In a historic downturn, wine imports from the European Union (EU) to Russia have fallen to their lowest level in 20 years. This year, only 126,000 tonnes of EU wine have reached Russian shores, marking a 25% reduction compared to the same period in 2022.
This figure, based on Eurostat data and reported by the Russian agency RIA Novosti, is the lowest import volume since 2004, when Russia imported a mere 87,000 tonnes. This drastic decline highlights how geopolitical factors, economic sanctions, and shifting market dynamics are reshaping Russia's wine import landscape.
Italy Emerges as Russia's Key EU Supplier
Despite the overall decline, Italy has managed to consolidate its position as the leading EU wine supplier to Russia in 2023. Accounting for 39% of all EU wine imports to Russia, Italian wines alone contributed 49,000 tonnes, with a total trade value of EUR 158 million. Italy's increased market share signals a strategic shift as it adapts to new opportunities in Russia's evolving wine market.
Interestingly, Lithuania and Latvia, which were Russia's top suppliers last year, have seen their wine exports to Russia plummet. Lithuanian wine imports fell by 2.7 times to 18,000 tonnes, while Latvian wine imports dropped by 4.3 times to just 14,000 tonnes. The reduced presence of these former market leaders highlights the evolving preferences and shifting political landscapes within the EU-Russia trade relationship.
Growing Influence of Other EU Wine Producers
Other EU countries have also adapted, managing to capture a more significant portion of Russia's wine market. Poland, for example, increased its exports to Russia by 70%, reaching 13,000 tonnes, while Portugal has seen its exports triple, reaching 10,500 tonnes. This diversification indicates a flexible response to market demands by EU wine producers, especially in an environment increasingly shaped by political tensions and trade restrictions. However, despite these gains, EU wines overall are expected to decline in the Russian market, with analysts predicting that the EU's share, which currently sits at 37%, could drop below 30% by year-end.
Outside the EU: Georgia, Latin America, and South Africa Fill the Gap
Georgia continues to be the largest non-EU wine supplier to Russia, holding an estimated 20% market share. With its close geographical and cultural ties to Russia, Georgia has maintained a strong presence in the market, meeting a demand that EU wines once satisfied. Additionally, analysts anticipate growth from Latin American countries like Argentina and Chile, as well as South Africa—regions not subjected to Russia's increased tariffs or import restrictions on EU wines. These countries have begun to make substantial inroads into the Russian wine market.
South Africa, in particular, has seen rising demand for its white and sparkling wines, while Chile led non-EU sales in 2022 with 16.6 million liters, marking a 10% increase from the previous year. Argentina and South Africa followed closely behind, with similar import volumes. Latin American and South African producers appear poised to expand further, capitalizing on the reduced presence of EU wines.
The Impact of EU Sanctions on High-End Wines
The European Union has been enforcing sanctions on Russia since March 2022, including a ban on exporting wines priced above EUR 300 per bottle. While such high-end wines represent a small segment (around 1%) of the market, the measure symbolizes the geopolitical tensions influencing trade. According to Leonid Rafailov, CEO of AST, one of Russia’s largest alcoholic beverage importers, the restriction on high-priced wines has had only a minimal impact, as demand in Russia’s wine market is predominantly for mid-range products. Imports of still and fortified wines actually rose by 4.4% in 2023, totaling 320 million liters, according to data from the Luding Group, another major Russian wine distributor.
Tariff Policies and “Hostile” Nations
Russian tariff policies have further complicated the situation for EU wine imports. In August 2023, Russia raised tariffs on imports from countries it deems “hostile”—a list that has grown from two countries in 2021 to 49 in 2023. The tariff increase, now set at 25% or a minimum of USD 2 per liter, was initially expected to end in late 2023 but has been extended through 2024. These measures have effectively raised costs for EU wines in Russia, making non-EU wines more competitive and likely pushing many Russian consumers to explore wines from other regions.
Rising Demand Amid Trade Constraints
Despite the decline in EU wine imports and the complex web of sanctions, tariffs, and political tensions, Russian demand for wine remains resilient. The Russian wine market has continued to grow, with consumers showing an increasing preference for wine amidst evolving tastes and rising disposable incomes. The country’s steady demand highlights the robust interest in wine, creating opportunities for both domestic and international suppliers willing to navigate the intricate import landscape.
Source: Vinetur