Russia faces wine import battle

Russia’s second biggest importer of French wines has announced the imminent bankruptcy of five of its companies, prompted by the collapse of the ruble.

Seat of power: St Basil’s Catherdral, Moscow

Rusimport has confirmed that five of its companies are to be declared bankrupt, as reported by rbth.com, due to increasing prices caused by the continued economic upheaval of the ruble.

Last year the Russian central bank raised interest rates to 17% in an attempt to prevent the rouble’s collapse. But the move failed to prevent its decline with the ruble now worth 3.6% less since the central bank’s emergency rate rise.

Since December 2014, Russian imports have dropped by 44% with importers forced to cut shipments of foreign wine due to the ruble’s plunge against major foreign currencies, which has seen retail prices rise by 30 to 50%. Businesses are currently paying twice what they would have paid to import wine in the summer of 2014.

As reported by rbth.com, only the most popular wines have been able to withstand the crisis. In December Russian importers including Simple, Roust and Sinergia were forced to halt shipments while contractors waited for the ruble to stabilise.

“All importers will have to reduce their stock,” said Irina Fomina, chairwoman of wine importer MBG. “Companies will leave those wines in their portfolios that have high rotation, those that can be sold quickly.”

Issues with the ruble have been compounded by increasing tensions with the west over imports which have been steadily growing due to various restrictions and bans imposed upon producers, particularly upon US producers. 

US brands Sazerac and Jack Daniel’s both come under fire from the Rospotrebnadzor earlier this year with the body imposing various restrictions on its imports. While Australian winemakers were warned by the Australian Grape and Wine Authority to prepare for a blanket ban on wine imports to Russia amid increasing tensions with Russia, Ukraine and the west.

The threat of trade bans has been seen as a response to tough new Western sanctions on Russia over its alleged support for pro-Moscow rebels in east Ukraine, which is currently in the throws of civil war. The tactic of banning alcoholic products has been used by Moscow as recently as 2008, when sales of Georgian wines were banned in Russia before diplomatic tensions spilt over in a short war with Tbilisi.