Our latest Russia Landscapes 2018 report shows that the Russian wine market is looking more positive following a revival in the domestic economy
Winston Churchill’s famous description of Russia as “a riddle, wrapped in a mystery, inside an enigma” remains apt nearly 80 years after it was uttered. Russia’s economy may be recovering after several years of economic struggle, but it is still subject to both the whims of its autocratic president, Vladimir Putin, and the swings and roundabouts of the global oil and gas market, on which much of its finances depend.
Putin and oil both have a strong bearing on the Russian wine market. Russia’s invasion and occupation of Crimea in 2014 coincided with the halving of the price of crude oil, and this, combined with sanctions imposed on Russia by the West, prompted a collapse in the value of the Ruble. Suddenly, imported wine was a lot more expensive, and in some cases harder to obtain because of difficulties in securing credit and stock. At the same time, a very public campaign launched by Putin to buy more Russian-made produce, and the removal of the ban on imports from Georgia, have transformed the fortunes of both domestic and Georgian wines.
All of this impacts what Wine Intelligence has explored in the latest Russia Landscapes 2018 report. Key trends of which can be identified as follows:
- IN THE WAKE OF A RECOVERING ECONOMY, RUSSIA’S WINE MARKET IS STARTING TO REBOUND, WHICH IS REFLECTED IN THE GROWTH OF WINE VOLUME
Since 2014, wine volume changes have mirrored the change in GDP – both declined between 2014 and 2015 and started to rebound in 2016. Imported wine had a particularly strong correlation as volume decreased significantly between 2014 and 2015 but had strong growth between 2016 and 2017. Domestic wine, however, experienced a slight decrease during the same period.
- THERE IS A REBOUND FOR SPARKLING WINE
Russia is currently the 5th largest sparkling wine consumer, sitting above both the UK and Spain. Although sparkling wines are still expensive, consumers are showing an increased willingness to spend more on a bottle compared to 2014, whilst still trying to find the best quality available for that price.
Aligning with global trends, this increased consumption of sparkling wine coincides with a change in how people are drinking it. Sparkling wine is starting to be consumed in more casual situations at home and in the on-trade, led mostly by the younger generation.
- DESPITE DECREASED KNOWLEDGE AND CONFIDENCE WITH WINE, CONSUMERS ARE STILL SHOWING A STRONG INTEREST IN THE CATEGORY
There is currently a decrease in awareness of wine regions and recalled country usage among imported wine drinkers in Russia. Compared to 2014, fewer consumers feel competent about their knowledge of wine, and more consumers say they would stick to what they know. However, a higher proportion of drinkers say they have a strong interest in wine and are willing to take their time when purchasing wine compared to 2014.
- CONSUMERS ARE BECOMING MORE VALUE-DRIVEN AND SEEK PROFESSIONAL RECOMMENDATIONS FROM RETAILERS
Average spend on wine in the off-trade has significantly increased, with more consumers spending 500+ RUB on a bottle of wine across all occasions. More consumers say ‘imported wine is an expensive drink’ than in 2014.
This could be in part because prices of imported wine have risen dramatically due to the sharp devaluation of the Ruble in 2014, precipitated by western sanctions resulting from Russia’s invasion and occupation of the Ukranian territory of Crimea.
- WINE IS PART OF THE NEW LIFESTYLE ADOPTED BY THE YOUNGER GENERATION IN RUSSIA, WHO ARE OPEN-MINDED AND KEEN TO DEVELOP THEIR KNOWLEDGE
In general, younger people are more interested in wine and see it as a part of their lifestyle and they are keen to learn about the category. Those aged between 18 and 34 make up 40% of the imported wine drinking population in Moscow and St. Petersburg, and have very different behaviour and attitudes in the wine category compared to older consumers. Although they are less knowledgeable about wine countries / regions, they feel competent about their knowledge of wine.
Since our last Russia Landscapes report published in 2014, the Russian wine industry has endured a rollercoaster of fortunes, correlating broadly with the ups and downs of the economy. But this current increase in both volume and consumption of imported wine in Russia is a positive sign for the Russian wine industry in general. As Millennials drinkers embrace wine more, we expect to see fundamental changes both in terms of frequency and occasion.
More information can be found in the Russia Landscapes 2018 report.
Author: Richard Halstead