According to data provided by Vadim Deluobizi, director of Research Center of Alcohol Market of Russian Federation on February 4th, Russian vodka exports has been increased by over 10 times in 4 years (42,000 liters in 2012 to 480,000 liters in 2016). Exports to China accounted for about 1% of the total exports (0.17% in 2012). Although such a share is not significant from Russia’ perspective, there is an increasing demand in China.
In 2012, China imported only 42,000 liters of vodka. The number began to grow significantly in 2014, reaching 761,000 liters. However, in 2015, it fell back to 288,000 liters. Deluobizi said China has an average annual demand of 500,000 liters of Russian vodka. In 2016, Russia exported the most vodka to Germany (6.9 million liters), followed by Ukraine (6.4 million), the UK (3.5 million), the USA (2.5 million), Latvia (1.7 million) and Tajikistan (1.1 million).
Russian alcohol meets fierce competition from international brands in China market. According to Mikhail, general manager of the Russian Export Center, fierce competition from international brands is the biggest challenge for Russian alcohol exports to the Chinese market. In order to expand the market share in China, Russian companies have to adopt localized production, he said. Mikhail believes that renowned international brands take a leading position in China because they are willing to pay high consumption taxes. Russian products belong to the middle price range; high consumption tax will hinder their entry into china. In addition, consumption pattern of China is different from that of Russia market.
"The Chinese value the brand rather than the liquor itself. The brand allows them to put themselves into a certain social class ", he said. Except for vodka and other spirits, the prospects are also optimistic for Russian wine in China. Pavel Shapkin, leader of Russia Alcohol Policy Center, said, "CIS countries, China, and even Germany, like Russia's inexpensive sparkling wine. Market prospects in these areas may continue to improve." Shapkin believes that taking into account the factors of global warming, it does not rule out that 4 to 5 years later, Russia may become suitable for viticulture. Russian Ministry of Agriculture plans to develop 50 thousand hectares of vineyards by 2020.