The Crimean winemakers reviewed the last year’s results by February, shed a few tears and thought of the future that after all looks gloomy: a lack of funding, inability to sell the finished product, change of the administration and visits of the Crimean “self-defense forces” to wineries do not give much cause for optimism.
The winemaking in Crimea had the periods of trial more than once – revolutions and wars, Gorbachev’s “prohibition” and the turbulent 90s. It remains to be seen whether the Crimean winemakers will survive in the Russian reality while saving their enterprises and technologies of wine but not powder substitute. But considering the severe morals and manners of the Russian system, they don’t have many chances.
Wineries of Crimea: before and after the annexation
The winemaking including the Crimean region had about 6% in the food industry volume of Ukraine. The Crimean wine-makers (including Sevastopol) ranked second after the Odessa region in terms of wine materials processing: 27.3% (the Autonomous Republic of Crimea and Sevastopol) to 44.4%. The brands Inkerman and Massandra were the best sellers in the Ukrainian market. As of the end of 2014, the wine market in Ukraine declined by 32%, mainly due to the loss of the Crimean manufacturers.
Today there are more than 40 wineries, among which 24 enterprises are engaged in processing of grapes, 7 wineries are involved in wine production, 5 – in champagne production, 7 – in cognac production, in Crimea. The lion’s share of these enterprises was nationalized: on March 26, 2014 (10 days after the “referendum”), the “State Council” of Crimea adopted the Resolution “On nationalization…” The 27 enterprises of the presented list of 131 positions were accounted for the wine producers that were quickly transferred to the property of the “republic” including such brands as “Massandra”, “Novui Svet” and “Magarach”. However, the nationalization didn’t touch the winemakers in Sevastopol as well as other enterprises. Moreover, the “governor” Menyailo plans to establish an agribusiness holding company by amalgamating the state farm-factory named after Polina Osipenko, Sevastopol winery and the company “Zolotaya Balka”, which is leased by the Ukrainian businessman, who is not in a hurry to move into the Russian legal field.
Summarizing the results of 2014, the “economic development minister” of Crimea Koryazhkin said that there was the decrease in wine production by 20%, cognac – by 37 % and vodka – by 55%. The main reasons: adoption of the Russian standards and deficit of rectified ethyl alcohol, which was delivered from mainland Ukraine.
Grape processing volumes declined in Ukraine in recent years as well but the current situation in Crimea is catastrophic: in 2013 the volume of grape processing on the peninsula accounted for 170 thousand tons, in 2014 – 50 thousand tons, according to preliminary estimates, it will be hardly possible to process more than 15 thousand tons in 2015 (a decline of more than 10 times!!!).
Ukraine is not Russia or about the standards of winemaking
A record decline of the Crimean winemaking sector is explained by following reasons.
Firstly, until recently this sector was supported in Ukraine under the Law “On Charges for Development of Viticulture, Horticulture and Hop-Growing”, according to which 1.5% fees of sales of alcoholic products was transferred to the farms for planting and care of vineyards. There are no analogues of such fees in Russia.
According to the words of one of the Crimean winemakers, today a lack of funding along with the difficulties of the transition period led to the situation when since the fall of 2014 the majority of state farm-factories didn’t initiate the performance of agrotechnical work because of a lack of financial, material and technical resources. And it means that there will be nothing to harvest in 2015.
Secondly, in order to bottle wine products by the Russian standards, it is necessary not only to fulfill a number of bureaucratic requirements but also the main things is that every enterprise is required to install the USAIS system, which costs from 3 up to 5 million rubles that is more than each enterprise can afford.
Thirdly, the winemakers faced with serious problems when it came to sales of products due to various reasons including a lack of the Russian licenses for production and sale of wine. There are a large number of unsold products that were still stored in the enterprises’ warehouses because of a sharp surge in prices since January 1, 2015, that was caused by the increase in the excise tax in the Russian Federation. For example, a bottle of Cahors wine (0.75 liters) that was produced in the Bakhchysarai winery having the Crimean tax stamp costs about 120 rubles and having the Russian one – 220 rubles.
As a result, primarily the enterprise workers suffer. For example, according to an insider, employees of the winery APK Vinogradnuy don’t receive a salary since October 2014. The total amount of debts amounted to more than 5 million rubles. There is almost the same situation in other enterprises.
In the fall of 2014 the mass media reported about the desire of the Crimean winemakers to move production facilities and bottling to the mainland. However, only private companies, which didn’t fall under the wheels of nationalization, could make this step. At the same time, the Minister of Agrarian Policy and Food of Ukraine Aleksei Pavlenko said at the end of January that Ukraine should retain the Crimean brands, in particular, “Magarach” and “Novui Svet” on the basis of re-registration of all state wine producers on the mainland. Having said this, the Ministry of Agrarian Policy and Food informed us that the connection with the Crimean state enterprises that were accountable to the Ministry was lost and the mechanism of their re-registration as well as its appropriateness particularly was being worked now.
“Massandra”: a question of survival
The National Production and Agrarian Association Massandra (since August 2014 – the Federal State Unitary Enterprise Massandra Production and Agricultural Association) that includes 8 enterprises located on the Crimean coast from Livadia to Sudak suffered the most severe trials.
On June 4, the National Production and Agrarian Association Massandra together with all its enterprises and vineyards were transferred under the supervision of the Department for Presidential Affairs of the Russian Federation by the order of the Crimean “Council of Ministers”. In these circumstances, the enterprises of Massandra happened to be on the brink of survival instead of the promised increase of funding. If previously 4 of 8 wineries were eligible for bottling, then now only one can do that – it is the main plaint. No one cares how the rest will survive.
As of February 10, 2015, the main plant of the Federal State Unitary Enterprise Massandra Production and Agricultural Association didn’t produce any bottle of wine starting from January 1 because of a lack of the Russian license. For the same reason the main plant can’t buy the wine materials from its wineries. At the same time four wineries that were previously engaged in the bottling already received the Russian licenses but they have no right for the bottling. The circle is closed.
According to the Ukrainian legislation, in Ukraine the enterprises, which have been engaged in processing of grapes and wine bottling for about 10 years, were allowed to sell up to 20% of produced wines in their factory stores that was profitable for wineries under the conditions of the tourist region. According to the Russian laws, the producers are not allowed to sell the wine.
The visit of the “Crimean self-defense forces” that earlier visited other wineries of the peninsula as well to the territory of the main winery was the final chord in the fate of Massandra. At the request of the online media “Pod pricelom” to the General Prosecutor’s Office, we were said that on February 10, the Prosecutor’s Office of the Autonomous Republic of Crimea put the information about the criminal offense under Art. 341 of the Criminal Code of Ukraine upon “the capture and blocking of the winery National Production and Agrarian Association Massandra by the gunmen of the so-called Crimean self-defense forces” on Unified Register of Pre-Trial Investigations and on February 11, all the materials were referred to the General Procurator’s Office.
The staff of the Massandra winery appealed the president Putin for help. The President didn’t answer but the Massandra director Boyko was removed from the post and a criminal case upon abuse of power was initiated against him (as we have already informed about). As you can see, the local authorities quickly found the guilty one, who is likely to be punished to the fullest extent of the law. However, both the Massandra employees (as they mentioned in their letter to Putin) and other Crimeans are sure that all the events around the main Crimean brand is just a struggle for valuable coastal land. The Main Department for Presidential Affairs is interested not in winemaking but in the hectares of the South Coast land that can bring a large profit.
And indeed, what can the Crimean winemakers expect from the Russians, who still don’t even have any law on wine (the Law “On Grapes and Grape Wine” is in force since January 1, 2006 in Ukraine). That’s why only in Russia the pride of the Crimean winemakers known as the White Muscat of Red Stone, which won 21 gold medals at international wine-tasting exhibitions, three grand prizes and one super grand prize, can be recognized as… “the wine drink”.
