The value of exporting wine to Russia

Russia has been in the news a bit, lately, but for all the wrong reasons (Russia edges closer to war as new arms arrive on Ukraine’s border). However, the people do drink wine, as well, which is what I will write about here.

The Russians do make their own stuff, mostly in the North Caucasus region (the very south-west of the country). Oddly, they do also seem to want to call their sparkling wine “champagne”, even when they make it themselves, rather than the French doing it (Only wines made in Russia can be called champagne under new Putin law).

As well as drinking their own wine themselves, they do export some of it. Indeed, in 2020 this amounted to 5.1 million liters or US$9.9 million (according to the UN Comtrade: International Trade Statistics database). It went to neighboring countries like the Ukraine (2.8 million liters, or 55%), China (12.5%), Georgia (11.5%), Kazakhstan (7.5%), Belarus (6.5%), Moldova (3%), Latvia (2%), and Kyrgyzstan (1%). This is why most of you have never tasted any of it.

However, their climate is not the best for growing grapes (not yet, anyway), and so they do import quite a bit of wine. The AAWE recently listed the top 20 sources of import for 2019 (sourcing their data from Comtrade), which accounted for 93% of the total import volume (657 million liters) and 94% of the total value (US$1.15 billion). Most of the wine comes from only a few places, with the Big Four countries accounting for 68% of the volume and 74% of the value.

I have plotted the data in the graph, where the horizontal axis shows the volume (note the logarithmic scale), the vertical axis shows the price per liter, and each point represents one of the 20 import countries. The pink line represents the average total value (ie. volume x price) — those countries to the right of this line contributed more than the average value across all countries. So, the vast majority of the wine value comes from Italy (IT), France (FR), Spain (ES) and Georgia (GE).

Note that there is more than one way to skin the proverbial cat. For example, Spain (ES) provides the largest volume, but at a very low price point, whereas France (FR) provides only 40% of that volume, but at 2.5 times the price — this results in roughly the same total value of wine imported from each of the two countries.

Uzbekistan (UZ) and Moldova (MD) provide the cheapest wine, while New Zealand (NZ) and Austria (AT) provide the most expensive stuff. The USA (US) and Australia (AU) provide less wine than New Zealand but more than Austria, and at a cheaper price point. Chile (CL), Portugal (PT) and South Africa (ZA) follow most of the Big Four countries in price, but with considerably less volumes.

Russia is the 9th most populous country on the planet, with c. 40% of the population of the USA; so this is potentially a large export market for the wine industry. It may be a better bet than the other large countries (India, Indonesia, Pakistan, Nigeria, Bangladesh), which are not known as big wine consumers. * Unfortunately, Russia may not be politically or economically any more reliable than China has turned out to be, as a trading partner. Nevertheless, it may be worth a quick look by the Australians, given their loss of the China market (China slams Australian wine with 218% tariffs for 5 years).

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* The USA is the third most populous country, after China and India. There has been a continuous rise in per person wine consumption in the USA from the end of Prohibition, finally resulting in the US taking the global lead in total wine consumption from the year 2010 onward (The rise of the USA as the world's biggest wine consumer ).