Fashionable and exciting for a growing number of young professionals and thirsty consumers, wine is becoming Russia’s next big thing. Recovering from wine nihilism of the late 20th century, the Russian state now supports local growers and producers with subsidies and protectionist laws.
Moguls in wine
Wine production, now supported by the state, has turned out to be an attractive sector for Russian investors. Names from the Forbes Billionaires List, like Abramovich, Alekperov and Galitsky, now frequently appear in the Russian wine news, although some of the major players still prefer to avoid publicity. With so much money involved, consolidation has become an inevitability for the industry.
Aleksander Aristov’s Ariant holding, founded in the late 1990s, currently has 11,000 ha of vineyards plus the dynamic Chateau Tamagne brand, making it the largest wine producer in Russia. A few other big companies, such as the historic Abrau-Durso holding, resurrected in 2006 with the help of investment from Boris Titov, or like the former state-owned grape juice manufacturer Fanagoria, represent the market leaders, with each one producing tens of millions of bottles. But a newer industrial group called Moey Vino (‘My Wine’) was founded in 2019 with the ambition to exceed 10% share of national wine production.
Moey Vino started from a well-equipped, yet rather small Usadba Divnomorskoye winery on the Black Sea coast, plus the historic Novy Svet wine estate in Crimea, but within a few months it had reportedly established control over the large Inkerman winery, which produces about 12m bottles of wine per year, and is also in Crimea. Its next major acquisition is likely to be the historic Massandra estate, which has recently gone public and which is aiming to sell 40m bottles per year. According to the recent news from media group RBK, Massandra is to be auctioned on December 14 with a reserve price of 5.3 billion rubles ($69,738,862m).
The two men behind Moey Vino’s growing empire are Yuri Kovalchuk and Gennady Timchenko, who are both major shareholders of Saint Petersburg-based Rossiya bank and President Vladimir Putin’s close friends. Yury Kovalchuk, 69, has a PhD in mathematics and besides being the owner of a strong bank, is considered to be one of Russia’s most influential and strategic thinkers. He was the locomotive force behind the first Russian Law on Wine, introduced last summer.
Criticized for how quickly it became law, it has, however, already reached its goal and stopped the massive shipments of imported bulk wine into Russia. The introduction of this law caused a shortage of raw material for the Russian wine industry this year, but it has also provoked a new wave of investments in domestic viticulture.
Kovalchuk is also said to be intent on founding a modern wine research centre, and launching a major strategic study of the Russian wine industry.
Russian legislation restricts wines and spirits advertising in print media but does not, curiously enough, cover printed books. This strange circumstance has created a place of asylum for wine publications; Simple Wine News, the only professional wine magazine Russia, changed its official status to “book”. And it has resulted in the first Russian Wine Guide, written by Artur Sarkisyan for both professionals and advanced consumers.
The ex-sommelier champion, restaurateur and founder of one of Moscow’s first wine schools, he launched the Russian Wine Guide with journalist Alexander Stavtsev. The annual Guide covers over 370 wines rated above 84 out of 100, chosen after trips through Russian wine areas. The 8th edition of the Guide is now in progress, although it may be postponed due to the pandemic.
While Sarkisyan’s Russian Wine Guide covers the crème de la crème of Russian winemaking, a government institution called Roskatchestvo (an abbreviation of ‘Russian Quality System’), worked with Sarkisyan to create a wine directory called The Wine Guide of Russia, designed for entry level wines, judged by a panel of some 30 tasters. The first edition published in 2019, featured nearly 600 wines with a retail price below 1,000 RUR ($13). Featured in the national media, it’s now considered Russia’s most widely quoted wine publication.
Being mentioned in either guide is considered as a privilege for a domestically produced wine.
While international recognition comes to Russian winemaking from the major international wine competitions, such as Decanter WWA, the International Wine & Spirits Competition and Mundus Vini, as well as Wine Advocate ratings, local wine producers get increasingly enthusiastic support from Russian wine critics writing for printed and digital media. The former struggle for survival, given melting advertising budgets; the latter, however, are gaining prestige and popularity.
One quirk of the prohibition against wine advertising is that the vague legal definitions mean that editorial can be interpreted as advertising. This uncertainty was the undoing of the specialist press, while also forcing general interest publications to shutter their wine coverage, or significantly reduce the number of wine articles. Wine writers turned instead to blogging on Live Journal, Facebook, Instagram and social media.
Denis Rudenko is arguably the most influential Russian wine blogger, whose Daily Winegraph page on Live Journal has more than 20 000 subscribers; he is also active on Facebook, Instagram and YouTube, where he cooperates with a pro-active videoblogger Igor Chersky. Their live reports on wines found in Russian retail attract hundreds of thousands of followers.
Rudenko, 48, graduated from Moscow’s Lomonosov State University and then worked as a digital programmer. After a successful career, he made a deep dive into wine and founded a wine club called ‘750 ml’; he has been a wine educator, wine consultant, wine school professor and wine journalist, but his real success has come from wine blogging.
His example was followed by a constellation of talented wine bloggers such as Sergey Aleksandrov, Vasily Raskov, Pavel Kirillov, Gertruda Kuznetsova and others.
While the first wave of Russian wine professionals who lit the fire of the modern wine market in 1990s were mostly desperate self-taught enthusiasts, the new generation are more like pedantic scholars.
This generation was brought up by a few pioneering wine schools in major Russian cities like Moscow, Saint Petersburg, Yekaterinburg and some others. Some of those schools were closed during the periods of economic crisis that periodically happen in Russia, but those which survived have got good reputations. Now, a diploma from a renowned wine school is obligatory for a sommelier looking to work in a decent restaurant or for a sales manager looking for a job opportunity in a leading wine company.
Several successful wine schools are owned by Russian wine companies, particularly by importers and distributors of fine wine and spirits. Their investments into wine education seem to have made a lot of sense – sommeliers, cavists and other wine professionals stay loyal customers of the company long after graduation.
Enotria wine school, launched 18 years ago by the Simple Group and permanently headed by the indefatigable Yulia Korneeva, is a good example. Having its own educational programs approved by the International Sommelier Association (ASI), while also offering WSET-2 and WSET-3 courses, Enotria can boast that around 7,000 of its former students are working as wine specialists, both in Russia and abroad.
Running a wine school in Russia seems a quite profitable kind of business. Enotria’s four-month-long basic professional course costs about 200,000 RUR, while its four-month intensive course costs 140,000 RUR. The courses scheduled to begin in January 2021 are already sold out.
Specialized wine chains
While the HoReCa segment was hit hard by the Covid pandemic in 2020, the specialist wine stores kept on working and became the major distribution channel for many premium wines. Wine store chains found themselves in an especially privileged situation because they managed to combined the advantages of scale with optimal prices and sophisticated, loyal consumers.
The Krasnoye i Beloye (“Red and White”) retail group was one of the leading specialist chains before the pandemic, and it managed to retain its position. Today it has 8,887 stores with an average are of 80 square meters; its annual turnover is estimated to be in excess of 300 billion RUR and it has an impressive 6,757,000 clients using its KiB app. This puts it far ahead other Russian wine retail chains, such as Aromatny Mir, Alcoteca, Alcomarket and others. In 2019, KiB joined the Diksi and Bristol chains, forming the DKBR Mega Retail Group Ltd.
KiB was founded in early 2006 by the charismatic, self-made entrepreneur Sergey Studennikov, whose worth was estimated in 2018 as $950m. In 2019, Forbes put KiB on the 29th line in the list of Russia’s biggest private companies. Rated #115 in the Russian Forbes list, Sergey Studennikov was on the front cover of Russian Forbes’ November issue.