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Changing drinking habits sees Russia wide-open for wine importers

Young consumers in contemporary Russia are rejecting the beer and vodka habits of the previous generation in favour of a wider appreciation of more exotic wines and spirits, with many New World offerings finding particular approval.

Photo: Opening up to the New World: Russian wine lovers. (Shutterstock)
Opening up to the New World: Russian wine lovers.

Long gone are the days when Russians drank only vodka, beer and semi-sweet wines. In these post-Soviet times, the more affluent contemporary Russian is now turning to dry wines, cognacs and whiskies, with per capita consumption of beer and vodka said to be declining. This distinct change in preferences has opened up a number of opportunities for the traditional wine exporters of Europe, while also extending the market to the more exotic offerings of Chile, South Africa and Australia.

In total, Russia imported 52.65 million litres of wines in the first quarter of 2014. France remained the leading supplier (with a 10% market share) followed by Italy and, more surprisingly, Georgia (with around 8% market share apiece). Imports from Spain, Chile, Germany, Bulgaria, Australia, Argentine, South Africa and New Zealand fared less well, accounting for around 3% per country.

Georgia's substantial market share is particularly striking, given that its wines have only just been made available again in Russia, following the seven year hiatus imposed after the 2008 conflict between the two countries. The end of the embargo has inspired a flood of nostalgia, with many middle-class, middle-aged Russians rediscovering the Kindzmaraulis and Khvanchkaras (two traditional Georgian wines) of their misspent youth.

Domestically, the production of wines has been growing steadily over the course of past seven years, with viniculture now focused in South Russia. The two most popular and most heavily-promoted Russian wine producers are Fanagoria and Abrau-Durso, although the output of neither has supplanted Mouton Cadet Rouge or Moët and Chandon on the tables of the more affluent and more image-conscious Russians.

The recent incorporation of the Crimean Peninsula into the Russian Federation, although otherwise controversial, has raised the prospect, at least, of increased consumption of the region's wines within Russia. Indeed, many Crimean vintages – notably Bakhchisaray Fountain, Red Stone Massandra, Kokur – retain an almost cult following among many Russian wine lovers.

Aside from the more locally-produced varieties, many Russian retailers are highly optimistic with regard to the prospects for the New World wines in the country, especially for those distributed via supermarkets and hypermarkets. Such products are highly competitively-priced, particularly when compared to the wines from the Crimea, France, Spain and Italy.

The New World wines have a particular appeal for the new generation of the Russian consumers. Unencumbered by any USSR-era nostalgia, many of these younger drinkers evaluate the New World wines on their own terms, while finding the output from the former Soviet bloc somewhat drab and unfashionable. At the same time, they dismiss the traditional offerings from France and Italy as simplistic and overpriced. By contrast, even the stylish labels on the New World imports find a resonance with these young consumers, with many seemingly beguiled by their pseudo-primeval motifs and vivid colour schemes.

The competitive sourcing available, courtesy of the many Hong Kong wine and spirits auctions, gives many Asian suppliers a real opportunity when it comes to introducing niche wine products to the Russian market, particularly premium brandies, calvados and sparkling wines.

At present, the majority of Russian importers are not aware of the competitive edge offered by Hong Kong in the wines and spirits sector. This sees a number of opportunities existing for entrepreneurial businesses in the region to establish themselves as buying agents for the more sizeable Russian importers.

Leonid Orlov, Moscow Consultant

Content provided by Picture: HKTDC Research
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