- The Ukrainian wine industry changed significantly over the past decades. Its main trend has been a transition from quantity to quality.
- The annexation of Crimea by Russia in 2014 resulted in the loss of about one third of vineyards in Ukraine, including some of their best and world-famous vineyards. At the same time, it was a turning point for the development of many inland wineries.
- The Russian invasion of Ukraine in February 2022 brought about further dramatic changes: some wineries were destroyed, some occupied, others live under the risk of shelling every day.
- The future of Ukrainian winemaking is uncertain because of the continuous Russian aggression. Export prospects are promising, but logistics may stay difficult.
Wine-producing Country
During the Soviet period, Ukraine was one of the largest wine-producing republics of the USSR, with a vineyard area of more than 150,000 ha and a big focus on industrial production. Currently, about 40,000 ha of vineyards are cultivated in Ukraine (excluding Crimea), with the focus shifting from an industrial approach to smaller scale and higher quality winemaking. This is accompanied by the emergence of many craft winemakers in recent years. Winemaking is not a strategic segment of the Ukrainian economy, but it is an important part of the national culture and self-image of the country.
Ukraine is located between 45 and 52 latitude, has mostly flat but also hilly terrain with the Carpathian Mountains in the west and the Crimean Mountains on the Crimean Peninsula. This geographic diversity provides numerous microclimates and the possibility of producing wines of different styles.
Commercial viticulture in Ukraine is mainly located in the south near the Black Sea: mostly in Odesa region, as well as in Mykolayiv and Kherson regions, where active war battles are now taking place. Due to climate changes, more and more winemakers are thinking about planting new vineyards further north. “Over the past decades, it has become noticeably hotter in the Odesa region. Therefore, our company made a strategic decision to move north and planted about 2 ha of new vineyards near Kyiv”, - says Igor Petrenko, co-owner of Biologist winery. At the same time, vineyards in cooler regions still need frost protection in the winter time, and the labor costs for such maintenance can be quite high.
The winemaking is mainly focused on international grape varieties, such as Aligote, Cabernet Sauvignon, Sauvignon Blanc, Chardonnay, Merlot and Riesling. These grapes together with the Georgian variety Rkatsiteli are the most cultivated vines in Ukraine.
In recent years, Ukrainian winemakers have been putting a lot of effort into promoting signature local grape varieties such as Telti-Kuruk (white) and Odesa Black (red). For example, Telti-Kuruk is the first wine from a Controlled Designation of Origin in Ukraine, which is an analogue of the French Appellation system.
Changes After 2014
The Russian invasion and the annexion of Crimea in 2014 led to a difficult economic situation. Ukraine lost access to about 20.000 ha of their vineyards on the penninsula.
Since Crimean wineries were buying a lot of grapes and bulk wine, Ukrainian inland winemakers and vine growers also lost a large sales market. “Before 2014 we sold from 30% to 50 % of our volume to wineries situated in Crimea”, says Konstantin Tintulov, the comercial director of Vinholl winery in Odesa region.
Therefore, some inland bulk wine producers were forced to intensify their export to other countries or change their sales strategies inside Ukraine, establishing their own brands for retail. “After we lost opportunities to sell to Crimea and the war started in 2014, we concentrated on the internal Ukraininan market and launched our new label Villa Tinta wines” - explained Konstantin Tintulov.
Since 2014, the old wine related laws also began to change to reduce bureaucracy. Expensive wholesale licenses were canceled for wineries who do not buy wine in bulk from third parties. And later, the term “small winery” was established in the law, which helped to make the legalization process for small producers easier, faster and cheaper. As a result, about 40-50 new small wineries have appeared in recent years.
Impact of the 2022 War on the Ukrainian Wine Industry
The 2022 war has a dramatic impact on wine production in all corners of Ukraine. Some wineries were completely or partially destroyed, some are in the occupied territories, others live every day under the threat of shelling. For example, the Leleka winery in Odesa region lost a large amount of their wines when the company´s warehouse was bombed. In Kyiv region, a rocket destroyed some of the premises of the Wine Idea winery located nearby. The house of the small family winery Cassia near Kyiv was partly destroyed when the Russian army was trying to capture the capital of Ukraine in February-March 2022. Not only wine producers but also Ukrainian wine importers have suffered from the Russian invasion. In the very first days of the war, the Russian army bombed the warehouse of Bureau Wine, one of the largest wine and spirit importers located in Kyiv (estimated losses €15m).
Problems in Southern Ukraine
The Russian occupation of wineries and vineyards in southern Ukraine affects not only local winemakers, but also their colleagues in central and northern parts of Ukraine. The latter, as craft winemakers, used to buy grapes from Kherson and other southern regions to produce their own wines. Many people are also leaving Mykolayiv region. “We are lacking workers now because some of them left their houses as they were afraid to stay. At the same time, the logistics became unpredictable. It is problematic to deliver to our region even basic things like bottles, corks, etc.”, says Svetlana Tsybak, commercial director of the Beykush winery in Mykolayiv region, which is now on the hostilities line.
Logistics and Materials
The war affects not only winemakers, but also infrastructure and related industries. Thus, the modern large Gostomel glass factory near Kyiv was totally destroyed, which led to a lack of glass bottles on the market. Since the import of bottles from other countries is difficult and the currency exchange rate has risen by 25-30%, production costs of wine have increased significantly. Products to treat the vineyards became much more expensive. The destroyed infrastructure further complicates logistics and blocks the usual trade chains.
“Starting from 24th of February, our company focused on humanitarian needs.”
"Starting from 24th of February, our company focused on humanitarian needs. We helped local hospitals, territorial defense groups, families of our workers, and so on. At the same time, we did not stop working in the vineyards and our team did everything possible to get a good healthy harvest. We are more fortunate than our colleagues from other places, who could not even get into their vineyards because of the bombing or occupation.”, says Giorgi Iukuridze, co-owner of Shabo winery in Odesa region.
All these examples are only the tip of the iceberg in the list of losses for the Ukraine wine industry, but much more dramatic are the loss of human lives. At least two Ukrainian winemakers were killed because of Russian attacks. The president of the National Association of Sommeliers, Ivan Bachurin, wrote on his facebook page, that he spent almost a month under occupation without proper food, water and electricity. And many sommeliers and wine producers are now serving in the military.
Clear Export Opportunities
With domestic production of 55-60m liters, the total Ukrainian still wine market amounted to about 100m liters (with an import share of about 40%). The share of exports from Ukraine usually did not exceed 5%. The majority of exported wines went to Belarus, Kazakhstan, Germany and Romania.
Wine of fresh grapes, including fortified wines from Ukraine in 2020:
- Areas, nes (not elsewhere specified): 26% (US$3.44 m)
- Belarus: 15% (US$1.96 m)
- Kazakhstan: 12.7% (US$1.65 m)
- Germany: 9.73% (US$1.26 m)
- Romania: 7.6% (US$992,000)
- Algeria: 5.07% (US$662,000)
- China: 3.3% (US$430,000)
- Moldova: 2.82% (US$368,000)
- Poland: 2.61% (US$341,000)
- Israel: 1.92% (US$251,000)
Source: Trend Economy, https://trendeconomy.com/data/h2/Ukraine/2204
Due to the war and unprecedented global support of Ukraine, the export destinations are changing. Local wine producers have noticed an increasing interest from foreign markets. Recently, Ukrainian wines were exported to Japan, Great Britain, Estonia, Poland and the USA, for example.
“The biggest change we saw was in the export potential. We were impressed by the willingness to support us from countries that until recently were interested mostly in wines from the traditional production countries. Even large chains of retailers, which were unreachable for us before, now show interest in buying our wines. Just imagine, we were even contacted by retailers from Spain and Italy”, - said Giorgi Iukuridze of Shabo.
Whereas the retail sales share of domestically produced wine declined constantly in recent years, local winemakers have noted greater consumer loyalty to their product in 2022. Due to the huge interest in local products inside the country and changes in the currency exchange rates, the “buy local” wine trend in Ukraine became stronger.
“Yes, we have noticed an increased interest in local wines in the domestic Ukrainian wine market and we believe that it still has good potential for growth”, said Svetlana Tsybak from Beykush winery.
“Will there be wine in Ukraine in the near future?”
The main wine question at the moment in Ukraine is an existential one: “How much wine can be produced in Ukraine in the near future?” It is still not clear if wineries will be able to harvest in 2022, especially in the southern regions. “I hope winemakers will have an opportunity to harvest at least partially in our region. This year is dry and without vine diseases. So, the harvest could be of good quality”, said Georgiy Molchanov, owner of Slivino Village winery in Mykolayiv region.
The Ukrainian wine industry is hoping for the best, but of course a lot will depend on Russia’s plans to continue this war. At the same time no matter what, Ukrainian wines may be one of your next major discoveries in the wine world.
Geisenheim University is actively participating in support of Ukrainian wine colleagues. An online seminar devoted to the “Current state, perspectives and initiatives how to help Ukrainian wine industry” is planned for Autumn 2022.
