High and dry in Russia

By: Anton Moiseenko

22/05/2011

In 2006 the importers and producers of alcohol products estimated their losses as a result of implementing the new regulations system called EGAIS as much as $1 bn. In the beginning of 2010 the imports almost stopped once again.

Summer 2011. Despite all the efforts of wine importers trying to do their business and provide wine culture as opposed to the beer / vodka culture, Russian officials represented by organizations with hardly pronounced names Rosalcogolregulirovanie and Rospotrebnadzor are making the life of importers even more miserable.

I am told that wineries’ representative can hardly believe it when they hear what’s happening on the Russian market. They just fail to understand why would the government officials invent so many rules that have no other explanation of existence than those of stupidity. Or, let’s keep it more clear, existence of greed, money-to-pocket flows and corruption.

This summer isn’t a relaxing time for virtually all wine importers in Russia, oh, no. The new game invented by the above mentioned regulations bodies is called «Get a new trading license». This is a striking addition to the recently adopted and UPGRADED certification system for each and every alcohol containing product that you bring to Russia. Well, you might not have heard of it if you are not dealing with Russia yet. But if you do, you might already have received a number of screaming emails and phone calls from your importer in Russia asking you to send your appellation rules, thorough description of the production process and of each wine as well. And, forgot to mention, have all of those docs legalized and apostiled.

Now it seems all of those were just minor problems in comparison to the danger of losing the trading license. I mean, why would you bring all this wine to Russia if you cannot trade? The process of getting new licenses is hard and connected with bureaucracy, bribes (obviously), long queues (you can image how many would like to renew their licenses at a time) and waiting for the final official confirmation letter. Which is sent to your company by ordinary mail, by the way, and can travel a week or two and still not reach your mailbox.

From my personal talks with wine importers I have a feeling that not all of them might survive this process and have their new licenses approved. This especially refers to the smaller companies with less buying power (in all the meanings of the word «buying»). Lucky are those big players who were big enough to create another trading company and get another license for it. At this hard time they are still capable to trade running all the business through another company, whose trade license hasn’t expired yet. All the rest just have to stop all the sales. Which means losses, losses and more losses threatening their businesses.

My personal advice to the wineries – be patient to your Russian fellows. This is not their fault their own government prefer money in their pockets, not in the Russian economy. Or are they just being stupid? Well, both factors might collaborate to this situation.