Winemaking in the South of Russia: Institutional and Consumer Barriers

Abstract

This paper addresses institutional and consumer barriers to the development of the winemaking industry in the South of Russia. During the recent years the Russian wine industry has been transforming significantly due to the institutional restrictions that limit the use of imported wine material in the country and the increase in the cost and range limitations of imported bottled wines associated with sanctions. Therefore, there is a growing market demand for high-quality and affordable wine produced in Russia. Southern regions of Russia are located along the 45th parallel, which is also called ‘the latitude of wine’, most Russian wine producers are concentrated there as the climate is good for winemaking. The Russian wine industry is rather immature and developing rapidly. Path dependence effects and the relative youth of the industry along with existing dependence on imported equipment and components, high entry costs, shortage of personnel, and insufficient government support are the main barriers that hinder the growth in the number of wineries in the region. Besides, the culture of conscious wine consumption has not yet been formed among the bulk of the population, the consumer pattern on the low quality of Russian wine remains stable. The practice of the use of imported wine materials, which used to be widespread among local wine producers before 2020, as well as the use of French and English names for originally Russian wine houses do not contribute to the formation of consumer loyalty to domestic wine. Taking all these into account, we assume that it is necessary to shape the identity of unique local wine brands and promote them on the market, building the new consumer patterns in the field.