Spanish wine exports make temporary splash in Russia

The Spanish Wine Federation announced today that exports to Russia of Spanish wine and wine must rose in 2006 by a dramatic 103% in volume from 61.8 million liters in 2005 to 156 million liters last year. According to information provided by the Russian Customs Service, this places Spain ahead of France (106 million liters) as the leading supplier of wine to Russia with a 28% marketshare for that year.

However, at 95 million US dollars, the total value of the Spanish product trails that of France ($ 123 million). The average per liter price is extremely low at $0.61 versus the $1.16 of France's exports. France and Spain combined accounted for 40% of the value of Russian imports in 2006.

The Spanish Wine Federation's press release ends optimistically by saying that now Spanish producers can look to improve the per-liter price, but exporters should not get their hopes up too high. The 2006 Spanish exports were obviously bulk shipments sold at a very aggressive price. Switching from this to branded wines at even 10 times the price (or $4.58 per 750ml bottle) would be big accomplishment. And a cursory Google-based investigation into the Russian wine market leads me to be even less enthusiastic. Russian traditionally imports wine from neighboring Moldava and Georgia. In March of 2006, citing concerns of pesticide contamination, Russia's consumer protection agency banned imports from both countries. Observers alleged that these bans were motivated by political disputes that Russia was having with Moldova and Georgia. Last November, President Putin announced the end of the ban with Moldova, while that for Georgia appearantly continues. Given that Moldovan wines are back in the Russian market, the bulk sale opportunity for Spanish wine will likely shrink, unfortunately.