Russia considers state monopoly on wine production

Russia, wine, monopoly, Russian Parliament, State Duma, winemaking, sanctions News Wine News http://decanter.media.ipcdigital.co.uk/11150/000008ac0/8df7_orh100000w160/russian-parliament-state-duma.jpg http://decanter.media.ipcdigital.co.uk/11150/000008ac0/2f3c/russian-parliament-state-duma.jpg
  • Wednesday 20 August 2014

The Russian Parliament (State Duma) is considering proposals to introduce a state monopoly on the production of wine in Russia.

Russia's parliament will debate plans to monopolise wine production

Russia's parliament will debate plans to monopolise wine production (Image: © Alexey Chernyuk / Alamy)

According to Oleg Nilov, a member of Parliament and one of the architects of the new initiative, the production of wine in Russia should take place only at the facilities of state-owned enterprises, and enterprises where the controlling stake is owned by the state.

Nilov believes that the introduction of a state monopoly would allow Russia to increase the quality of wine produced in the country and significantly boost state revenues from the domestic wine industry.

A spokesperson for A Just Russia, a social democratic political party in Russia, which submitted the new draft bill to the national parliament and the government, said the introduction of a state monopoly would help Russia to remain independent of - and not dependent on - the international wine industry in case of restrictions or an entire ban on the wine imports to Russia, measures currently being considered by the national government as a response to Western sanctions.

According to the State Duma, the introduction of a state monopoly would also provide an impetus for Crimean and Krasnodar winemakers to increase their production volumes and would provide them with space on shelves of national retail outlets.

However, leading Russian analysts in the field of alcohol and wine business have criticised the initiative.

According to Vadim Drobiz ,the Director of the Center of Research of Federal and Regional Alcohol Markets (CRFRAM), a leading wine business analysis agency, the introduction of a state monopoly would make the Russian wine industry unprofitable, as it currently remains heavily dependent on VAT and excise duties and would create conditions for corruption in the market.

According to CFRAM analysts, the adoption of these plans would also result in an increase of contraband wine being brought to Russia and a significant decline of the quality of domestic wines.

The new draft law is expected to be debated by the Russian Parliament during the first week of September.

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