A new Russian rule has left French Champagne producers seething, as they claim it seeks to harm their world-famous brand. Champagne is a region in northeastern France, but it is best known for the sparkling wine it produces.
Russian officials are fighting this with a new regulation that forces French Champagne manufacturers to include the phrase “sparkling wine” on the back of their labels if they wish to sell their bottles in Russia. Champagne makers are adamant about their brand and unwilling to use the term “sparkling wine.”
The same regulation permits Russian sparkling wine manufacturers to use the word “shampanskoye” — Russian for “Champagne” — on their bottles.
Charles Goemaere, director of the Champagne Committee, told CBNC that the producers have incurred financial damage since they are unable to export champagne to Russia. Changing labels on ready-to-ship bottles would be both a technical and expensive barrier.
The Champagne industry in France has advised its members to suspend exports to Russia for the time being, citing the fact that the word “Champagne” is protected in more than 120 countries.
Champagne producers exported 2.6 billion euros ($3.07 billion) worth of bottles internationally in 2020. According to data from the Champagne Committee, the United Kingdom, the United States, and Japan were the top three buyers.
According to Fredrik Erixon, ECIPE director said via an email that the new bill is designed to support domestic producers.
However, there is a new WTO dispute in relation to the bill. The name “Champagne” is protected by what are known as “geographical indications,” or GIs. This notion in international trade recognizes that a product’s territory is identified by certain indications, usually names. In essence, the item’s quality and reputation are determined by its geographical origin. This is true of Champagne sparkling wine, as well as Scottish whisky, Roquefort cheese, and other similar products.
The Champagne Committee’s Goemaere told CNBC that the sector wants French and European officials to “initiate conversations with Russian authorities in order to find a solution.”
This dispute may end up in front of the World Trade Organization.
The new Russian rule “doesn’t prohibit French producers in Champagne from using the Champagne name, nor does it dispute that the French region has its own Champagne appellation. “As a result, if France and the EU file a complaint with the WTO, they will be unable to make a clear lawsuit,” Erixon told CNBC.
He did add, though, that France and the EU “could still win such a case” because the Russians “appears to err on the wrong side” of well-established geographical markers.
Furthermore, Erixon stated that “until a bilateral solution is found soon, I am confident that the EU will submit a complaint. “Protecting geographical indications is a core tenet of EU trade policy, and there is a risk that other nations will follow Russia’s lead if it stands up.”