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Georgian Winemakers Concerned about a Possible Growth in Excise Duties on Wine in Russia

Georgian Winemakers Concerned about a Possible Growth in Excise Duties on Wine in Russia

As reported, the Russian government is discussing the possibility of increasing the excise tax on wine, especially imported.

Georgian winemakers fear that this decision could have a negative impact on the export of wine to Russia. According to General Director of “Tbilvino” Zurab Margvelashvili, if the decision is adopted,  the export of wine from Georgia would be hampered.

“As a rule, the rise in price of any goods has a negative impact on its sales. Especially against the backdrop of the crisis and the decline in purchasing power in Russia. Even a slight rise in prices will have a negative impact on the sales,” – he believes.

In the words of Gia Shengelia,  Director General of the  company “Badagoni”, the  excise increase will negatively affect the export of wine from Georgia.

“Russian distributors can ask us to reduce the price, but then we will see losses. Now we are competingawith cheap wines from Abkhazia and the Crimea. Currently, Russia accounts for 35-40% of our exports,” – he says.

CEO of the “Kakhetian Traditional Winemaking” Zurab Chkhaidze also expects the negative effectsfrom the excise duty increase. According to him, in recent years, Russia is trying to stimulate the development of its winemaking, but the increase in excise duties is unlikely to bury the export from Georgia. Chkhaidze notes that  Russia accounts for 35-40% of exports “Kakheti Traditional Wine” wine.

The head of the National Wine Agency Giorgi Samanishvili says  that at this stage it is difficult to talk about what can be the results of excises growth in Russia, moreover,  the initiative is still being discussed.

The National Wine Agency reports that as of August 2016, a total of 28 156 547 bottles (0.75 l)  of wine have been exported from Georgia to 46 countries which is 42%  more  than the previous year’s data. According to the Agriculture Ministry, export growth was observed both to  the European Union countries as well as China and other traditional markets. In particular, China – 184% (3 368 361), Ukraine – 75% (3 042 192), Belarus – 47% (667 656), Russia – 45% (14 664 610), Poland – 34% (1 367 960), Estonia – 39% (413 364), Kyrgyzstan – 107% (163 966), US – 10% (171 316) in Japan – 12% (101 448), the UK – 65% (67 522), Latvia-  9% (772 926) and others.

In general, Russia is the largest importer of Georgian wine, and the Russian market is of critical importance to the industry. At the same time, the Georgian winemakers are trying to diversify markets and hopes are pinned on China – export to this country is growing every year, and the expected signing of a free trade agreement will increase the supply of wine to China.