The Russian government is set to introduce a minimum price for wine in a bid to make grape growing more profitable and reduce the volume of counterfeits in the country's wine market.

TAGS:

The legislation, which was recently signed by the Russian Prime Minister Dmitry Medvedev, will allow the state to regulate the minimum price of still and sparkling wine sold in Russian retailers.

According to Leonid Popovich, head of the Russian Union of Winegrowers and Winemakers, the plans have been welcomed by Russia’s leading wine producers.

‘The establishment of minimum prices will make the production of grapes profitable, even in the regions where the production has always been associated with serious difficulties.

‘In addition, wine producers in the regions with more favourable climatic conditions will be able to earn more,’ he said.

The introduction of minimum pricing is also an attempt to tackle the number of counterfeit products in the Russian wine market, a similar measure taken with the domestic production of Vodka since 2010.

Vadin Drobiz, head of the Russian Research Centre of Federal and Regional Alcohol Markets, believes minimum pricing will reduce the amount of illegal wine on the Russian market by 25-30%, as was the case with Vodka.

While the official prices aren’t expected to be set until the middle of 2015, Popovich believes they shouldn’t be less than 100-110RUB (US$1.5-2) per litre of still wine and 120-130RUB (US$2.5-3) per litre of sparkling wine.

Prices of domestic Russian wine materials are often higher than those in the Ukraine and across Asia, a factor that should also be taken into account when setting the limits says Pavel Titov, general director of Abrau Durso, one of Russia’s largest wine producers.

In the meantime, the introduction of minimum wine prices may face opposition from Russia’s retail sector, a significant part of which relies on cheap wine priced at no more than 100RUB.

According to sources at Lenta, one of Russia’s leading retail chains, the new minimum prices could result in a significant decline in demand for wine in Russia, and an increase in the popularity of Vodka and spirits. At a time of recession in the country, domestic consumers may not be willing to pay more for a product which has always been considered a premium drink, Lenta said.

The minimum pricing measures will feature alongside the current government target to increase the total area of vineyards in Russia up to 140,000 ha by 2020.

Written by Eugene Gerden