New Zealand anti-Russia sanctions threaten wine supply

The country is one of Russia’s top ten wine suppliers and its Sauvignon Blanc variety is reportedly very popular among Russians

New Zealand announced new trade restrictions against Russia on Tuesday, which include a ban on trade in luxury goods, in response to this week’s escalation of the conflict in Ukraine.

“The trade measures include a significant expansion of the range of exports of strategic importance prohibited to Russia and Belarus, and prohibiting certain luxury goods from being traded with Russia… like NZ wine and seafood and Russian vodka and caviar,” Foreign Minister Nanaya Mahuta said in a statement on the government website. The measures are to come into force on November 4. However, the details of the ban have not yet been revealed.

New Zealand wine is very popular with Russian consumers, with the country being among the top-ten suppliers of wine to Russia in 2021 and 2022, according to the Italian wine industry association Unione Italiana Vini. The most popular variety of New Zealand wine in Russia is Sauvignon Blanc, which makes up 90% of New Zealand’s wine exports to Russia, RBC news outlet reported, citing market insiders.

It is unclear whether New Zealand will introduce a total ban on wine supplies to Russia, like the US and Australia did earlier, or whether the ban would be partial and will only cover wines with price tags over a certain threshold, as is the case with the EU. Brussels earlier this year banned the supply of wine to Russia which costs over €300 per bottle.

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However, according to trade experts, Russia may still be able to obtain New Zealand wine after sanctions come into force, for instance through third countries.

“Wine is bottled in New Zealand and then sold to some intermediary company… which has no ban on the supply, and the intermediary sells it to Russia,” a source in the wine market told the news outlet. Also, some of the wines under New Zealand brands are bottled in other countries – for example in South Africa, and may presumably be delivered from there.

Wellington’s new trade restrictions on Russia will also affect oil, gas and the supply of related production equipment. In addition, it has imposed sanctions against some 50 Russian businessmen and 24 officials associated with the former Ukrainian territories that joined Russia last week.

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