Russia is back

Wednesday, 18 January, 2017
Vladimir Gorodkov
Russia has a highly volatile wine market. Periods of rapid growth are often followed by drastic declines. But amid the numerous problems and uncertainty there are opportunities there that should not be missed.

Since WOSA withdrew its activities and financial support from Russia in 2014, the market in that country went through rough waters. Due to the devaluation of the national currency, international sanctions and economic crisis Russia shifted the emphasis to increasing its own local production and price optimisation. The imports fell sharply and Russia dropped out of the world’s top five wine importing countries in 2015.

With the oil prices stabilizing and the Ruble strengthening, 2016 proved to be a turning point again. While the exact statistics for the year are not available yet, according to the estimates of Vadim Drobiz, the Director of CIFFRA, the import of wines into Russia grew by 13% to 450 million litres (or over € 700 million) last year.

The increase of imports from specific countries is even more spectacular. Georgia, Russia’s neighbour in the South, has increased its wine exports to Russia by 40%. South Africa’s export of bottled wine has skyrocketed, increasing by 76% to over 3 million litres. This is the highest volume of bottled wine ever exported from South Africa to Russia and makes this country the fastest growing export market in 2016.  

In the absence of support from WOSA, South African wine producers are left to their own devices to penetrate and conquer the recognition of this intricate market. This is not an easy feat by any measure, especially taking into account the difficult economic situation, tough bureaucracy and import regulations, and different business ethics, culture and language.

Apart from accidentally stumbling into a Russian importer at an international show in London or Dusseldorf, or personally rocking up in Moscow with a suitcase of samples, there are few vehicles that can help South African producers to enter the market. On this background, it is disappointing to see the low interest from the producers in participating in the major shows in Russia. Prodexpo, which is the largest food and beverage expo in the Eastern Europe and where the South African pavilion has been run by WESGRO for the past three years, will house just a couple of South African wineries this February. The World Food Exhibition, which takes place in September and where the South African pavilion has been organized by the DTI, does not stimulate much enthusiasm either. The latter is mostly the consumer show, however, its wine segment is insignificant.

There is also the Festival of South African wines in Moscow which is in its 8th year running. Focussed solely on South African wines, the show has been steadily growing over time and currently occupies a prominent position in the professional wine calendar of the Russian capital. The Festival is not only an efficient tool in raising the popularity and image of wines from South Africa, it also proved to be an effective launching pad for new brands on the market.

Many producers have found their distributors through participation in the Festival. Last year alone two out of four participants, who didn’t export wines to Russia before, received offers from Russian importers. One of them – Eikendal Wine Estate – even received two proposals to choose from. Another one – Boland Cellar – signed a deal with well known Russian distributor Grape Premium Wines & Spirits. These volumes have not even been included in last year’s statistics, so hopefully we will see further growth soon.

The 8th Festival of South African Wines in Moscow is taking place on 25 April 2017. It is organized in close cooperation with the Embassy of South Africa in Russia and is actively supported by prominent Russian importers and wine media. The registration for participants is still open.

While it is still not clear whether we will ever see Donald Trump with a glass of South African wine in hand, let us in the meantime explore the opportunity presented by Russia, keeping in mind that the relations between Russia and South Africa are well on the rise!

Wine Export to Russia
Wine Export to Russia

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