Email This Post - Print This Post Print This Post

By John Helmer in Moscow

The Russian wine market has been drying up, though it’s on account of falling incomes, not because of recent exhortations by mental health specialists and President Dmitry Medvedev to curb drinking.

“The average statistical man in our country is a drunkard,” according to Alexander Nemtsov, a department head at the Moscow Research Institute of Psychiatry. That’s because Russians drink about 15 litres of pure alcohol a year, 80% of it in high-proof form.

Medvedev has responded with a recent appeal to “stop the growing consumption of alcohol among young people. The habit of drinking with and without a reason may lead to heavy alcohol addiction in a rather short time. According to the data we have, one-third of young men and almost 20% of young women use such drinks daily or every other day…The sale of alcohol to people under the age of 18 is banned in Russia now as it has always been. It’s no secret that this requirement is often ignored, which it was not in Soviet times.”

During the first post-Soviet period when Boris Yeltsin, the most alcoholic of Russian politicians ever to rule the country, was in charge, his combination of income cuts and increases in the price of vodka led to the rapid growth of consumption of imported beer and wine. Even in the popular canned Russian beers on sale until the crash of 1998, the only Russian component was the water. The collapse of the rouble that year put imports out of reach, and revived vodka consumption.

Yeltsin’s exit, and the prosperity that came with it for the decade until August 2008, have increased the accessibility of wine, which is almost entirely imported, for the Crimean vineyards that have begun again to produce as they did under aristocratic management in the 19th century have a cost-to-taste ratio that makes them as unpalatable as they are unsaleable domestically. Russia’s current aristos have opted to invest in French vineyards instead; that is to say, they have promised to invest. But read on..

According to the latest available Russian customs data, in the first quarter of this year, total imports of wine fell 40% to 69.2 million litres, and down 41% by value to $96 million, compared to the same period of 2008. French wine is traditionally the biggest supplier for Russia. This year French shippers cut prices by 29%, but they still lost 27% in volume of trade. Italy and Spain lost almost as much of the Russian wine trade.

For lack of cash, the domestic market has been putting bananas and cabbages in its mouth, instead of pineapples and asparagus. It has done the same with wine, with Russian consumers shifting to cheaper blends. The biggest gainers have been wine shippers from Ukraine, Moldova, Abkhazia, Armenia, as well as Serbia and Brazil. The Black Sea plonk producers have now expanded to supply more than half the Russian consumption of imported wine. France used to hold a 21% share of the market in value terms; it was down to 18% on March 31, and is still falling.

The French disappointment has been compounded by the collapse of the fortune of the man who was perhaps the most advertised Russian connoisseur of cognac in the country, and the only one to have bought himself at least one, possibly two chateaux (pictured), one distillery, and to have proposed investments to increase his vineyards from 23 hectares to 400. Varshavsky’s ambition at the end of 2007, according to interviews granted by his spokesman to the Charente region press, was to make his Croizet-Eymard marque as big as Martell, the number-3 in the cognac league after Hennessy and Remy-Martin. The annual shipment of 300,000 bottles of brandy into Russia was also the target at the time. But by the start of this year, the spokesman told Figaro “time is needed to get a footing for an enterprise which had practically disappeared from the market.”

Now it is Varshavsky’s disappearance from the market, pursued by his creditors, for which time is needed, although the local cognac promoters in Charente have tried to remain hopeful. Speaking in January, before the extent of Varshavsky’s troubles became known in Moscow, Jean-Dominique Andreu, a spokesman for the National Interprofessional Bureau for Cognac (BNIC) announced: “Historically, it’s foreigners which have dynamism to cognac. It’s nec essary to be pragmatic. Despite the crisis, the Russians are coming here. They spend money, and that’s good for our economy.”

Standing alone this year in the Russian market, South African exporters have done well to sell 9% less wine by litre, but to get Russian consumers to pay 2% more than they did when times were better, a year ago.

South African winegrowers have proved to be less enamoured of Russians promising to spend money. One of the biggest promisers in South Africa, Victor Vekselberg, arrived one day in his helicopter, along with his wife, aides, and bodyguards, to make a buy-out offer for Vrede en Lust, a 300-year old vineyard and hotel owned and run by the Buys family. According to a family friend, they told Vekselberg he was welcome to stay, but not to buy.

Leave a Reply