Russian govt hikes duty to 20% on wine imported from 'unfriendly' countries - Economic Development Ministry

MOSCOW. July 25 (Interfax) - The Russian government has approved the decision to hike the duty on wine imported from "unfriendly" countries from 12.5% to 20%, though at least $1.50 per liter, the press service of the Economic Development Ministry said in a statement.

The corresponding government decision has been approved and adopted as part of implementing a set of retaliatory measures to actions on the part of "unfriendly" countries, and it will be valid until the end of 2023.

The adopted decision will take effect seven calendar days from the date of publication of the decision.

According to a press release, domestic producers are currently actively increasing the supply of products to the domestic market, and consumers are increasingly selecting Russian wine. Wine production in Russia increased by seven million decaliters from 43 million to 50 million dal in 2022. "Industry experts forecast that the positive dynamics in the production of Russian wine products will continue in 2023," according to the statement.

The area of vineyards at the fruit-bearing stage is also increasing, with growth having averaged around 2% in recent years. The area totaled 82,200 hectares in 2022, and it is expected to increase by 2,000 hectares by the end of 2023.

"Meantime, all the conditions exist for increasing the supply of wine products from 'friendly' and 'neutral' countries," according to the statement. "Thus, imports of still wine from Chile increased 9% in value terms last year, and by 2.6-fold from Armenia. Data for the first four months of 2023 indicate significant potential for boosting supplies of South African wine. Thus, domestic production and imports from 'friendly' countries should fully meet domestic demand."

Emil Omarov, CEO at Derbent Wine Company, told reporters that the company plans to boost production to 50 million liters of wine by 2027, which is five-fold more than in 2022. The company currently owns more than 1,100 hectares of vineyards, and plans to increase to 3,000 hectares by 2027.

"The rising yields of grapes and increasing production capacity allow our company to increase wine production by 8-10 million liters annually," Omarov said, stressing that he sees no prerequisites for a sharp rise in prices for Russian wine.

Meanwhile, the Sevastopol Association of Viticulturists and Winemakers considers the hike in duties on wine imports "only the first step, after which it is necessary to consider further steps to limit imports of cheap, low-quality wine to Russia."

The association notes the rise in areas sown with grapes in Russia this year "is becoming more of a problem than a positive factor. According to the association, wine sales from producers have fallen by 20% or more, and some by more than 30%. This means that viticulturists will be the most affected, who, firstly, are forced to reduce prices; and secondly, even at reduced prices, they will not be able to sell all the grapes, since the winemakers have not freed up their containers," the association says in a commentary.