Russian wineries maintain production despite EU sanctions

Russian wine suppliers have been facing difficulties due to EU sanctions. But Putin's favorite vintners have been trying to import material from Portugal and France through third-party countries. DW investigates.

The sea breeze, bright sun and warm climate have made the coastal hills along the Black Sea an attractive destination for wealthy Russians. The picturesque landscape near Gelendzhik offers panoramic views and is located near the megamansion known as Putin's Palace.

Opposition figure Alexei Navalny, now imprisoned, made the estate world-famous with his investigative videos. One vineyard after the other was established in the region in recent decades — multimillionaires and billionaires in the Kremlin's inner circle consider this "hobby" to be a status symbol.

"Out of everything I saw there, the only thing that interested me was the production of wine," Vladimir Putin said in January 2021, speaking with students on TV. The Russian president also claimed he had nothing to do with the "palace."

But during the show, he did admit he had been impressed by the neighboring estate belonging to the famed Russian winery Abrau-Durso. The main shareholder is Boris Titov, a friend and presidential consultant who also acts as Russia's business ombudsman.

Titov has spared no expense when it comes to Abrau-Durso, which for years has been led by his son Pavel. Customs data by ImportGenius, the world's leading information service for the import-export industry, show that the winery only uses the best products from across Europe.

Seedlings, barrels and winemaking supplies are sourced from the best suppliers in Italy, while French manufacturer Saverglass provides some of the bespoke bottles.

According to media reports, Putin's favorite brand is apparently the dry red wine Usadba Divnomorskoe. Photos of menus circulated in the media have confirmed that in past years, this wine has been served at receptions for such high-level state guests as Belarusian President Alexander Lukashenko or Chinese President Xi Jinping.

As Navalny discovered, the grapes for this merlot grow directly adjacent to Putin's Palace in Gelendzhik, in a vineyard set up by the owners of Abrau-Durso about 10 years ago.

In 2019, Gennady Timchenko, an oligarch from Putin's inner circle, bought the company Lazurnaya Yagoda, a subsidiary of Abrau-Durso that also owns the winery and vineyard. Vladimir Kolbin, identified by the media as the son of one of Putin's childhood friends, was also involved in the deal.

The influential and wealthy owners have also invested heavily in wine production, hiring Italian oenologist Matteo Coletti to oversee the process. In 2021, Putin awarded Coletti with Russian citizenship for his efforts.

Despite sanctions for Russia's war on Ukraine, the Italian specialist continues to work in Russia. But he, too, is now facing difficulties.

At receptions in the Kremlin, Russian wine is usually served in Italian bottles designed by Vetri Speciali. But after Russia launched its full-scale invasion last year, the company stopped collaborating with Putin's vintners.

"In fact, all economic and financial exchanges with Russia have been suspended, so we no longer deliver our products to Russia, including to Usadba Divnomorskoe," a spokesperson for Vetri Speciali told DW from the headquarters in Trento.

Aside from sourcing bottles, the Kremlin's vintners have had to contend with another problem: under the sanctions, in place since last summer, it's illegal to export corks from the European Union to Russia.

"During our production, we use natural, unbleached cork of the highest grade A. To make them, first, the bark is collected from cork oaks that are at least 52 years old and then sorted by quality," the producers of Usadba Divnomorskoe said on Instagram shortly before Russia invaded Ukraine. They added that their wine was only ever corked "with the best corks from leading suppliers."

The only problem is, all the leading suppliers are based in the EU. "Since the beginning of the Ukraine war, Corticeira Amorim have suspended all exports to Russia, as well as any direct investment in that country," a spokesperson for the Portuguese firm, also the world's largest cork producer, told DW.

Portugal is responsible for about 70% of global cork production, followed by Spain at about 10%. Customs data indicate that Abrau-Durso and Usadba Divnomoskoe use corks from Corticeria Amorim.

For wine producers who claim to belong to the premium class, natural cork is an essential feature, Utz Graafmann, publisher of the well-known German online wine encyclopedia Wein.Plus, told DW.

"It's traditional. Technically, the cork can be replaced with a synthetic plug or a screw-on cap. But producers are often reluctant to choose these alternatives, because they fear their product will be associated with cheap wine," he explained.

Furthermore, natural cork is indispensable if the wine is to continue maturing in the bottle after aging in the barrel. High-quality natural cork ensures there is a limited, but consistent supply of oxygen to the bottle.

The sanctions don't appear to have been a problem for Abrau-Durso, however. Customs data from ImportGenius show that the winery continued importing corks from Corticeira Amorim via Turkey after the EU embargo went into effect in July 2022. The sender on the customs declarations form was no longer the distributor Amorim Cork S.A., but the Turkish logistics company Mepline Logistics, based in Istanbul.

ImportGenius has not yet made any data available for 2023, and Abrau-Durso did not respond to DW questions about whether it was still evading sanctions through Turkey. The Usadba Divnomorskoe winery proved impossible to contact, as its website only listed the telephone number of the Abrau-Durso trading house.

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Corticeira Amorim assured DW that it knows nothing of deliveries to Russia through Turkey. "We informed our former clients in Russia that we didn't want to continue supplying our product because of the Russian invasion in Ukraine," they said.

With regards to controlling the supply chain, they were quick to add that, in the light of indications of deliveries through Turkey, they would consider more due diligence to reduce the risk of supplying products to companies that are used to evade EU sanctions.

If found guilty of violating sanctions, suppliers face a fine of up to €10,000 ($10,665). Last year, the European Commission proposed to lift that minimum fine to 5% of the company's annual turnover, and to make sanction evasion a punishable offense.

This article was originally published in German.