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Will the US-EU wine trade war increase Russia’s wine market attractiveness?

As much as I would like wine market in Russia to become a more welcoming place for all international wine players, we are still facing a lot of difficulties. And, yet, when wines from the EU face a possible increased taxation from the US government, what do you do? You look for other opportunities, closer to home.

It is weird — Moscow. being just 2,5 – 4 hours away by plane from major wine capitals of Europe, and still is not considered an interesting (I’m not even saying priority) market by many wine producers and wine associations (AOCs, DOs and DOCs, what not). This is both good and bad news for everybody: bad, because Russian consumer and a wine professional remains relatively cut off from major exhibitions and wine shows, except several Italian ones and three shows for Portugal, Germany and Spain. Wine appellations are not investing here — not at the moment. They abandoned the market back in 2014, some of them — back in 2008, and haven’t come back (Wines of Germany and Wines of Portugal being rare examples, both explaining it roughly similarly: “We are seeing an increase in mean price per bottle sales”). Fair enough.

The good news is that there isn’t much competition among appellations. Yes, sommeliers are receiving wine importers’ phone calls, but those are seldom creative. A handful of smart wineries, though, are taking Russian market seriously — and they get rewarded really well. Stable place in top ten markets isn’t something new for some EU wineries. And we are talking about HoReCa and private clients segments, not the shady off-trade.

Russian population remains a weak wine drinker for two major reasons: 1) economical and political stagnation that won’t let mass-consumer start really spending money on wine and 2) strict wine trade regulations, corruption and wine advertising ban which makes spreading information about wine much harder than it should be.

Hey, considering vodka-related alcoholism traditions, Russian officials must be happy to promote wine drinking of ANY sorts — be it binge or occasional. With all this in mind, quality wine consumption remains quite limited to a group of people living in big cities like Moscow and StPete, with limited growth in consumption. The fact the that number of middle-class drinkers cannot increase is simply because the middle-class population is not growing. Yes, wine knowledge spread slowly anyway, with all the barriers and nonsense that’s going on, but not nearly as much as it could.

But when the shit hits the fan, so to speak, meaning D.Trump messing with Europe, things can get pretty interesting. Would it be wise to funnel some of that export juice and marketing effort to nearby Russia, instead of sharing 25% wine taxation with your partners-importers in the US? I have no idea how long the 25% tax will remain (and they say Donald is already thinking 100% tax and not only for France). One definitely doesn’t want to lose such a lucrative market as the US. But maybe, just maybe, it’s about time to look at your options in the Eastern markets — not only Russia. Especially when you’ve got electronic visa for a short-term (less than 8 days) visit to Russia, provided you’re flying in to Saint-Petersburg (read here).

In the end, people drink wine here too.

Anton Moiseenko
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