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Wine Digest (January 21)

Wine Digest (January 21)

Thomas Anthony

English-language Editor

21 january 2022
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Overview of Top Stories in the Russian Wine World.

Wine law compromise, Price rise, Export rise, Illicit alcohol, Agrotourism grants.

Every week we identify for you the top stories in Russia about wine, spirits, restaurants, beer, cider, etc. We provide an English-language summary of each of them, as well as a link if you want to learn more. 

Written by Evgeniy Kotelevsky, edited by Thomas Anthony.

Authorities compromise about deadline for compliance with new wine classification

The moratorium on enforcement of the July amendments to the Russian wine classification system, which formally expired on December 31, was quietly extended until March 1. According to Vedomosti sources, this was agreed upon at a meeting of representatives of the Ministry of Agriculture, the Ministry of Finance, Rospotrebnadzor, and other government bodies. Wine importers and retailers are advised to apply specially-developed stickers to bottles, confirming their legal status, to avoid their seizure. According to Alexander Lipilin, Executive Director of the Fort wine company, such stickers will cost only 0.5-1 ruble for importers. However, it remains unclear how the new legislation will be applied after March 1. Read the original news in Russian.

Experts predict a rise in the prices of all types of alcoholic beverages in 2022

The excise tax on spirits has been increased by 4.6 rubles from January 1. The rise in the prices of vodka and brandy may reach 8-12% in the coming months, due both to this and to a 7% increase in the official Minimum Retail Price (MRC) of spirits. Producers of Russian wines, in particular Kuban-Vino and Millstream, indicated that the retail prices for their products could jump by up to 10-25%. As we reported at the end of last year, wine importers have warned of an upcoming increase in their purchase prices, which could lead to an increase in the retail price of imported wines by 10-15%. Experts of the Chamber of Commerce and Industry of the Russian Federation (CCI RF) anticipate an increase of 10-15% on average of the market prices of all alcoholic beverages. Read the original news in Russian.

Russian wine exports increased by 28% in 2021

The Federal Center for the Development of Exports of Agro-Industrial Products (FGBU Agroexport) reports 619,000 decaliters of wine were exported from Russia in 2021, with a total value of $13 million. Thus, the export of wine from the Russian Federation increased in 2021 compared to the previous year by 28% in volume and by 38% in monetary terms. Russia exports wine to 30 countries, led by Ukraine, South Ossetia, and China. At the same time, total wine production volume in Russia fell last year by 14.3%, according to the National Consumer Protection Union. However, this is explained by the changes in legislation banning the use of imported wine materials for the production of “Russian” wines – so the figure for 2021 includes (for the first time) only wine actually entirely produced in Russia from Russian grapes. Read the original news in Russian.

Photo: © Igor Rodin

According to Skolkovo experts, 26-35% of alcohol in Russia is of illegal origin

A study by the Skolkovo Moscow School of Management assessed the overall level of bootleg alcohol consumption in the country as “dangerously high” – with spirits accounting for the lion’s share of this. 30-40% of spirits sold in Russia are produced illegally, while 4-7% of beer is illegal, and only 0.5% of wine. A recently published English-language analysis – looking at statistics of bulk wine imports, Russian vineyard yields, and production of wine and brandy – found a discrepancy in the numbers, with production levels higher than seem to be possible from the declared imports and vineyard yields. This apparently agrees with the Skolkovo estimate of the prevalence of illicit spirits, as this “gray area” of production is also likely in the form of inexpensive brandy.

Among the factors influencing the high consumption of illicit alcohol in the country, experts note the large number of small non-chain convenience stores operating without licenses to sell alcohol, sales via Telegram, a drop in the population's income, and a revival of interest in home distillation. Commenting on the recent tragic deaths of 12 residents of the Tyumen region after drinking illegal vodka, Vladimir Panov, expert of the Small Format Trade Association, noted that the problem of illegal alcohol sales is related to the difficulty of obtaining licenses and implementing the EGAIS system. “They have regulated this industry in such a way that it is practically impossible for small shops, especially in rural areas, to work legally,” Panov said. Read the original news in Russian.

Ministry of Agriculture introduces new type of grants for “Agritourism”

Grants of 3-10 million rubles will be provided to small and medium-sized businesses, and are designed to help farmers who want to develop tourism activities to complement their main occupation. The funds can be used, for example, for the construction and renovation of premises, the creation of tourism infrastructure, or the purchase of equipment and inventory. The grant imposes significant obligations: continuation of the agrotourism project for at least five years from the date of the grant, achievement of benchmarks according to the business project, and the project becoming profitable within five years. The Vice-President of the Russian Union of the Travel Industry, Yuri Barzykin, described to Radio Kommersant the great prospects for the new initiative, warning that the 300 million rubles allocated for the project in 2022 would not be sufficient to meet demand for the grants. One barrier to the implementation of the project is the Land Code, which currently prohibits the construction of tourist facilities such as hotels on agricultural land – although as we previously reported, some are lobbying to change this. Read the original news in Russian.

Cover photo: © Gabriella Clare Marino.

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