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Wednesday 1 October 2014

Wine body confirms threat of Russian ban

11th August, 2014 by Neal Baker

Australian wine producers should “prepare themselves” to be affected by Russian trade embargoes, according to the country’s Grape and Wine Authority.

Russian Prime Minister Dmitry Medvedev last week announced the Russian import ban on certain foods from the West, sparking fears of an extension into alcohol products (Photo: Wiki)

Russian Prime Minister Dmitry Medvedev last week announced the Russian import ban on certain foods from the West, sparking fears of an extension to alcohol products (Photo: Wiki)

Steve Guy, the AGWA regulatory manager, told Australia’s ABC network that the Russian market is “one that we would hope to be able to grow and of course you can’t do that if there’s a ban on exports.

“It’s a niche market for some companies, and certainly not one we’d want to lose.”

One million litres of Australian wine are sent to Russia each year, a small fraction of the 678m litres Australia’s winemakers export globally, according to figures obtained by the broadcaster.

But Guy stressed that Russia is a higher value market compared to other importing countries; returning $4.60 (£2.54) per litre compared to the global average of $2.60 (£1.44) per litre.

He also emphasised that Russia’s recent allegations against Georgian and Moldovan wines – claiming that they are dangerous and even poisonous – is an example of what could happen if tensions continue to escalate between the West and Russia.

“These were spurious allegations. At least… the Russians are being transparent about their motivations,” he said.

This was in reference to the current ban imposed by Russia last week on certain foods and agricultural products from the EU and other nations such as the US, Canada and Australia.

Exports of wine and spirits are under threat as Russia has already begun banning certain brands and wine regions, claiming risks to health and safety

Exports of wine and spirits are under threat as Russia has already begun banning certain brands and condemning some wine regions, claiming risks to health and safety (Photo: WIki)

In the UK, the Wine and Spirits Trade Association told the drinks business that, while “wine and spirits are currently exempt from the list of sanctions”, the trade body is “in co-operation with European trade bodies” and are currently “monitoring the situation closely” to ensure that the country’s drinks producers are prepared for any eventuality.

Sazerac’s Kentucky Gentleman Bourbon was recently treated to the same health claims as the eastern European wine regions, as Russian consumer authorities claimed recently to have found harmful chemicals in the US-made spirit, imposing a ban in the interests of “sanitary and epidemiological welfare”.

This is indicative of the threat that is also faced by spirits producers hoping to stay in the Russian market.

Primary among these are makers of Scotch whisky, who have been enjoying steady growth in the country over recent years. They stand to lose significantly if the current ban extends to Western alcohol products.

Direct exports of Scotch Whisky to Russia were worth just under £25 million in 2013, according to the Scotch Whisky Association (SWA).

However, direct exports to Latvia were up 48% to £79m last year, and to Estonia they were up 28% to £69m. Due to route-to-market networks, much of those exports are shipped onto Russia, showing the steepness with which demand has been growing there in the last few years.

An SWA spokesperson told db: “Current sanctions are not affecting imports of Scotch Whisky. However, we are closely monitoring the situation and any potential restrictions, in liaison with the UK Government.”

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