some said that the regulation helps defend the market against counterfeit produce, but the system is largely seen as a serious obstacle to market liberalisation.

Crimea annexation has also been a major factor in developing public debate and interest in the state of the local wine production. Russian media, especially online, has been generally talking more freely about wines inspiring people to get closer to the subject.

Notable distributors

Most wine importers in Russia started their businesses back in the 1990s with the opening of free trade after the Soviet Union collapse. While many exist, only a couple of dozens may be called “established” or “known to the consumer” players. They operate with price markups of 100-200%, those include numerous taxes and duties, logistics, listings and marketing.

Although the entrance barriers in the wine importing business are high, market insiders believe there’s a place for everyone — once you’re there.

While several major players retain the leadership with great multipurpose portfolios it’s the smaller-scale niche wine importer and distributor Vinoterra that seem to inspire many insiders and new wine companies with its business practices, management and wine selection. The company’s CEO Vladislav Volkov and his team have been instrumental in pushing the motto of terroir-driven wines from Germany, Austria, Italy, Portugal and Spain.
Notable CEOs of the major wine distributors are Maxim Kashirin of Simple. Dmitry Pinsky of Dp-Trade, Valery Filatov of United Distributors, Mikhail Bodukhin of Fort and Vadim Dobrynin of Eurowine — all with unique management skills and market approaches.

Some retail chains have also successfully developed their own imports with major example being Maxim Koscheyenko’s premium retail chain Azbuka Vkusa (“the ABC of taste” in Russian) which is developing its chain despite the weak economy.

New smaller specialist companies — Grape, Art Wine, Wine Discovery and Clasica — are yet to prove their ability to withstand the crisis pressure and push themselves into the market. These companies are created with limited portfolios which will hopefully be transformed into full ranges of wines.

Retailers

With the economical disturbance shaking position of Russian retailers, they have been moving in different directions managing their wine portfolio. International network Auchan has been noted for reducing its wine selection dramatically and moving into cheaper category, significantly downgrading the overall attractiveness for wine buying client ready to pay 800-2000 rubles (€18-50) a bottle. METRO Cash & Carry is believed to potentially be one of the major players in the retail market. Although its wine category manager Alexey Soloviev is pursuing the policy questionable to many leading wine importers, he also is looking to become a wine market leader, especially with the strategy of negotiating exclusive contracts for famous brands like Antinori.

Unlike Moscow players, many regional retailers has been reacting hard on the crisis, looking to replace established labels from prominent importers with cheaper stocks from sinking companies like Rusimport which declared bankruptcy in the beginning of 2015.

Specialised retail — Moscow

Despite the economical downturn, wine boutiques owners are saying the specialised retail sales are growing both in SKUs sold and in value. With the new economic reality of 2015, wine distributors are rethinking their attitude to business practices. It’s a general understanding go the market that it’s time when “anything goes” meaning more business experiments the aim of which is one: reaching consumers without intermediaries and on the more intimate level. Unlike the specialised single-importers outlets of 2000s (Grand Cru of Simple, DP-Trade wine boutiques), a new wave of wine venues has emerged blurring the boundaries between on-trade and specialised retail.

An example is Sergey Minaev’s Khleb y Vino (“Bread and Wine”) wine bars which use the power of the own wine company MBG/Millenium to support low prices. Minaev tends to put wine closer to consumers using his unique media power in Facebook and Twitter unparalleled to any other wine business owner in the country.

Other businesses are following the practice opening their wine and food bars, for example the new importer Grape has established a wine bar right in Moscow’s central location delivering food and simple but quality dining experience. Fort wine distributor is also opening a co-owned on-trade venue. No doubt this trend will continue through 2015 and further.

Specialised regional retail

Regional retailers are pushing boundaries with projects like Krasnoye y Beloe (“Red and White”) , that incorporate thousands of local wine shops delivering the cheapest wines at low margins and driving volumes instead of value. Chelyabinsk-based Sergey Studennikov the owner of the network, is seeking to change the population’s attitude towards wine as “alcohol” and is looking to expand dramatically with the next 5 years.

Another developing low-segment wine retail is Bristol chain specialised in cigarettes and alcohol sales that is now considered soon-to-be a part of DIXY supermarket group and currently belongs to Russian retail oligarchs coming from tobacco retail business Igor Kesaev and Sergey Katsiyev. The Otdokhni (“Relax!”) retail shops are more wine oriented regional real network of Vladlen Aktshuller from Nizhni Novgorod with 130 shops around Moscow, Moscow region and Nizhni Novgorod.

Smaller and higher-level specialised retail exists in virtually every bigger city, some owned by local wine distributors, others are independent.

Wine bars

While wine distributors are attacking the concept of investing into own on trade venues. independent wine bars owners are rethinking their attitude too. Vladimir Perelman, the owner of I Like Wine bar that proved extremely successful is not only looking to increase the number of Moscow wine bars dramatically, but also working on creating an independent wine portfolio for his network keeping to better control the margins and prices. Xenia Karpenko of another successful wine bar Wine Religion is also looking to open new venues to satisfy the needs of wealthy clients of Moscow extra-urban communities outside the central part of the city. In fact, Moscow and St.Petersburg have many interesting wine bars, mentioning them all is not possible here.

Media

Of major influencing publications Moscow’s Anna Maslovskaya’s creature The Village online magazine has been noted for promoting wine knowledge with Anton Obrezchikov as an author. Igor Serduyk, one of the Russian wine market long-liver, continues to write for such publications as Forbes Russia at the same time being involved in a new winemaking venture in Crimea.

Denis Roudenko remains a universal expert and journalist writing and talking on extremely broad topics of business, wines and spirits and running his own wine tasting club 750ml.

Of glossy magazines Vassily Shomov, the editor-in-chief at Aeroflot premium business class inflight magazine is particularly known for his passion to wine and never misses a chance to write about it despite the regulations.

Wine journalist Dmitry Kovalev, based in the town of Pyatigorsk, is doing a great job of putting tons of information and interviews on Russian wines on his web-site NasheVino.ru.

Major nationwide online and offline business newspaper RBC has been instrumental in delivering in-depth business interviews with the leaders of wine, spirits and beer segments of the market. Its editor Denis Puzyrev has been showcasing quality reporting for some years now with Oleg Trutnev managing the business section at another leading newspaper Kommersant.

Simple Wine News remains a quality wine publication printed by a single wine company (Simple) with its editor-in-chief Anastasia Prokhorova leading the team.

A notable media effort was done by Sergey Minaev from MBG to attract interest to his company and brands with the ItsMyWine web-site.

Local wine scene

Driven by a threat of imported wine embargo in the middle of 2014, Crimea annexation and the following ruble devaluation, Russian wine became an extremely hot subject both in media and in government discussions. Putting in place EU-like legislation that will let Russian wine made of Russian grapes flourish is something that many farmers, growers and winemakers await these days.

It’s important to note that one of the keys to the developments of wine legislation and attitude towards wine is strong ties between the “Russian wine” business and the government officials. For example, Boris Titov is an ombudsman for entrepreneurship and small business development under the president Putin and — at the same time — the owner of the major and most powerful Russian winery Abrau-Durso and a chairman of the Union of Russian Vinegrowers and Winemakers. The Union itself is headed and managed by Leonid Popovich, another prominent figure of Russian wine scene, whose work in putting together the pieces of an extremely intricate puzzle called “business-government relations”. Wineries like Lefkadia, Fanagoria, Kuban-Vino, Villa Victoria, Myskhako, Gai-Kodzor, Burnier, Karakezidi and many others lead the trail.

Many Russian wineries seek european consultancy or full-time employment of prominent winemakers such as Patrick Leon with Lefkadia, Hervé Justin with Abrau-Durso and Frank Duseigneur with Chateau Le Grand Vostock.

On the official side, the appointment of the southern Krasnodar region governor Alexander Tkachev as a new minister of agriculture is seen by many as a good sign of the future of Russian wine. Artur Sarkisyan is noted for promoting the culture of Russian wines and organising a yearly exhibition of Russian wines in Moscow.

In Crimea, Pavel Shvets is known for his passion for unconventional author approaches to winemaking and is putting a lot of effort to attract new owners to the vineyards in the area of Sebastopol city. Igor Samsonov , the owner of Satera winery, and the winemaker Oleg Repin are showing positive results with their brand Esse — drinkable, complex and affordable wines.

The version of this appeared in the 3rd issue of Meininger’s Wine Business International of 2015

Запись Wine: who is who in Russia впервые появилась Wine Report Russia.

Market turmoil

The ruble, hit by falling oil prices, economic sanctions and geopolitical tensions over Ukraine, finally collapsed in late 2014, after efforts to shore it up failed. On 16 December 2014, Russia’s Central Bank increased interest rates from 10.5% to 17% without warning, sending the ruble into free fall, past the psychologically important exchange rate of 100 rubles per euro. The plunge had an immediate and dramatic effect: white collar workers left their posts to hurry to ATMs and withdraw their cash in euros, while others queued outside foreign exchange booths to offload rubles before its value plunged even further. The impact on the wine market was immediate.

“There’s no doubt the market has backed off,” says Gazin. “It is not going to be the same for some years.” He should know: Russia has been among the top ten markets for Baron Philippe de Rothschild during the recent years. The famous family business has been working with two established Moscow-based distributors, giving the company plenty of risk diversification and portfolio management. Growth expectations for 2014 had been high.

As market hysteria ensued, most distributors had no choice but to temporarily stop sales and enter immediate negotiations with key clients on the new situation. “We had to protect ourselves from our clients’ potentially hasty actions, like being driven into buying a lot of wine and finding themselves not able to pay later,” says Vladislav Volkov, general manager of medium-sized fine wine distributor Vinoterra. “With some of them we had to draw the line to decide if they were still clients or debtors.”

The fallout

Broadly speaking, Russian wine distributors are operating in a government-imposed and coordinated system, with margins varying from 100% to 200%. “These margins, only seemingly high, include entry payments and retro-bonuses, marketing, salaries, restaurants listing payments and logistics risks,” says Sergey Smolin, regional sales development manager at Eurowine. But despite such extravagant payments, the wine business flourished – until the end of 2013, when demand for expensive wines slowed.

In fact, most businesses could see turmoil coming long before the ‘black’ date. “While the sales of 2014 are comparable to those of 2013, our clients started to avoid super-expensive wines back at the end of 2013,” notes Alexander Khatiashvili, deputy general director at wine distributor Simple. Other importers had begun extending their portfolios with cheaper wines.

When the interest on loans made in rubles reached 30%, businesses not only found it hard to pay existing loans, but also to get them, as credit dried up. While self-funded companies were able to pay wineries up front, they asked for bigger discounts in return: this means that those brands invested in Russia now faced increased market spending but delayed returns. With sales shrinking up to 50% across the country, distributors need all the help they can get to survive – up to and including suspending payments to suppliers.

Smaller wineries and less prestigious names are going to find Russia a bumpy ride from now on. A source from one of the major wine distributors, who wants to remain anonymous, says the company has adopted the practice of paying major wineries but deferring payments to minor ones. The same source says the practice is becoming widespread, as everyone waits for a better exchange rate before they pay. Just when this “better exchange rate” will become reality is hard to predict, although the ruble did appreciate in April 2015, rising to around 55 rubles to the euro.

Most wineries will have little choice but to accept more risk, agree to suspended payments, and offer deeper discounts. The choice is simple: either back up the distributors or de facto quit the market. “We understand that we need to work much closer with our partners during this difficult period and give them as much support as possible,” says Carlos González-Gordon from González Byass.

Consumer impact

Will Russians change their drinking habits as a result of the financial crisis? Most market players believe it’s unavoidable. Wine portfolios will have to change too. “Business and private consumers are looking for smart buys. Many expensive wines are being re-evaluated and put away,” says Maxim Lesnichenko, the former CEO of wine distributor Fort. “Iconic wines will continue to sell – in lower volumes.”

Volkov of Vinoterra, admits he has no clear idea about the new pricing policies yet, but said that a number of wines had been put on hold. “We are seeking to add new wines from our current producers. Those priced €1.50 to €10.00 ($1.63 to $10.88) ex-cellar will be most attractive.”

Premium retailer Azbuka Vkusa, with 78 retail stores and its own importing division, is now seeking wines with the biggest possible margins. “We are looking to expand our offer of mid-priced wines,” says Andrey Golubkov, head of public relations. “Yet, we are also working in the premium segment and are about to offer our customer a Grand Cru Classe selection later this year.”

The realigning of wine portfolios will continue throughout 2015. “Adding new wines that meet the market demand in this situation is essential,” says Khatiashvili from Simple. Wines that are hard to sell will be cleared out, and portfolios could shrink. But it’s not just a question of loading up on cheap wines. “Switching to low-level mass-market wines doesn’t really help,” argues Volkov. “The other side of moving cheap wines is less margin and more effort to sell volumes. Financial health and the right price policy comes first these days.”

If Russian wine merchants need a lesson in financial health, they need look no further than the vivid example of Rusimport wine distributor, owned by the Mamedov brothers, which handled big brands such as J.P. Chenet. Several holding companies issued bankruptcy statements in late January 2015, citing lack of access to credit, the unfavourable exchange rate, and the stiff payment terms imposed by the retail chains. Some insiders perceive the move as a tactical one and are not expecting the company to actually close down.

Inside the importing companies, a change in approach is taking place. Most have put consumer-oriented projects on hold, while marketingdepartments have been cut – in some instances, more than 50% of staff have been let go. Some companies have been forced to source cash wherever they can find it, by dramatically reducing prices, with discounts reaching 50%. Even distributors carrying strong brands like Marchesi de’ Frescobaldi, Marqués de Riscal and Louis Roederer have to fight for customers.

And, of course, importers – such as Grandi Vini – have gone under. Surprisingly, new players also emerged in 2013 and 2014, creating new portfolios and mostly targeting the HoReCa segment. Companies like Art Wine, Clasica and Grape are notable new distributors in this segment. They focus on small-production boutique wines at lower prices, and rely on personal relations with sommeliers in Moscow and St Petersburg.

HoReCa on fire

Back in the Ritz’s lounge bar things are calm despite the tone of conversation, with the emptiness of place masked by the sounds of R&B. When asked about the restaurant market, Gazin is straightforward: “Forget about the 25-page wine lists. The wine market goes narrow.” Yet he doesn’t see a significant decrease of on-trade sales. Well, not yet. “You can’t judge the situation by the reaction of restaurants. The effect in this segment is delayed and will be noticeable in six to seven monthsʼ time.”

Even with the delayed impact the situation is focusing attention on wine management in restaurants and wine bars. High-powered restaurant groups like Ginza, Novikov and Maison Dellos inevitably have to change, and are already looking for new concepts and formats. “Restaurants go through turbulent times. At the same time, some venues are hard to get into,” says Khatiashvili from Simple.

Volkov from Vinoterra says that clients are on the move. “People who used to visit expensive venues are now moving towards democratic places – gastropubs and wine bars,” he says. “Big places with big design and PR are having troubles. People who used to go to wine bars and cheaper restaurants are consuming more wine at homes.”

With an overabundance of half-priced wines, some retailers and restaurant groups are trying to dominate the market by offering something different, pursuing better margins for themselves and at the same time trying not to scare away their clientele. High-end restaurants like those of Maison Dellos Group (including the famous Café Pushkin), are being more demanding of their wine partners and asking for better prices – and are ready to dispose of those who refuse to cooperate. Restaurants are reducing their suppliers. Newly opened Restaurant Fahrenheit and Orange-3 have been especially selective, appointing just one wine supplier each. “It’s quite beneficial for us,” says Sergey Aksenovsky, the head sommelier of the Maison Dellos Group. He explains that customers are not wine knowledgeable enough to realise that the range is limited.

Back in 2006, Simple created a fashion for wine bars when they opened their first Grand Cru, an amalgam of a bar, shop and restaurant. The initial concept quickly became a chain that spread throughout Moscow and then to St Petersburg. Today, a new independent wine bar sector is evolving, partly out of a desire of importers to control their own margins. Distributor MBG, for example, has opened ‘Bread and Wine’ wine bars with a wine selection from its own portfolio. In turn, wine outlets that were formerly pure retail have evolved their food and wine offerings. Wine distributors are now competing with their own on-trade clients.

But even wine bars are finding the new situation difficult. I Like Wine and Wine Religion are two wine bars successfully launched in Moscow in 2014, but they too have been impacted by the situation. “Our net profits have suffered a lot because of the currency rate,” says I Like Wine’s owner Vladimir Perelman. “On the other hand, our turnover skyrocketed during the months of January and February.” Luckily, I Like Wine’s business doesn’t rely on bank loans and avoids distributor obligations. While Perelman is looking for better-priced wines, the list is simultaneously being supplemented with more expensive bottles to meet the needs of the top tier of wealthier guests.

Another development possibility is for Perelman to enter into an agreement with one of the wine importers, to bring in a portfolio of wines that’s available only in his wine bars. “It’s all about controlling the wine margins,” he says, adding that he will need to open 10 more bars to get the volume he needs to secure exclusive contracts with importers.

The importance of sommeliers is also growing: restaurants are dependent on their ability to sell fast and build wine lists that will perform according to the guests’ needs.

Regional fever

For producers like Baron Philippe de Rothschild that rely heavily on national retail distribution, the currency instability has been a major headache. Gazin is particularly worried about the inconsistency of retailer strategies. “Around 70% of our sales come from retail networks,” he says. Some retailers are increasing prices, while others hang on to the pre-collapse pricing. “We cannot have our wines priced as we would rather like. Mouton Cadet can cost 850.00RUB ($16.57) in one place and 1,200.00RUB ($23.38) just across the road. It’s the same with all the major wine brands.”

Retailers continue to control the market. For years distributors have had to cope with substantial entry fees, retro-bonuses and challenging contract obligations. These tactics were tolerable while oil prices were high, but have become crushing.

Gazin and his partners have no option but to deal with the situation across the channels and the regions. What worries him most is the impact on the consumer. “We are trying to adapt to these new conditions and keep our wines in their habitual price brackets.” It’s not easy when his brand network is spread throughout Russia.

Moscow distributors look nervously at regional players’ overstock problems. Back at Simple’s office, Khatiashvili confirms that regional sales have become one of the company’s biggest risks, because of deferred payments and the uncertain financial state of local players. On the other hand, Oleg Arkhipov, who used to work in the regional departments of both Fort and Simple, believes the regional problems are in part caused by the wine distributors themselves. “Pushing regional clients to buy more has been common practice in the past five years,” he says. “Moscow distributors offered additional payments and other bonuses for those who bought more. Those with brains didn’t get into this rat race. Others now have to either go bankrupt or return the stocks.”

This hasn’t affected everyone equally. Those regional players who have been able to manage stock control and distributor relationships are thriving. The three Vinoteka Soloviova wine shops in Yekaterinburg, population 1.5m, is one small-scale business doing well, despite wine prices having risen 25% to 30%. “Unlike most local restaurants we didn’t subscribe to any sales contracts pushing us to sell specific wines or spirits,” says co-owner Semyon Soloviov. This ability to refuse seemingly attractive proposals from wine and spirits distributors seems to be the key to healthy finances. Semyon says there has been no overall decrease in sales, thanks to corporate clients and wine education programs.

The view from abroad

If things are difficult for members of the Russian wine trade, how are the producers that supply them faring? Some well-established producers with long memories have the experience of other crises to fall back on. “My experience with crises in other countries tells me that companies with a long-term approach have more chance of surviving,” says Miguel Torres of Torres. He adds that watching the political situation is now part of running a wine business in Russia. For their part, Nadia Zenato of Veneto’s Zenato winery says: “We think that dumping prices, as some producers do, is not a serious strategy. You lose your reliability in the long run.”

On the other side of the world, Yalumba also feels no urge to overreact: “As a family- run business the Hill Smiths are able to take a long term view. A small dip in shipments is not a motivator to make dramatic changes,” claims Elizabeth Schoen, European regional sales manager for Negociants International.

Martin van’t Zelfde, European regional director for Constellation Brands, is sure their Paul Masson brand will be fine in Russia: “We finished the year [2014] with more inventory than planned due to the sales results, but we have a number of orders on hand that are prepared for shipment,” he said. “Some of the feedback we receive from the market is that consumers place their trust in known brands and strong brands will get stronger.”

Predicting the future is extremely hard, but some market-watchers are willing to try. A source inside a leading wine distributor team assumes low-level clients (buying $260.00 worth of wine a month or less) will disappear from the market, while wealthier clients will continue to buy. “Expensive Burgundy and Bordeaux are still in demand.”

Sergey Smolin of Eurowine agrees that it’s unlikely the present turmoil will affect the market share of the big, established players. “Prices are chaotic and everything is changing fast, but it’s all temporary,” he says.

As Gazin finished his drink, he is optimistic. “I don’t think it will come as far as full market blockade,” he says, referring to sanctions against Russia. He does think that tensions will continue to rise for some time and the economy will be difficult for another two to three years. “Russia is a fascinating market and people like wine and brands, and are ready to try different cuisines. We will definitely not sit still and will do what we can to increase our market share.”

By Anton Moiseenko

This article appeared in Issue 2, Meininger’s Wine Business International Read the full story on Meininger’s Wine Business >>>

Запись The Russian market in crisis впервые появилась Wine Report Russia.

In my last article for a known European wine mag I outlined the problems of the Russia’s wine market during the times of crisis. Oddly enough, it seems that it will do a lot of good to wine business. Wine distributors with weak financials are disappearing, new wine bars are opening and Russian consumers are starting to actually think about what they choose to drink. Price and quality relation is becoming a major factor of choosing wines for many of us.

From the conversations I had with many of the market players (sommeliers, importers, salespeople and consumers) it became clear to me that I have to convey this important message to you, which in short is:

• crisis gives great opportunities to increase communications and promote the wines of your region
• with new bars and restaurants opening — smarter than ever — consumers are becoming more savvy about new regions with great price/quality potential
• social media (Facebook+Instagram, specifically) is becoming the major and exciting way of communicating your ideas in Russia
• old-school communications are getting extremely annoying and out-of-date. Provocative brand journalism and storytelling are the future.

Don’t be scared. If you’re planning to grow or sustain your positions in Russia, feel free to contact me and discuss the possibilities of communications development & promotional activities for your wine region or winery. Creativity, inspiration and attention to modern consumers are the things I like to apply to wine communications.

Bring it on!

Запись Time to bring your region’s wines to Russia. Seriously, it is. впервые появилась Wine Report Russia.