Talk to a Moscow-based hip sommelier or a high-end wine trader and they will use words like “pét-nat”, “orange”, “Spätburgunder”, “Pinot Blanc” and so on. Soldera and Gravner sound like they’re the go-to names for the whole of Italy. Then, take a look at what people are actually drinking – and it can be quite different.
With the Russian economy in crisis, belt-tightening can be felt across the country. Surprisingly, that doesn’t mean wine sales are down: in some instances, things have become even better. Professionals across the market indicate that wine knowledge remains poor among the general public. But the ruble’s reduced buying power, and retailers’ desire to make better margins, have combined to expose Russians to more new wines than in the past. Russians are experimenting, whether it’s with wine from Spain’s La Mancha or Portugal’s Vinho Verde, New Zealand’s Sauvignon Blanc, Spanish Cava and Prosecco or affordable German Rieslings.
Dramatic changes in taste
It’s not easy to obtain hard statistics from Russian retailers, and commercial information is rarely offered to media voluntarily. What is certain is that Russian import statistics have shown dramatic changes in the past three or four years. Among the losers are Old World leaders Italy, France and Germany, which have all lost a significant share of the market compared to runners-up Spain, Portugal and Georgia. The New World is stagnating, with Australia, South Africa and Chile losing market share; the US and Argentina have been particularly hard hit. On the other hand, wine-producing countries of the former USSR, which share a cultural tie with Russia, have seen impressive growth.
Although Russia as a whole remains a consumer of sweetness-driven wines, market players sense a slight drift to drier wines. Although the effect isn’t big, it’s there, probably because there is such a great variety of dry wines, some of which can readily compete with off-dry and semi-sweet wines. The developing gastronomy scene has been another factor in the move towards dry and brut styles. While the trend is largely limited to wealthier consumers, it influences other groups too.
Russians buy their wines from several categories of retailers. The biggest combine food and wine offerings, such as X5 Retail Group’s chain of Pyaterochka supermarkets, which has more than 12,000 shops across the country and which is, by far, the biggest mover of volume wine in Russia. On the cheaper side is the Diksy chain, while Auchan is a big volume mover as well. Metro Cash & Carry, on the other hand, is a far more sophisticated wine trader dealing both with volume and quality producers. With its combined wine shops/on-trade concept, Otdokhni (“Take a Break” in Russian) is another fast-growing retailer combining food, wine and HoReCa under one roof and defining what the future of affordable wine sales might look like. Mid-level supermarket chains like Lenta and Perekryostok are showing fewer signs of a creative approach while upscale supermarkets like Tvoy Dom (“Your House”), which have an impeccable wine portfolio, don’t seem to be making it an important part of their business. The top-end Azbuka Vkusa (“The ABC of Taste”) retail chain, which has its own wine portfolio, is a powerful player catering for higher-income consumers.
The development of affordable chains shows that the general consumer likes shopping close to home at Krasnoye & Beloye (“Red & White”, about 5,000 retail outlets); Bristol (2500 outlets); Aromatny Mir (“Aromatic World”, 500 outlets) and the abovementioned Otdokhni (200 outlets). Such chains, some of which have thousands of outlets situated in uptown Russian cities, are capable of moving serious volumes. Spirits producers are also involved in the distribution of wines. Beluga Group, the producer of the eponymous Russian vodka, has importing wine for several years now, having already added about 300 specialised shops in Moscow under the brand WineLab.
Another reason for wine producers to be optimistic about Russia is the recent trend towards retailers importing on their own behalf. While the rich and stable 2000s were about the development of fine wines, and importers and distributors were able to maintain a healthy margin and still be successful, from 2010 prices were pushed downwards and they had to fight for every cent. Now, observers on three sides – retailers, importers and journalists – agree on the diminishing role of classic wine importers, as retailers invest in their own importing departments. Several national wine promotional bodies have reported an increase in value per bottle sold in Russia, despite volumes being down. Wines of Portugal have returned and German wines are expected to follow suit.
What’s hot, what’s not
Production of local wines has grown since 2010 as more wineries in the south of Russia develop a clear vision for better quality. Thirst for the national product increased dramatically after the population was cut away from the EU by sanctions and trade wars. After US-Russia relations deteriorated, the impact on US wines was felt immediately although some high-end wines remain in Russia. Interest in local wine can also be explained by the fact that many wine specialists and PR people, having lost their EU projects and employers in Russia, have been forced to work for Russian wineries or winery associations. With the addition of Crimea, the country’s areas under vine have dramatically increased. While the quality remains debatable, there are positive examples of better wines appearing, both at the high end and mass market levels.
Chile remains the leading New World supplier in Russia, but consumers are losing interest in wines from across the Andes. They are simply not trendy anymore and do not fit the price to quality ratio Russians like to see. Important brands of the past have been washed out of the stores with the likes of Luis Felipe Edwards and Concha y Toro being virtually all that have survived. With no marketing presence in Russia, Argentina and its Malbec have been unable to take root on the shelves.
New Zealand’s Sauvignon Blancs, on the contrary, have doubled their exports to Russia in the past few years. Although imports in general remain relatively small in comparison to Chile’s, intense, crispy Sauvignons sell faster than pancakes on a sunny Easter day.
With regards to French wine, something has gone terribly wrong so that they no longer compete on a par with Italy. Oxana Batarshina, export manager for the Gérard Bertrand Group, believes several factors are to blame: bad consecutive harvests in Bordeaux leading to a surge in prices, the ruble devaluation, and strong competition from other countries in the price level previously occupied by cheaper Bordeaux. “People are also simply fed up drinking wines of the same regions,” she adds.
Italy, on the other hand, faces equally negative developments. Expensive classic bottlings from Tuscany and Piedmont are much less attractive while booming sales of Prosecco have not helped much on the value side. Affordable Italian reds from Puglia and Sicily perform better with distributors reporting increased interest.
Russia used to be one of the fastest growing markets for sparklings. The good news for Italy is that Prosecco remains big, although DOC/DOCG distinction is mostly disregarded. Another interesting market mover has been Spanish Cava, which attracts ever more people. This interest is driven by democratic offerings that have appeared in supermarkets. Chains like Krasnoye & Beloye sell Cavas at $9.00 to $10.00.
Russians love wines with high alcohol. While professionals are calling for Pinot Noir-ish elegance and lower alcohol levels, ordinary consumers vote with their rubles for intense, powerful wines. The alternatives to $20.00 Amarones sold through Krasnoye & Beloye are Puglia’s lush reds and Georgian Kindzmarauli, a semi-sweet wine made from Saperavi grape.
Georgian wine, banned from the Russian market in 2006, is now back on the shelves and stronger than ever since the ban was lifted in 2013, although it’s more mass-market options than quality-driven wines that are available. The thirst for Georgian wines is explained by the demand from consumers who remember Soviet times and Georgia’s position as the winemaking Mecca of the Soviet Republics. The popularity of Georgian cuisine and tourism are also contributing to growing demand; Georgia is clearly becoming an important travel destination.
While the political status of Abkhazia remains an issue, it has become, alongside Georgia, one of the fastest-growing suppliers of wine to Russia, dominating the cheap wines segment; the wines are probably made from Moldovan bulk. Brands like Lykhny, Apsny and Psou cost virtually nothing at just $5.75 and are semi-sweet. There are positive trends for countries such as Azerbaijan and Armenia too. Winemaking in the latter is moving at speed and geographical names like Areni are becoming familiar, thanks to Arthur Sarkisyan’s efforts to bring these wines to Russia.
Mysteriously, Portugal, whose grapes most Russians can’t even pronounce, is making a strong comeback, with sales doubling in value in 2017 compared to 2013. The secret is, of course, attractive pricing, great quality, drinkability and Vinho Verde. The “zelenoye vino”, as Russians call it (green wine), is probably the most emblematic Portuguese wine in Russia. The Wines of Portugal 2018 marketing campaign has also helped.
Sales of Spanish wines, not including the imported bulk used to produce “Russian wine”, are also on the rise. Democratic offerings from La Mancha and Jumilla are driving the segment with distributors increasing the presence of smaller wineries from Spain’s non-classic regions.
Grower Champagne, although a niche offering for HoReCa and Moscow’s private clients, has become interesting in places where sommeliers play an important role. Instead of carrying one or two well-known brands of Champagne as they did several years ago, Russian distributors are looking for niche terroir wines of limited production, which generate all-important cash flow.
With people still figuring out which wines taste better, organic concepts are not yet attracting strong interest. While both retailers and media have made great efforts to explain the difference between organic and biodynamic farming, the population at large still remains uneducated on the matter and, in any case, it looks like organic ideals don’t really speak to the Russian soul.
Pét-nat wines, on the other hand, have attracted interest thanks to favourable reviews from hip somms and traders. While companies are still bringing such wines into Russia, it looks like the saturation point is not far away.
Overall, while times are tight, they’re also good for ordinary consumers, who have more and better wines on offer than ever before.
This article first appeared in Meininger’s Wine Business International, 22 Nov, 2018