Perspectives - Russia

The Russian economy has been on a rollercoaster since 2014, when the ruble took a dive and European sanctions began to bite. But experts tell James Lawrence the market has bounced back.

Jonathan Campion

Jonathan Campion 

Analyst (Russia)

In an improving economy, the defining trend in the Russian market has been for wealthier consumers to trade up from local wines to imports, particularly from Georgia and Spain. The wave of patriotism that was thought to be behind a recent surge in demand for Russian wines faded; having tried local wines, consumers understand now that imported wines are often of higher quality. However, the vast majority of imported wine sold in Russia costs less than $10.00. Nevertheless, the trend for increased imports looks set to continue throughout the forecast period (2018-2022), with value offerings from Italy and Spain making up the majority of added volumes. In addition, lower-end French wine may continue to become less competitive, losing market share to value-for-money offerings from other Old World countries. Yet more expensive bottles should remain in demand, particularly in the sparkling wine market; a healthier economic climate should bring about more occasions to consume Champagne and sparkling wine. Consumers are showing an appetite to trade up from value brands – the market will become increasingly weighted towards standard wines.

This growth in demand, however, is not simply being driven by rising levels of disposable income. An emerging wine culture is continuing to develop across Russia’s urban landscape, with new wine bars opening in Russia’s cities. The growing profile of still wine, and an emerging healthy lifestyle trend, is attracting Millennial consumers to switch to wine from vodka and other spirits categories, as well as from beer. As a result, imports from all major wine-producing countries have increased dramatically over the past few years. Yet most of this growth came from the standard and value segments: Russian consumers either do not understand enough about wine to be tempted to trade up in search of higher quality, or they are aware that the wines sold expensively in Russia are much cheaper in Europe, and so appreciate that the premium segment offers poor value for money. Meanwhile, a small number of craft wineries are opening in Russia’s southern regions, but their produce is thought to be too expensive in relation to their quality.

But that is not to suggest that Russia’s domestic industries are in decline; consumption of local wines will continue to grow as the domestic winemaking industry develops and the quality of Russian wine improves. However, this growth is forecast to be slower than in previous years due to some consumers moving back to imported wines. This will have a knock-on effect on Russia’s near-neighbours – the improvement in the quality of local wines (and increase in the area under vine), is likely to reduce demand for cheap wines from Russia’s historic trading partners such as Moldova, whose winemaking industry is shifting its focus to European markets.


Francesco Lo Conte  

export manager
Fattoria Le Pupille, Italy

After a rocky period, things are looking up in the Russian market. Over the last two to three years the market for imported wine has stabilised, and has shown reasonable growth. That being said, in terms of our own brand I did have expectations of higher growth – this remains a challenging market. Yet the market for imported wine is growing moderately rather than exponentially, so we are in line with the average.

My optimism concerning doing business in Russia chiefly stems from the fact that the market is becoming more sophisticated; I have observed less demand for bigger brands in favour of higher quality and more expensive wines. Overall, this is quite a dynamic market, especially because Russian wine buyers tend to show a great interest in the product and constantly travel to various wine regions. I am sure this approach will gradually also help the end consumer expand their knowledge about wine – with greater knowledge comes greater interest. In my experience, the growth in demand for imported labels is largely emanating from on-trade, particularly from a recent surge in the number of wine bars. However, the demand for wine is not confined to Moscow and St Petersburg – the interest is countrywide.

Many people ask me, what are the main risks to brands that wish to sell into this particular market? My answer is always that the risks are minimal if you work only on prepayment terms, which is our policy. Also ensure that you do follow-up visits to promote your wines. Compared to the other BRIC economies, Russia offers a developed economy and infrastructure, and although the import/distribution bureaucracy is still high, it is much less than in other BRIC countries. Yet, as always, be aware that it is not an automatic jackpot and that you must have the correct price-quality ratio to enter and remain here. It is essential to maintain a constant presence in this market, and to welcome clients to your winery so they can transmit the philosophy of your brand to the final consumer.


Marco Fizialetti

export manager
Castello di Querceto, Italy

Over the past year, the demand for imported wine has slowed slightly in Russia, although the market is far from moribund. I must admit that we were expecting a faster growth rate for sales of Castello di Querceto, but hopefully this is going to change. I remain confident about our future here as knowledge and interest in Italian wines is growing and consumers are getting to grips with the great differences among Italian wine appellations. Indeed, I really feel that we are going through a new phase in Russia, with a transition from being a traditional market towards a more dynamic one.

To date, our growth has largely emanated from the retail market and especially in the large-scale retail trade, where we found a growing interest in wine in general. However, overall the imported market is being driven by the growth of the HoReCa channel – wine bars are now very trendy in Russian cities. Therefore the prospects for further growth are encouraging, although doing business in Russia can be very frustrating. The main problem revolves around the volatile nature of the market and often there is a great variation in sales from year to year – sometimes more than 50%. Yet on the positive side, Russia has a deeper wine culture than other BRIC countries and consumers are more willing to explore wines from outside Russia, especially today. This is not a market solely fuelled by a small group of wealthy customers; a large percentage of the population drinks wine, and larger numbers are being tempted to move across to imported labels. Just be aware of the bureaucratic hurdles you’ll have to navigate; a solid and serious importer may help.


Vincent Lensveldt

European market manager
Villa Maria, New Zealand

Overall still wine sales have declined slightly in Russia, but this is mainly because demand for domestic wine is falling. The good news is that imports, especially in the mid-price segment, are growing. Demand for wines in our price segment (₽1800-1900 or $27.00-$28.00) was slightly affected by the crisis but after a few challenging years we are happy to see sales picking up again. Sparkling wine is also still popular in Russia and this is the category that shows the biggest growth. In addition, I’ve observed a definite change in attitudes over the past five years – Russian consumers appear keen to learn about wine and are more open to imported brands. They have a nose for quality and are willing to pay for it. Also brand loyalty has increased over the years.

So the picture that emerges is largely positive. The market has grown at the rate I expected, although we also had some challenging years. However, the crisis has mainly affected consumers within the lower income brackets. Consumers with higher incomes were still able to buy our wines and remained loyal to the brand. Both retail and the on-trade is doing quite well for Villa Maria – retail accounts for the majority of the overall market, but restaurants and wine bars are becoming increasingly important. Indeed, Russian sommeliers are very well educated and are key in convincing traditional guests about our high quality and award winning wines. The other key point is that this is not a market solely dominated by the major urban centres – there are still plenty of supermarkets, restaurants and wine stores that are not located in the larger cities. Just remember to seek out a good distributor who understands the market, as you’ll need their expertise. A long-term strategy is advisable; don’t expect huge volumes in the first years as it takes some time to build a brand in this market. But once people get to know your brand, you will have customers for life. 

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