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2/2018


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DRINKS
Review of the Russian Market of Alcoholic Products
Research by the Company NeoAnalytics
Condition and Development Trends of the Russian Wine Market
Research by the Center for Investigations of Federal and Regional Alcohol Markets (CIFRRA)
Review of the Russian Beer Market
Research by the Company Market Analitika
TEA & COFFEE
Review of the Russian Coffee Market
Research by the Company Step by Step
CONFECTIONERY
Russian Exports of Confectionery Products
Research by the Confectionery Market Research Center (CMRC)
Review of the Russian Market of Chocolate Products
Research by the Company Market Analitika
MEAT
Review of the Russian Meat Market
Research by Credinform Information Agency
DAIRY PRODUCTS
Review of the Russian Dairy Market
Research by Consulting Company Foresight 24
CANNED/PRESERVED FOOD
Review of the Russian Market of Condensed Milk
Research by the Company Eventus Consulting
RETAIL
Russian Grocery Retail
Research by the Company RBC Market Research
TRADE SHOWS
25th Exhibition Prodexpo-2018
3rd Exhibition Beviale Moscow
16th Exhibition Dairy and Meat Industry
8th Anuga FoodTec-2018
26th Trade Fair Upakovka-2018
21st Trade Fair Interplastica-2018

BRANDING
Private Labels in the Russian Market
Research by the Branding Company Labelmen


Condition and Development Trends of the Russian Wine Market

Research by the Center for Investigations of Federal and Regional Alcohol Markets (CIFRRA)
Russia has grown a lot in the past 1517 years in the field of winemaking, in terms of both quantity and quality. 19982008 may be considered the preparatory period, whereas 20092016 were the stage of proving to ones consumers and the state, as well as foreign experts, that Russian winemaking is close to reaching global levels; starting with 2017 we have entered a new phase, which will last until 20252027 and which involves a twofold increase in vineyard areas and wine material production, strengthening of positions in the medium and premium segments, ongoing involvement of the worlds leading experts, the creation of a positive image for Russian wine, and much more.
A quote by Leonid Popovich, the President of the Union of Winegrowers and Winemakers of the Russian Federation, is to be presented here, Lately, interest towards wine and winemaking has been steadily growing in Russia. Russian winegrowing and winemaking have a millennium-long history. The South of Russia with its culture, traditions, multinational cuisine, and noble drinks made from autochthonous grapes unique for this location (Krasnostop Zolotovsky, Tsimlyansky Cherny, Plechistik, Sibirkovy, Kokur, Aly Tersky and others, still growing on the banks of the Don, in Dagestan and on the Crimean peninsula) has huge potential for development of enogastronomic tourism.
Unique natural and climatic conditions of Russian wine regions combined with their rich history and indigenous culinary culture are perfect for the creation of popular enogastronomic tours the so-called wine routes. For instance, Abrau-Durso is already included in the general tourist programme of the European Union in this field.
Today, a term combining and defining quality wine products is forming namely The Wine of Russia. Step by step, Russia has been occupying a strong position in the structure of global winemaking and wine consumption.
Now let us look at the path that our industry has followed throughout the past 20 years in figures. We will intentionally omit the rewards that Russian wines have won during the past 10 years in various prestigious competitions abroad let us focus on output figures only.
Long statistical studies in any branch of the economy are no longer relevant in Russia today these tend to cover the recent 10 years at most. Nevertheless, we have kept indicators from as early as 1940 in our table as evidence of the capability of true creation demonstrated by both the Soviet state system and several generations of Soviet people.
The statistics of wine production starting with 2005 is of particular interest. In 2005, our country produced 45.9 million decalitres of wine products from grapes (liquors not taken into account), whereas in 2010 we reached the level of 76.48 million decalitres. The total volume of wine products (excluding liquors) in 2005 equalled 48.9 million decalitres, and in 2010, with the crisis being almost over, it increased to 82.44 million decalitres. In 2016 we produced 82.5 million and 88.6 million decalitres respectively. Thus, from 2005 to 2016 we increased output of wine products from grape, excluding liquors, by 80% total (this includes the crisis production growth of 2015 in the conditions of imports having declined by a third, as well as the drop in output in 2016 as imports began to recover), whereas the volume of wine production on the whole, excluding liquors, grew by 81%.
Since 20122013, the Russian wine market has been facing the new demographic reality the number of active wine consumers aged 2255 is declining. Since November 2014, Russia has been going through an economic crisis, and at the same time since June 2016 imports have virtually restored their positions (having increased by 3035%).
Nevertheless, we made outstanding progress in production of finished goods from Russian and imported wine materials and increased production volumes almost twofold over the past 12 years. The results of 2017 are objective and understandable enough; however, no more declines are expected in 2018: the female demographic age hole in the market will be compensated by an influx of men as well as growth in consumption of wine by women aged 3550.
In addition, growth in output will be stimulated by the inevitable administrative substitution of imports in cheaper segments we suppose that, inspired by the adoption of the law, our winemakers will also press for some quotas for imports of bottled products.
What we would like to highlight is the real feat of our winegrowing and winemaking businesses. The last line of our table production of grape wine materials goes as follows: in 2000 it amounted to 5.8 million decalitres; in 2005 it already equalled 13.5 million decalitres; in 2020 21 million decalitres; in 2015 29 million decalitres; in 2016 34.5 million decaliters; in 2017 32 million decalitres. During the 1517 years, wine material production from domestic grapes in Russia increased by 55.5 times!
Nevertheless, today a decline in production of Russian still and sparkling wines to the minimum value of the decade is already being discussed. First and foremost, it is necessary to increase consumption of wine products, which is something that the state has not been doing and is apparently not planning to bother with. When the programme of the Ministry of Agriculture for the following 10 years, which has still not been adopted, appeared a year ago, we noted the following nuance right away: the terms consumer and consumption are only mentioned in it once or twice, and even then the context does not imply the necessity of stimulating growth of wine consumption.
Yes, we have returned to the last pre-crisis year 2014 in terms of wine production (32 million decalitres at the time). The rush revolving around Russian and even Crimean wine in the retail segment has ended. According to producers and retail buyers, in 2017 federal chains were more interested in working with cheap imports (from 200 to 300 rubles) than with similar Russian goods Russian products at 200300 rubles are already considered expensive. Consumer patriotism (especially among the female audience), the false all-importance of which we highlighted as early as at the beginning of 2015, turned out to be far from the most favourable ally of the market.
However, lately we have written multiple times that despite the decline in production volumes of still and sparkling wine, the wine market did not shrink in 2017. The wine sector (excluding ciders) in Russia accounted for 116.7 million decalitres of products (domestic output plus imports, minus exports) this constitutes a reduction of product supplies to the market of only 1.6% to 2016. In 2017, no overproduction was recorded in wine products of all types, unlike 2016, which demonstrated overproduction in wine drinks (approximately 3 million decalitres, which were transferred to sales in 2017 and caused an additional decrease in wine drink production during the year). With this taken into account, the market of wine products amounted to 119.7 million decalitres (i.e. the real dynamics is growth by 3.4% to 2016, rather than a drop by 1.6%). Russia did not demonstrate a drop in product supply to the population on the whole and this is important, as no one is working for storages anymore.
We are convinced that, with the existing inconsistency between indicators of the Federal State Statistics Service (Rosstat) and the Unified State Automated Information System (EGAIS), the total volume of wine product sales in 2017 increased by at least 12% to 2016, and Russians consumed more wine products in 2017 than in 2016.
To sum up, one must strive for structural changes in the market of wine products more domestic products in all sectors, more Russian raw materials, more still and sparkling wine.

Vadim Drobiz,
Director
Center for Investigations of Federal and Regional Alcohol Markets (CIFFRA)




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