CRIMEA

Russia seized Crimea from Ukraine in 2014. It coveted Crimea’s strategically located ports,  sandy beaches and wine. During the Soviet era, central planners used the region to mass-produce wine, often of dubious quality, for the whole Union. After the annexation, among the first assets that the new Russian authorities seized and nationalised were two tsarist-era wineries, Noviy Svet and Massandra. The Russian government has showered its new alcoholic acquisitions with subsidies.

The challenges of post-annexation life have been hard for many producers.The Russian market is much larger than the Ukrainian one, but Russin drinking revolves around spirits and beer. Credit can be hard to come. The transition to de facto Russian rule has made acquiring and holding property tricky; small producers have struggled to adjust to Russian regulations. Western sanctions mean that supplies often have to be acquired through roundabout means, adding 15-20% to costs which hurts potential exports, and imports. After the annexation, two Russian factories became the main sources of glassware (bottles) for Crimean wineries. Recently, one cut off its contracts with Crimea; local winemakers suspect that a new director, loyal to Western shareholders, discovered that the company had been supplying Crimea.

Source: ‘Battling the Bottlenecks’, The Economist 18th May 2019, p23.