THE WINE MARKET IN RUSSIA: GROWTH RETURNS
Russia, the world’s seventh largest wine market, is a vital vino stop on global export markets. Traditional tipples are losing ground amongst Russian drinkers as, despite the lingering effects of recession, consumption and imports of international wines are gaining ground in Russian once more
Picture your idea of the stereotypical Russian drink. You’re likely to be picturing a chilled shot glass topped up with crystal-clear vodka. While this may be the historical view, Russia’s thirst for spirits is shrinking. And, much like beer, the Russian wine market is tasting a sweet mixture of increased consumption and imports.
Imported wines enjoy popularity in Russia
Wine is a $693 million market in Russia — one that has started growing again as post-recession recovery continues. Russian imports of both sparkling and table wine rose around 4.5% across 2016, hitting 174.73 million litres and 34.85 million litres respectively. Harder liquors were not so popular amongst importers. Whiskey imports, for example, fell by 15.4% to 28.43 million litres. Brandy and cognac showed similar drops, imports decreasing by 21.8%, as Russian’s wine tastes take on an international flavour once more.
It should be pointed out that spirits still make 42% of Russian alcohol sales — so the market for these products is still very real and very stable. But why are Russian’s increasingly preferring a glass of fine red, or sweet white, wine to other drinks? A weaker euro and increased production output in many key EU supplier states means Russians are able to snap up great wines at lower prices, while other nations with developed vinicultures are specifically targeting Russia.
Additionally, around the beginnings of Russia’s economic crisis, domestically produced wines skyrocketed in price. According to President of Russian alcohol dealers Simple, Maksim Kashirin, consumers made the switch to cheaper, internationally-sourced varieties. Wine is an international concern for Russian consumers As mentioned above, Russia’s wine enthusiasts have a taste for European vintages.
Statistics from Russian wine sector website Nashevino.ru show Spain is Russia’s chief wine supplier with a 50.49% import share. South Africa was 2016’s second biggest exporter, accounting for 13.29% of total imports. Russian wine racks and cellars are well stocked with international bottles, with major retail groups reporting sales of foreign labels were up in 2016. GC Dixie, one of Russia’s largest supermarket chains, said its sales of imported wines grow 5%.
Russia’s wine market: the big players
Russia’s biggest wine importers are split between table and sparkling categories, according to data from Russia’s Federal Customs Service. So, with that in mind, let’s take a look at the main movers and shakers on the Russian wine import market:
- Table Wines Mistral Alco — 19.86 million litres — 11.3% import share — 5% rise compared with 2015
- Ludwig — 15.89 million litres — 9.1% import share — 25% rise compared with 2015
- Simple — 8.82 million litres — 5.05% import share — 32.1% rise compared with 2015
- Retail Imports — 6.29 million litres — 2.6% import share — 87.3% rise compared with 2015
- Priorimpeks — 6.24% million litres — 3.57% import share — 123.2% rise compared with 2015
- Sparkling Wines Bacardi Rus — 3.62 million litres — 10.4% import share — 18.6% drop compared with 2015
- Campari Rus — 2.7 million litres — 7.76% import share — 18.3% rise compared with 2015
- Simple — 2.2 million litres — 6.3% import share — 45.2% rise compared with 2015
- Marine Express — 2.03 million litres — 5.81% import share — 50.7% rise compared with 2015
- Russian Alcohol House — 1.89 million litres — 5.41% import share — 5.9% rise compared with 2015
Russian wine consumption predicted to grow
Russians consume an average of around 10 litres of wine per person per year. Consumption, which hovers around 1 billion bottles a year, is also predicted to grow steadily. By 2020, research body Euromonitor, consumption is expected to grow at a CAGR of 1% — reaching a total of 1.1 billion litres. The market, despite enjoying a healthy taste for the products of overseas vinyards, is focussed on cheaper offerings — although, as mentioned earlier, international wines tend to be cheaper than domestic labels for Russian consumers. The price of choice for 70% of consumers, when it comes to bottled wine, is under 200 roubles a bottle (about $4). Bottles costing between 200-500 roubles, about $4-10, hold a 25% market share. Premium wines, i.e. those priced 500 roubles and above, make up the remaining 5%. However, this sector is in contraction — in part due to tighter household budgets, but mainly due to Russia’s HORECA industry struggling to recover from the economic crisis.