French champagne maker Moet Hennessy has said that it will begin adding the designation "sparkling wine" to the back of bottles destined for Russia to comply with a new law, having had to suspend deliveries to make the change.
French winegrowers jealously guard the designation "champagne" for the output of the region of the same name, and shun other descriptions.
But the law, signed by President Vladimir Putin on Friday July 1, requires all non-Russian producers of sparkling wine, including the French, to describe their product as such in Russia on the label on the back of the bottle, although not on the front.
Makers of Russian "shampanskoye" may continue to use that term alone.
Moet Hennessy, which sells the Moet & Chandon, Veuve Clicquot and Dom Perignon champagnes and belongs to the LVMH group, said that it has been forced to suspend deliveries to change its labels.
"The MH Champagne Maisons have always respected the legislation in force wherever they operate, and will resume deliveries as quickly as possible once these adjustments are made," it said in an e-mailed statement.
LVMH shares were down approximately 0.2% on the afternoon of Monday July 5, underperforming the Paris bourse, which was up 0.34%.
Russian Winemaker Abrau-Durso's Shares Jump
Shares in Russian sparkling wine maker Abrau-Durso leapt after the introduction of the new legislation that foreign champagne producers must add a "sparkling wine" reference to the back of their bottles.
Abrau-Durso's Moscow-listed shares were up 4.5% by 0923 GMT on Monday July 5. They had earlier been 7.77% higher on the day.
French Champagne Industry Group Fumes
France's champagne industry group has blasted the new law and called for the halting of exports of the bubbly drink to Russia.
The French champagne industry group has called on its members to halt all shipments to Russia for the time being and said that the name "champagne", which refers to the region in France where the drink comes from, has legal protection in 120 countries.
"The Champagne Committee deplores the fact that this legislation does not ensure that Russian consumers have clear and transparent information about the origins and characteristics of wine," the group's co-presidents, Maxime Toubart and Jean-Marie Barillere, said in a statement.
French Trade Minister Statements
French Trade Minister Franck Riester said that he is tracking the new Russian law closely, and is in contact with the wine industry and France's European partners.
"We will unfailingly support our producers and French excellence," he said on Twitter.
Abrau-Durso President Statements
Pavel Titov, the president of Abrau-Durso, told Radio France Internationale that his firm does not have sparkling wines that would be called "champagne" in its portfolio and said that he hopes that the issue will be resolved in favour of global norms and standards.
"It is very important to protect the Russian wines on our market. But the legislation must be reasonable and not contradict common sense...I have no doubts that the real champagne is made in the Champagne region of France," he said.
European Commission Response
The European Commission said that the legislation in Russia regarding spirits and wine will have a considerable impact on wine exports and that it will do all it could to express its disagreement and concern.
"We will do everything necessary to protect our rights and take the necessary steps if this law enters into force," European Commission spokeswoman Miriam Garcia Ferrer said.
When asked what counter-measures the European Union could take in response to the Russian law, she said it that is premature to discuss such a situation.
New Law No Cause To Pop Open The 'Shampanskoye', Says Abrau-Durso
Additonally, Abrau-Durso has said that the new law will do little to spur on sales of Russia's "shampanskoye".
Titov told Reuters that he does not believe that the new law will change the level of competition in Russia's market.
"We are in completely different price segments - imported French champagne is many times more expensive," he said.
Shares in Abrau-Durso, which last year renamed its "Russkoye shampanskoye" brand "Russkoye igristoe", or Russian sparkling, were trading up 0.5% on the day on Tuesday July 6 and at one point almost 9% up since the start of the week.
Abrau-Durso exports its wines to 24 countries but not France, Titov said.
Some French champagne producers have said that they will comply with the law to keep access to Russia's market.
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