Weapons instead of wine: how is the industry reacting to the war in Ukraine?

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The situation concerning how Western drinks brands respond to the war, and how increasingly severe sanctions will affect business in Russia, continues to develop. Some major drinks brands halted business in Russia immediately, some others have succumbed to mounting pressure and, whilst still operating in Russia, have significantly reduced operations. Some major companies are citing a “moral obligation” to their thousands of employees there. Boycotts of Russian vodka brands have already had a significant impact.

Will there be a 2022 vintage of Ukrainian wines?

In 2014 Russia illegally annexed Crimea, the major wine producing area of the Ukraine noted for their light sparkling wines. When Ukraine lost Crimea, it lost half its winemaking industry and Russia has benefited from wine production there. The current Russian attack against Ukraine is further destroying the country’s wine culture. According to the figures of the industry association Wines of Ukraine, vines grow on 41,500 hectares in Ukraine – that is almost as much as in Austria. In 2019, 133.4 million litres were produced by around 50 wineries and cooperatives. Today, there are not only vineyards in the southern regions of the country such as Odessa, the annexed Crimea, Mykolaiv or Kherson, which has since been conquered by Russia, but also in the northern areas. Many wineries are located in the currently heavily contested growing regions of Chernihiv, Lviv, Kyiv and Ternopil. Whether some of them have already been destroyed is currently unclear. Months of fighting have not only disrupted – and possibly set back – Ukraine’s winemaking abilities, but it also wreaked havoc across Eastern Europe’s wine supply chain as a whole. Some facilities have stopped production in order to help refugees. Others have encountered inflation and other problems involving everything from transport to bottle supply issues, as hostilities resulted in destroyed inventory and blocked Ukraine’s main port of Odessa. Whilst the sale of alcohol is forbidden in the time of war, Ukrainian producers have no operational business right now, so winemakers are bottling not wine, but gasoline for Molotov Cocktails to protect their land from Russian invaders.

The Eastern wine industry is suffering as a whole

It was business as usual for wineries and their suppliers in Eastern Europe until Russia declared war on Ukraine, consequently other Eastern countries have also been thrown into uncertain territory, with wineries changing production to housing refugees, bottle supply issues, transportation problems and rising inflation. For decades, Eastern European vineyards were known as the hidden gems of the wine world, only available to the Russian market. The end of the Soviet Union had changed that, and once the inevitable chaos that arose from political turmoil had cleared, Western wine drinkers had a whole world of labels to explore from Central and Eastern European countries like Georgia, Moldova, Ukraine, Bulgaria, Romania and Hungary. But Russia’s invasion of Ukraine has changed that. For example, Georgian winery Pheasant’s Tears claims their warehouse with about $16 million full of wine inventory was eventually bombed and destroyed. At the time, the facility was also being used to prepare and send meals to hospitals, territorial defence, and Ukraine’s Armed Forces, and was likely viewed as a target.

There are also logistical problems that have arisen because of Russia’s attacks on Odessa, Ukraine’s largest port on the Black Sea. Shippers are having to worry about both the war and inflation. On top of this, winemakers are also dealing with a shortage of glass bottles. Swiss glass container maker Vetropack had to stop production at their facility near Kyiv, where much of Eastern Europe’s wine bottles are made. When their workers were forced to flee Russian troops, 300 tons of molten glass hardened inside the facility’s furnace, damaging it.

Even if they are not on the frontlines, vineyard owners located in countries outside Ukraine appear to be living on the fringes of the war are also enduring hardship losing income because tourists have stopped coming for wine tours and tastings. The fallout from Russia’s war has even been felt beyond the region’s wine industry. Germany’s Eichbaum brewery and the country’s third-largest beer exporter, has seen the price of its hops and grains skyrocket, thanks to the spike in prices that the loss of Ukrainian harvests have triggered. As Russia and Ukraine account for about 30% of world wheat exports, and the worsening supply-chain disruptions are creating a commodities shock that is driving up food prices worldwide.

Georgian winemakers have repeatedly suffered Russian aggression

Another country victimized by Putin’s expansionist fantasies is seeing its wine industry shaken by the war, its winemakers undoubtedly wondering if they too will soon switch from Saperavi and Rkatsiteli to petrol bombs. The country of Georgia is generally considered to be the oldest wine-producing region in the world with experts tracing winemaking all the way back to 6,000 B.C., long before the French started making the beverage. When Georgia was incorporated into the Soviet Union, many winemakers – who until that point practised complex, nuanced, traditional winemaking – were forced to shift largely to mass-production, low-quality wines to ship to Russia. Many of the winemakers themselves refused to drink this industrialised wine, instead focusing on small, personal quantities of the wines they had been successfully making for thousands of years. Georgian wine once again paid the price for Russian policies when Mikhail Gorbachev in 1985 waged a campaign against alcohol, which dramatically slashed vineyard allotments and the land dedicated to wine production in Georgia decreased to just a quarter of its original size. After the fall of the Soviet Union, Georgia’s producers continued to sell the majority of their wine to Russia until 2006, when Vladimir Putin placed a disastrous embargo on the product. Since 2006, Georgia has sought to diversify its wine exports. Still, as of 2021, 57% of Georgian wines ended up in Russia, with another 12% going to Ukraine. That means that almost three-quarters of Georgia’s wine market has dried up almost overnight as Russia’s invasion of Ukraine has shocked world markets – but especially markets in Eastern Europe.

Clearly, this is an emergency for the wine industry in Georgia. But those who value the historical importance of wine and seek to better understand its roots, even outside of Georgia, should be worried about these developments as well. Not only is Georgia, to our knowledge, the birthplace of wine, but it’s also home to an ancient winemaking technique that involves fermenting grapes in handmade clay pots, called qvevri, buried underground. And those who have cut Russian vodka out of their drinking routine as a form of protest should see the purchase and consumption of Georgian wine as a similar political act. Russia invaded Georgia back in 2008 and annexed the territories of South Ossetia and Abkhazia, just like Putin did to Crimea years before its push into the whole of Ukraine. Georgia’s winemakers and citizens are tense as its aggressive neighbour wages war on a country with a much larger military than its own. With Putin’s fantasy of re-establishing some fever dream of the Soviet Union shaping global politics by the minute, Georgia, unprotected by NATO or the European Union, is well aware that it could be next. Though buying a bottle of wine may seem like a miniscule and inconsequential act, bolstering Georgia’s economy in any way possible at this time is surely a step in the right direction.

Moldovan winemakers are also paying the price of Russia’s invasion of Ukraine

With its warm climate and fertile soil, tiny Moldova, sandwiched between Ukraine and Romania, has long been one of eastern Europe’s most significant wine-producing countries. The country has the biggest density of vineyards in the world, covering 3.8% of its territory and 7% of its arable land. It boasts a whopping 89,768 vineyards and 331 wineries in a country just 33,846 square kilometres in size (slightly bigger than Belgium), with a population of 2.6 million people. Wine is currently the third most exported product from Moldova (behind insulated wire and sunflower seeds) and in 2019 the country exported $137 million in wine, ranking it the 20th largest wine exporter in the world. Its most important markets are Belarus, Russia, Europe and China. Those statistics might not sound impressive, but for one of the poorest countries in Europe, its transformation from state wine producer for the Soviet Union to critical darling has been painstakingly long, and vintners worry their toil could be wiped out in an instant. Like much of Moldova’s exports, being a land-locked country and without a port itself, most of their wine is sent internationally through the Black Sea port of Odessa in southern Ukraine, which has been devastated by Russian troops.

Moldova underwent similar Russian aggression issues as Georgia in 2006 and 2013, when Russian officials froze imports of Moldovan wine. After the 1992 Transnistria War, Russian-backed separatist forces in Transnistria battled pro-Moldovan forces after Moldova declared independence from the Soviet Union. In 2006, Moscow banned all imports of Moldovan wine, when chief sanitary inspector of Russia Gennadiy Onishchenko claimed that heavy metals and pesticides were found in them. Moldova claimed there was no proof and no other countries had identified any problems with the wine, labelling it economic blackmail. This happened again in 2013, when Russia banned all imports of Moldovan wines and spirits, saying, without providing any evidence, that the wine was of “unsatisfactory quality.” It came as Chisinau was attempting to establish closer ties with the European Union. Officials said the ban was caused by sanitation concerns, but the move was widely considered punishment for Moldova’s relationship with the European Union.

As a result of this tumultuous past, Purcari Winery in Moldova makes a wine called Freedom Blend, made with saperavi grapes from Georgia, bastardo from Ukraine, and rara neagra from Moldova. All these states have suffered Russian aggression, it is symbolic to take the grapes of these three countries that are still fighting for their freedom in the real sense. They may have independence, but that doesn’t mean they have their freedom.

Eastern wineries also can’t simply sell elsewhere overnight. Managing partner of Marq Wine Group who is working on behalf of several Ukrainian wineries said that wineries are seeking new markets immediately.

“they are not seeking charity, they simply need to continue their business in order to support their employees and surrounding communities, and refugees that are seeking shelter in safer zones”

Contact us to find out more about a few Eastern wineries we work with info@h2vin.co.uk

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