April 07, 2006

Wine Embargo


Wine Embargo

Russian Wine Blockade

Russia may face another politically-induced deficit. This time it is wines.

Reds and whites from Georgia and Moldova became non grata in Russia, after consumer rights watchdog Gennady Onishchenko called for a suspension of wine imports from the two countries on health and sanitation grounds. Georgian and Moldovan wines were found to contain high levels of pesticides and heavy metals, Onishchenko said. Both countries stood up to defend the quality of their wines, saying it was political, not ecological concerns that were at issue.

Russia's ban on wine was soon followed by bans on champagne and cognac.

Although never truly a wine-drinking country, Russia is a principal export market for both Georgian and Moldovan wines.

Before the ban, Moldova sold up to 95 percent of its wine and cognac to Russia, while the European Union bought just 2.5 percent of all Moldovan spirits, according to Nezavisimaya Gazeta. Wine comprised 60 percent of all Moldovan exports to Russia, Bloomberg reported.

Georgian wines presently have a 12 percent market share in Russia. Over half of Georgia's wine exports go to Russia, accounting for annual sales between $100 and $200 million, according to Georgian Deputy Agriculture Minister Mirian Dekanoidze.

Fake and low-quality wine has long been a problem for Russia. According to some estimates, as much as 80 percent of some brands are faked. Komsomolskaya Pravda reported that, aside from the embargoed Georgian and Moldovan wines, over half of recently sampled wines from Russia, Spain, Ukraine, Germany, France, Argentine and Portugal do not meet Russian health standards. Part of the problem is Russians' low income, combined with high consumption, which makes them opt for cheaper wines in bigger bottles. And wine-makers are just following the demand.

However, Georgia and Moldova say Russia is using the wine embargo as a stick to punish them for their souring relationship with Moscow, for moving closer to the European Union and the United States, as the Associated Press reported. Moldova may challenge Moscow's decision in court, ITAR TASS said, and Georgia announced it may follow suit.

The wine ban, which has already bared some Russian wine shelves and may raise the price of cheaper wines by at least 20 percent, according to Komsomolskaya Pravda, comes right after a salt frenzy in Russia, induced by the Russia-Ukraine row over natural gas early this year. Russians swept salt off the store shelves in fears that Ukraine would stop exporting salt to Russia in revenge for the gas crisis.

RL on Russian drinks:

While wine accounts for less than 10 percent of Russian alcohol consumption, vodka remains far more important. Read Russian Life advice for buying real vodka safely, and the right appetizers to go with it. Even more prominent among Russian drinks is tea, somewhat unexpectedly, while such drinks as medovukha and sbiten are making a bit of a comeback.

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