Russia Says Goodbye To Wines From “Unfriendly” Countries

Russia has once again hit the agri-food exports of “unfriendly” countries – the ones that have joined the anti-Russian sanctions policy of the European Union and the West as a whole, starting in 2014. This time, wine was the focus of the Kremlin’s attention. Until the end of 2023, imports of wine from Italy, Spain, France, and other “hostile” countries to Russia will be subject to “prohibitive” duties that suddenly increased from 12.5% to 20% and “cannot be less than $1.5” per liter of wine.

The first to disappear from store shelves were the “economy” wines, which in Russia cost an average of 700 rubles (about 6.9 euros) per bottle. Italy, which, despite the armed conflict in Ukraine, held the title of “largest wine exporter to Russia” until the beginning of 2023, will be among the countries most affected by Moscow’s customs policy. Until recently, Russia was the tenth largest market for Italian wines and the fifth largest market for “made in Italy” sparkling wines. According to Russian experts, the import of elite wines “should not undergo significant changes.”

In September, imports of Italian wine to Russia fell by 45%, while imports from Spain fell by 38%. Russian importers are abandoning European wineries in favor of South African, Chilean, and Argentine wineries. “Logistics for South African wines are very attractive: transportation does not take longer than 35-40 days,” said Daria Sologub, director of the Fort import company, noting that recently “the export of Turkish wines to Russia has been growing rapidly.” Together with Russia, South Africa is one of the founding countries of the BRICS group, and bilateral trade can be carried out in national currencies.

In other words, the international development scenario for Italian and European wines is becoming increasingly complex. As the Italian economic and financial newspaper Il Sole 24 Ore wrote, “in the first half of this year, there were double-digit quantitative drops in sales in the USA, Canada, Japan, Norway, China, and South Korea, and then two unexpected negative events occurred: an increase in duties on wine in Russia and, above all, the new excise taxes on alcohol introduced by Great Britain from August 1.”

Great Britain is firmly the third largest market for Italian wine after the USA and Germany, with a turnover of €741 million in 2022. Following the guidance from the World Health Organization (WHO), which “recommends a reduction in alcohol consumption worldwide,” the UK is aiming to make money with a new excise duty system that will be in place for 18 months and can be adjusted repeatedly. The system foresees a new method of “parameterized calculation” that will no longer be based on “volume,” but on “alcohol content.” Therefore, this regulation, aimed primarily at restricting the sale of spirits, will cause beer to become fashionable in the British market, while at the same time discriminating against wine.