The Russian Market

The wine market in Russia is a market for which I have a particular interest and where I put high expectations for the future increase in the recognition of Portuguese wines, given its economic stability.

This is definitely a market to follow with regard to trade relations between the two countries. It is in Russia that I see the greatest market opportunity for high-quality wines.

Russia is a large country, the greatest country in the world in territorial extension, so I will focus on the geographical area that belongs to the European continent.

Wine consumption in Russia is much centred in the Western region, especially in major Russian cities, and as Moscow and St. Petersburg, with a population of about 16,000,000 inhabitants, 12,000,000 in Moscow, Source: UN, and 4,000,000 in Saint Petersburg. In addition to the potential that the two cities represent, they are also two major poles of tourist attraction.

Russia and Russian consumers awoke recently to the trade and consumption of wines from all over the world, although in the South of Russia, more precisely in the Caucasus, there are ancient references to wine production, and it believed this was the first region of the planet to produce wine. The distillates and Vodka are the most consumed alcoholic beverages by the Russian population.

The growing interest of Russians consumers for wine arises in a perspective of globalization of the wine trade; that is to say, it is a consumer who seeks wines from all over the world, without obeying to the criteria of quality, although the French wines are recognised on the market precisely for their quality. There is however an increasingly significant interest for quality wines. Russian consumers are more informed and connoisseur, recognising that the production of quality wine is not restricted to only one or two countries.

Wine consumption by Russians consumers is a clear sign of ostentation, luxury and economic power. When betting on a greater market formation, the role which the wine represents at the level of the upper classes can eventually replicate to the middle class and thus increase the trade in wine to a wider number of consumers.

Nowadays the wine consumption is an expensive practice. There is a high speculation and surcharge of the prices of bottles, and when buying wine the consumer invests enough to obtain good wines. This effect causes the consumption of wine per person to be still very low, with only 7.2 litres of wine consumption per person per year (Source: OIV, 2015). This is, however, a number which I believe will grow, providing continuity to the average over the past 10 years.

Portugal is a country completely unknown to the Russian consumer, in such a way that it can be an asset to the entrance of Portuguese wines. In my opinion, if we manage to communicate the excellence of our wines, we have a strong chance of entering this market with fine wines at competitive prices.

The Russian economy has grown sustainably and the increased middle class is also a good omen for the future consumption of wines.

Currently the Russian consumer evaluates the quality of the products he/she consumes by the price he/she pays per bottle, a typical behaviour of younger consumers, in which the link regarding the price reflects the idealized quality. With the maturity of the market there will be of course a drop of prices and quality standards will be different; in my opinion more fair, because the mere increase in the price of the bottles by the seller does not reflect in any way the quality of the product. So, in market logic, this will be an opportunity for the positioning of fine wines of medium and high range but lower prices regarding the current ones. In this context, Portuguese wines of medium and high range can exploit this market with the comfort of lower prices than the existing practice, ensuring, in most cases, a superior quality.

When this leap is done the biggest barrier and the challenge put to the producer and seller will be communication. The Information on the history of wines or grape varieties should be made in Russian, including the producers’ websites, which should also focus on this language as a determining factor to reach the consumer. This is about offering a specialized service. In the case of a market still young on the wine consumption, the consumers training around the Portuguese grape varieties, about the tradition in the production of wine or the characteristics of each wine, is a form of captivate and attract Russian consumer preference, as well as a good strategy to sell the Wine Tourism services and attract the consumer to know the cellars.

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