Foreign Wine Investment into Crimea Taking Off

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crimea-wineDespite Western sanctions over the 2014 reunification of Crimea with Russia, the peninsula’s economy has seen rapid growth both in terms of economic output as well as investments. This has left the republic with ambitious goals for its future development. According to the republic’s Minister of Economic Development Natalia Chaban, speaking at the recent Sochi Investment Forum, prognoses indicate that Crimea experienced 10 percent growth in gross regional product during 2017, with investments also surging. Andrey Nazarov, chairman of the board of the Yalta International Economic Forum Foundation, underscored Chaban’s sentiment, saying that there is a rapidly growing interest among Western investors to “fill the gaps” in Crimea’s economy, even before sanctions are lifted.

“We have no doubts that in 20 years, Crimea will be a second Monaco,” the chairman said, going on to say that “Businessmen in general, regardless of if they are Russian or European, people are very often very wise, pragmatic, and therefore want to fill those niches, which are currently free, ahead of time. Of course, in 20 years there will not be an opportunity like there is now. Therefore, many are willing to take risks, even during sanctions to act and invest in Crimea.”

One of the areas of the economy that Nazarov was keen to point out had seen considerable investment was in wine production. The peninsula’s climate is ideal for vineyards, and has thus attracted the attention of Italian and French firms seeking to invest in production there.

The fourth annual Yalta International Economic Forum is slated to take place later in April of this year. Several hundred participants from upwards of 60 countries are expected to attend, including from Western countries.

Most of the production of Russian wine is concentrated in the Krasnodar, Rostov, and Crimean regions of Russia, while the Russian market is characterized by the presence of a large number of low-cost products, with a significant part of local wines having a retail price of less than 100 rubles. Attempts to shift away from the low-quality reputation of Soviet wines has been moderately successful, with increasing amounts being made in dry, rather than sweet or semi-sweet varieties.

In 2014, Russia was ranked 11th worldwide by the area of vineyards under cultivation. The Russian wine industry is promoted by local authorities as a healthier alternative to spirits, which have a higher alcohol content. The book Russian Wine Country  lists 55 wines from 13 wineries, including brands such as Fanagoria, Lefkadia, Chateau du Talus, Abrau-urso, and Chateau le Grand Vostock.

“Crimea has a long history of making wines,” says Chris Devonshire-Ellis of Dezan Shira & Associates, and some of the Russian wines being produced now are extremely good. They possess a unique combination of the nearby coniferous forests adding hints of juniper and berries, while Black sea breezes add a certain saltiness similar to that obtained by the Margaret River wines of Australia. It makes a lot of sense for Italian, French and other European wine manufacturers to get involved in Russian production.”

 

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