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Shock new trade figures show hundreds of millions of dollars worth of western wine and spirits pouring in to the country via the Baltic states.

Big alcohol manufacturers – including Scotch giant Diageo – voluntarily pulled out of Russia after Vladimir Putin’s full-scale invasion of Ukraine in early 2022.

That decision drove down sales of western brands, including Scotch, for a year. But new statistics from the Kremlin show imports have more than recovered. 

This is because big distributors – many of which are closely linked to the Kremlin – have found ways of buying booze from western Europe and America through neighbouring countries.

The latest customs figures from the Kremlin show whisky imports of more than $350m in 2023. That is more, local press says, than ever before.

This figure is for all whiskies from all countries – so includes bottles made in America, Ireland and even India as well as Scotland.

But official sources name Johnnie Walker – a Diageo product – as the most popular brand getting in to the country under what are termed “parallel imports”.

One way or another, therefore, Scotch is reaching Russia – despite the big distillers pulling out of the country. 

Kremlin customs figures explain how: Latvia exported more than $250m worth of whisky – far from all of it Scottish – to Russia last year. 

Lithuania shipped another $39m worth of the booze.

These numbers compare with direct exports of whisky from the UK to Russia of under $15m in 2023.

The Baltic booze trade is raising eyebrows in Latvia, whose staunchly anti-Kremlin government has been at the forefront of calls for further trade sanctions on Russia.

Latvia, home of Riga Balsam, does not make whisky. Yet its exports of the spirit to Russia are double the size of all other countries put together.

Oxford Mail: Riga: Latvia exported more than $250m worth of whisky - far from all of it Scottish - to Russia last yearRiga: Latvia exported more than $250m worth of whisky – far from all of it Scottish – to Russia last year

“There are western European companies which are using Latvia as a distribution centre,” Matiss Mirosnikovs, an economist at the Bank of Latvia,  “In other words, we are talking about re-exports and not the sale of goods manufactured in Latvia.”

The expert, speaking to German broadcaster DW last month, stressed the ethical problems raised by the trade.

“On one hand, it is good to get money from Russia because that way Russia will have less to spend on war,” he said. “On the other hand this allows Russian elites to do whatever they want, to enjoy the lifestyle they have become used to, as if nothing has changed.” 

Neither the UK nor the European Union has imposed an outright ban on alcohol exports to Russia. The trade is perfectly legal.

Manufacturers who have exited the Russian market have done so voluntarily.  

French-owned Pernod Ricard , which makes Ballantine’s, announced it was leaving Russia in April last year, saying it would take some months to wind up its distribution network. 

Its Scotch and Irish brands, like those of Diageo, are among whiskies shipped under “parallel imports”. 

This is essentially when distributors buy products without the consent of their manufacturer, often shipping them through roundabout routes. Vladimir Putin passed a law last year legalising such “parallel imports” for premium brands.

The Russian business news website BFM, citing official customs data for the first nine months of 2023, revealed that Diageo’s Johnnie Walker was the most imported brand under the new laws. 

This was followed by Pernod Ricard whiskies Ballantine’s and Chivas Regal from Scotland and Jameson from Ireland. 

Beam Suntory – the makers of American whiskey Jim Beam – was third.

Russian officials refer to these western brands as coming from “unfriendly countries”. But the Kremlin has also entered in to new deals to buy booze – and other produce – from what it calls “friendly” nations, such as India and China.

Demand for premium western brands of all kinds – such cosmetics and clothes – remains high in Russia. Trade is now often indirect, passing through neighbouring countries. 

Sky News last month highlighted a boom in the export of British cars to Azerbaijan. 

Sales of UK vehicles to Russia dropped to close to zero immediately after the invasion. Exports of cars to Azerbaijani leapt from close to zero in early 2022 and reached more than £40m in January of this year alone. The rise in sales was more than 2,000 per cent.

The Society of Motor Manufacturers denied this boom was down to sanctions-busting. It argued sales were rising because Azerbaijan’s economy was “flourishing”. Sky pointed out that, in fact, Azerbaijan’s GDP was flatlining. 

Unlike whisky, the sale of cars to Russia is banned. That is because vehicle are “dual use” – they can be used by the military.

The temporary drop in whisky imports in 2022 had a huge knock-on effect in Russia. 

It prompted several manufacturers to boost production of their own versions of the drink.

A few distillers are proudly producing their own malts and blends. 

Oxford Mail: Vladimir Putin remains at the helm following the recent Russian electionsVladimir Putin remains at the helm following the recent Russian elections (Image: PA)

Others are bottling drinks that contain some Scotch – labels usually refer to “Scottish distillates” but it is not clear where they source this raw material.

There are also manufacturers producing whisky that mimics Scottish, Irish and American brands to one degree or another.

There have also been examples of complete counterfeits, including a fake Johnnie Walker factory shut down near Moscow last year. 

The Scotch Whisky Association, as the Herald revealed last year, is closely monitoring such developments. 

Last month the trade lobby trumpeted a record year for exports by value – some £5.6 billion. Neither Russia nor Latvia featured in its official list of top markets for Scotch.

The body deals with exports, not imports, so its figures do not capture the grey market for western spirits to Russia.

An SWA spokesperson said: “Exports of Scotch Whisky to Russia continue to fall compared to previous years, having more than halved the year that the Russia-Ukraine conflict began.

“The industry continues to operate in line with sanctions and the SWA has been monitoring the situation and passing on government guidance to member companies since 2022, and will continue to do so.”

Russian experts are optimistic about whisky sales.

“There is no problem,” Maksim Chernigovsky, general director of the Club of Alcohol Market Professionals, told BFM at the end of last year.

“Russia already has around 15 distilleries producing good – and I would even say – high-quality whiskies.

“Russians will not have noticed shortages last year or this year. Yes, there has been some import substitution. European manufacturers have stopped distributing their own products in Russia.

“But new manufacturers have appeared, from India, South Africa, China and other countries. So total retail sales of whisky are around 80m litres a year, about half imported and half domestically produced.”




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