Content:
  1. Vines under fire and under occupation
  2. The decline
  3. The chance
  4. The interest of foreigners

The occupation of Crimea in 2014 caused irreparable losses to the Ukrainian wine industry, and a full-scale Russian attack in 2022, occupation, and constant shelling of key wine regions could have caused a catastrophic decline.

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However, even in times of war, the trend for Ukrainian wine is growing steadily. Both Ukrainians and foreign connoisseurs have begun to take a closer look at domestic wines. You can increasingly find bottles of Made in Ukraine beverages in supermarkets in the Baltic states, Japan, the United Kingdom, Canada, and the United States.

Ukrainian wines win prestigious awards, and winemakers participate in global events. For example, this year, Ukraine is represented for the first time at Wine Paris and Vinexpo Paris, which is taking place these days. 

How has the war changed the Ukrainian wine industry?

Vines under fire and under occupation

On February 23, 2022, the Ukrainian Prince Trubetskoi Winery shared the good news of a new release of wine that the brand has been producing for over 10 years. The winery was just packing bottles to send to the prestigious Decanter exhibition, preparing to open a hotel and restaurant.

But their plans were cut short. The very next day, in the first hours of the Russian invasion, Prince Trubetskoi's chateau in Kherson Oblast was occupied. This is the third war for the winery (after the two world wars). For more than nine months, neither the management nor the employees had access to the enterprise, Andriy Strilets, the managing head of the Prince Trubetskoi winery, told The Village.

With the liberation of Kherson by the Ukrainian Armed Forces in November, he was able to return to the winery: "The Russians completely looted the collection of wines that had been collected for several generations, and mined the vineyards. The building of the historic chateau and buildings on the premises were destroyed. They stole equipment and furniture of the restaurant, hotel, office, and store," Strilets lists.

The Russians also blew up a warehouse with more than 40,000 bottles of wine during the occupation of Kyiv Oblast.

Prince Trubetskoi Winery is not the only Ukrainian vintner affected by the war. In early November, a pre-premiere screening of the documentary Wounded Land took place, featuring several other producers: SliVino Village, WineIdea, Olbio Nuvo.

How many winemakers have already suffered from the war is currently unknown, Volodymyr Kucherenko, CEO of Ukrvinprom Corporation, explains to LIGA.net:

"We know about the complete destruction or significant damage to a number of wineries in Kherson, Mykolaiv, Odesa and Kyiv oblasts." Wineries in Zaporizhzhya Oblast, occupied by the invaders, and in Donetsk Oblast, where the military situation is extremely dangerous for civilian infrastructure, are at particular risk.

Russia's military aggression has become another huge challenge for the industry after the loss of about 23,000 hectares (up to 40% of all) of vineyards and almost 5,000 decaliters of wine products with the annexation of Crimea, he explains. As of the beginning of 2022, the total area of vineyards in Ukraine (excluding the peninsula) was 34,000 hectares.

The decline

Over the past five years, the share of Ukrainian wineries' products on the domestic market has significantly decreased, MAUDAU, the online platform of Fozzy Group retailer, confirmed to LIGA.net.

In addition to problems with vineyards, the industry has found it increasingly difficult to compete with "cheap" imports after the abolition of duties on European wines in 2021, in accordance with the Association Agreement.

In European countries, the wine market is very developed, with winemakers receiving significant subsidies and incentives to export, Anna Horkun, founder of 46 Parallel Wine Group, explains to LIGA.net: "In most cases, this makes it possible to set prices below cost, as a significant portion of the costs are covered by government programs."

The numbers speak for themselves:

-The volume of wine imports in 2019 increased to 55,700 tons, while exports of domestic wines fell almost sixfold to 8,800 tons, according to a study conducted by experts from the Institute of Agrarian Economics. At the end of the year, Ukraine had a negative foreign trade balance of $135 million.

-According to the results of 2021, the value of imported alcoholic and non-alcoholic beverages to Ukraine amounted to $719 million, which is 22% higher than in 2020 at $587 million, according to the Institute of Agrarian Economics.

-As of the beginning of 2022, the total area of vineyards in all categories of farms amounted to 34,000 hectares, with a gross harvest of 257,500 tons, according to the State Statistics Service.

A full-scale Russian invasion could have destroyed the industry, especially in the first months, when local military administrations imposed a total ban on the sale of wine products and producers lost access to vineyards, says Kucherenko of Ukrvinprom.

Currently, market participants interviewed by LIGA.net estimate the share of domestic wines in the Ukrainian market at 10-15%.

The chance

But unexpectedly, the war gave producers new opportunities. When the ban on sales was lifted, Ukrainian retailers created a strong demand for Ukrainian wines: it was impossible to import foreign drinks – wine was not subject to critical imports, so store shelves were empty, Svitlana Tsybak, executive director of the Beykush winery and president of the Ukrainian Association of Craft Winemakers, told LIGA.net.

At the time, the "boom" expected by producers did not materialize, Tsybak says. However, since mid-summer, consumer interest in Ukrainian wine has been growing steadily, LIGA.net's interlocutors confirm.

"Unfortunately, it was the war that became the 'trigger' that drew the attention of domestic consumers to the Ukrainian product," says Horkun.

Demand has increased by about 10-15%, with a particularly strong interest in the west of the country, Ivan Plachkov, co-owner of the Kolonist winery, confirms to LIGA.net.

Before the outbreak of the full-scale war, there were 563 items from Ukrainian producers on the MAUDAU platform, and now about 100 – 1.6% of the entire range is available for order. "Although consumers are interested in Ukrainian wine, they still prefer well-known foreign brands for the holidays," explains MAUDAU. In 2023, the platform plans to add locally produced craft wines to its catalog.

The share of Ukrainian wines in the product mix of the largest Ukrainian online retailer Rozetka increased to 20% in 2022, and their turnover doubled compared to 2021, the company's press service told LIGA.net. The highest sales of Ukrainian wines were observed in October-December, and Ukrainians are most interested in wines in the lower and middle price segments. The average "wine" check at Rozetka is UAH 150 ($4), the company said.

The retailer plans to continue expanding the range of domestic wines, including using their own resources: 

"Soon, consumers will be able to taste the wine of our own brand, as well as water, which is necessary when drinking alcohol," the company said in response to a request from LIGA.net

The interest of foreigners

Interest in Ukrainian wines abroad has not just multiplied – it has appeared, Svitlana Tsybak of Beykush tells LIGA.net. The producer now sells its wines to Japan, Finland, Britain, Iceland, Sweden, and is establishing sales in the United States, Norway, and Poland. Overall, about 70% of the Ukrainian producer's wines are exported.

"After two months of our export drive, we were left with virtually no wine," says Tsybak.

Despite the constant shelling, the Ochakiv-based producer harvested a wartime crop, and in early summer, Beykush wine won a gold medal at the prestigious Decanter World Wine Awards 2022 and was listed among the world's 50 best wines out of more than 18,000 submitted to the competition.

An increasing number of Ukrainian craft producers are working to put Ukraine back on the world wine map, in part by consistently reminding the world of themselves. According to the Ukrvinprom association, over the past five years, Ukrainian vintners' products have won about 600 awards at competitions and exhibitions. In November, Ukraine renewed its membership in the International Organization of Vine and Wine.

The Ministry of Foreign Affairs is also helping to make foreigners interested in Ukrainian wines. In particular, last year, with the assistance of the Ministry, a program was implemented to represent Ukrainian wine in the La Cité du Vin wine museum (Bordeaux, France).

However, the ability to meet all the demand is still limited, explains Tsybak. The producer expects to produce about 50,000 bottles from the new (already wartime) harvest (previously they produced over 30,000).

46 Parallel Wine Group also sees a lot of interest in its wine from foreigners, mainly Europeans, company founder Anna Horkun tells LIGA.net:

"We reject most of the requests because we are not always able to guarantee the terms of supply that our foreign partners need," she explains.

While in peacetime they would have no hesitation in signing up to all the terms and conditions, now, with power outages, rising prices, and other force majeure, exports are becoming economically unprofitable, Horkun says.

Kolonist has also experienced increased interest from foreigners, but they are not going to significantly increase exports – no more than 15-20%, the winery's co-founder tells LIGA.net, as the 2022 harvest was one-third less than a year ago – about 250,000 bottles will be sold:

"The culture of wine consumption in Ukraine is growing rapidly. The generation of 45-50 year-olds already prefers wine to strong alcohol. The market is actively growing, we already have our fans, so why lose them," says Plachkov.

Uliana Bukatyuk

LIGA.net business correspondent