In vino veritas

Taking a Bite Out of Burgundy

When the Russian government introduced a food embargo in 2014—effectively closing the market to cheese, jamón, and other agricultural products from the EU and US (alcohol, including wine, was not banned) in response to sanctions over Crimea—the wine market held its breath: without French châteaux and Spanish Riojas, consumers risked reverting to the "flank" of hard liquor. But things turned out differently. Over ten years, Russia not only avoided a degradation of drinking culture but also entered the top 20 wine producers.

In 2024, the International Organisation of Vine and Wine (OIV) placed Russia at 11th in its ranking of wine producers—5.4 million hectoliters. And while global production is declining (-4.8%), Russia is showing growth of nearly 19%. For comparison, the world leader, Italy, increased production by 15% to 44.1 million hectoliters, while France, in second place, actually reduced wine production by 24% due to ongoing drought. As for Russia's direct competitors in the rankings, Portugal, which holds 10th place, saw a decline of 9%, while Romania dropped 20%.

Young Vines and the Low-Base Effect

The double-digit growth is largely tied to the youth of Russian wine production and the low-base effect in grape cultivation. While the European industry is already hundreds of years old (and in some regions, thousands), in Russia during the 1990s, after perestroika and anti-alcohol campaigns, many agricultural enterprises fell into decline, and vineyards either dried up or were deliberately cut down.

By 2010, plantings of technical grape varieties used in winemaking in Russia reached 60,000 hectares, while in other European countries (Spain, France, Italy) this figure approached 1 million hectares. Active restoration of the industry only began after 2014 and the return of Crimea (although a significant portion of grapes is still grown in Krasnodar Krai).

Particular support came from the adoption of the Law "On Viticulture and Winemaking," which regulated the industry's operations, as well as the reduction in October 2019 of VAT on fruit and berry crops from 20% to 10%, including grapes. This provided serious support to the industry, allowing it to nearly double the scale of vineyards in literally a decade: from 60,000 hectares to 108,000 hectares, securing Russia 17th place in the global rankings (just behind Moldova with 115,000 hectares). 

In other words, import substitution became the key to growth. Before sanctions, every second bottle was foreign; now, according to Luding Group, the share of imports in sparkling wine alone stands at 28%. Here's an interesting nuance: even after reducing our dependence, we remain in the global top 10 importers—we've simply switched from Bordeaux to Chile and other friendly countries.

Vineyard Startup—Why There's No Quick Path

Winemaking is not a business for quarterly reports. Vines "eat" money for three years, yield technical wine by year five, and produce something familiar to consumers by year eight. Half of Russia's plantings are younger than ten years, which means we haven't even tasted the true character of our new terroir yet. To recoup investments in vineyards alone takes at least 15 years. The math looks roughly like this:

• Planting vines—≈ 1 million rubles/hectare (100 hectares = 100 million rubles)
• Maintenance first 3 years—≈ 300 thousand/hectare/year (another 90 million rubles)
• Winery for 2 million bottles/year—≈ 500 million rubles
• Operating expenses (staff, energy, packaging)—≈ 50 million rubles/year.

The first commercial batch sells in year 5–6. At a wholesale price of 250 rubles (taking the minimum) per bottle, revenue reaches 120–130 million rubles, with a net margin of 35–40 million. At this pace, the investment is only covered by year 12–14, barring any force majeure.

And while Russia has genuinely figured out its own grapes and primary production over the past decade, "secondary" imports related to packaging and equipment itself haven't gone anywhere. For example, in 2022, Leonid Popovich, president of the Union of Winegrowers and Winemakers (SVVR), stated that 90% of natural cork used for producing stoppers still comes from Portugal and Spain. In 2023, regarding the reduction of foreign supplies reported Kuban producers, so they decided to tackle the problem playfully: start abandoning cork in favor of screw caps, where possible. This, by the way, also applies to most of the equipment: in 2022, the share of foreign suppliers  stood at 87% – mainly European from European countries, including France and Italy. Overall, the localization of equipment for wineries, judging by the key region – Krasnodar Territory – stands at around 20%. In other words, we make wine from our own raw materials, but age it in European barrels and bottle it on Western equipment. The situation is at a stalemate, and both imports and the business turnover cycle are reflected in prices.

Tariffs: a double boomerang

The first serious "tariff" rally began in August 2023, when Russian authorities raised the rate on wine from unfriendly countries to 20%. By November, a basic European Bordeaux had risen in price from 750 to approximately 1,000 rubles. The next wave came in August 2024: the rate increased to 25% (and no less than $2/liter) according to a government decree. As a result, since February 2024, imported wine has risen in price by nearly 40%, while imports have fallen by a third. However, following foreign wines, domestic wine also began to grow more expensive—in particular, at the beginning of 2025, winemakers announced an upcoming price increase averaging 15-20%. The officially declared reason is rising costs associated with importing equipment and oak barrels from Europe (though from that same February through August 2025, the ruble actually strengthened by roughly 16%—from 93.17 rubles/$ to 80.76 rubles/$), as well as expenses for purchasing glass containers, which, according to RBC, increased in price over the year by 1.5 times, from 15 rubles to 26 rubles.

The purpose of the tariff is clear: make domestic wine noticeably more attractive while simultaneously replenishing the budget. But will this create a "golden cushion" for full localization of packaging? After all, to meet just the winemakers' needs for glass and cork alone would require investing billions in new furnaces, oak plantations, and processing facilities. At current margins, that's at least five to six years of reinvesting the entire "tariff bonus."

In other words, every ruble in tariffs is a double boomerang: it makes imports more expensive, but simultaneously opens the door for domestic producers to raise prices. It's the same situation as in the auto industry, where following the recycling fee and rising prices for imported Chinese car models, prices also increased for cars assembled in Russia.

Will mass-market Russian wine ever become cheaper?

Today the retail shelf resembles a chessboard where the pieces differ not by color but by place of origin. On one side sits the now-familiar Russian "basic still" wine at around 500 rubles for 0.75 liters, next to it a "friendly" Chilean Malbec at 750–900 rubles, and a tier above, European classics that have soared to 1–1.3 thousand rubles after two waves of tariffs. The gap is noticeable but not catastrophic: in the average Muscovite's budget, it's equivalent to a couple of lattes. In the regions it's harder, though they also prefer more mass-market wine there, with an average price tag of 330 rubles. But even there, Georgian products enjoy popularity.

Meanwhile, experts constantly debate the possible consequences of tariffs and international trade. For example, Simple Group co-founder and vice president Anatoly Korneev believes In Russia today, high labor costs are combined with a severe talent shortage. This significantly complicates the task of producing quality wine in the most popular consumer price category of "under ₽500 on the shelf." And the tariffs that have been introduced will, on the contrary, push Russian producers to raise prices to match imported wine levels. He proposes a different approach: exempt Russian wine from VAT while maintaining competition.

The main intrigue, however, lies in how the state will manage this tariff "umbrella." If by the time the main wave of vines matures (which should happen in just 5 years) the tariffs are reduced, the market will face an honest stress test: will winemakers be able to compete with a revitalized Spain and Italy without customs barriers? In an ideal scenario, yes: Sauvignon from Taman will drop into the ₽350–400 price corridor, and consumers will benefit from a wider selection. In a pessimistic scenario, the "greenhouse" comfort will preserve high prices and set the industry back, turning tariffs from a stimulus into an addiction.