Russian Champagne – a real Sham(panskoye)? - New Russian law redefines Champagne and causes a lot of fuss over fizz

What has happened?

On Friday 2 July 2021, in a move that sent ripples of outrage through the Champagne community, Russian President Vladimir Putin signed amendments to the Federal Law ‘On State Regulation of Production and Turnover of Alcoholic Products’, changing the legal definitions of "Champagne" and "Cognac" in Russia. Under the new law, all imported (ie non-Russian) sparkling wine must now be labelled as "sparkling wine" and only Shampanskoye ("Russian Champagne", a sparkling wine that is made in Russia) can use the prestigious label. Russian Shampanskoye has evolved from the drink "Soviet Champagne", a Stalin-era cheap sparkling wine first created in the 1930s.

The law similarly impacts Cognac. All imported Cognacs must cease to use that label after a transition period of 7 years, at which point only "Cognac of Russia" may use the name "Cognac". This new Russian Cognac is defined as being completely made of grapes which are cultivated in Russia.

Geographical Indications of Origin

The names "Champagne" and "Cognac" are protected in France under the appellation d'origine contrôlée (AOC) system and refer to wine and brandy produced in the Champagne and Congac regions respectively, and according to traditional methods and other established criteria.  The names are also protected throughout the EU under the Protected Designation of Origin (PDO) and Protected Geographical Indicator (PGI) schemes respectively.

However, protection for geographical indications and designations of origin (GIs) throughout the world varies and some consider them to be a protectionist attempt to monopolise terms that have become generic. The EU frequently seeks to make protection for GIs a condition of trade agreements with third party countries. Russia has provided for some degree of protection of GIs since the early 1990s.  

What was the response?

The Champagne region is said to have been "scandalised" by this development in Russian legislation and the Comité Champagne (the French Champagne producers' committee) called for a suspension of Champagne exports to Russia. French Trade Minister Franck Riester weighed in on Twitter to give his support to the French Champagne producers, ending his tweet with a characteristic "Vive le #champagne français!" Moët Hennessy (part of LVMH) threatened to suspend exports to Russia but later backtracked and indicated they would label their product as "sparkling wine" for the Russian market.

Russian media reported that policy officials claimed that Champagne producers had misunderstood the new amendments and would not need to rebrand their drinks for the Russian market. It appears that restrictions may relate to the use of the term "Shampanskoye" in Cyrillic characters and that Champagne producers are still free to use the word Champagne in Latin characters, provided they also include the term "sparkling wine" in Cyrillic characters. In practice, the impact of this distinction may be limited as many Russian consumers cannot read Latin characters and will look for the Russian word "Shampanskoye" written in Cyrillic characters.

Could the UK follow suit?

English sparkling wine is growing from strength to strength and now reportedly accounts for 72% of all English wine production. The quality is recognised as improving, partly thanks to increasingly temperate climes, and Taittinger have purchased vineyards in Kent with the aim of producing its first English sparkling wine by 2023. So could Prime Minister Boris Johnson follow in Putin's footsteps and establish a similar law in the post-Brexit UK? Could we be soon be raising a glass of English Champagne?

In short, the answer is no. The Brexit withdrawal agreement established that existing EU GIs as at the end of the Brexit transition period were given the same level of protection in the UK as under EU law. Re-examination was not required and so the "Champagne" and "Cognac" titles remain protected in the UK. This protection will last until another UK-EU agreement supersedes it. The protection of GIs was a controversial issue between the UK and EU during negotiations (see our earlier blog: EU-UK Trade and Cooperation Agreement: what does it mean for IP?)  but nonetheless this aspect was agreed.

The UK has now set up its own GI scheme that protects registered product names when they are sold in England, Scotland and Wales (see our blog: New UK Geographical Indication scheme announced).The EU GI schemes continue to protect registered product names across the EU and Northern Ireland. All the previously protected product names, including Champagne and Cognac, are now protected as GIs under both the UK and EU schemes.

What happens next?

It remains to be seen how Cognac producers and Champagne producers will react to the Russian legislation. The quick reversal by Moët Hennessey could suggest that the changes may be met with grudging acceptance. However, the new law constitutes an unprecedented GI intrusion by Russia. GI owners like the Champagne producers are well accustomed to being on the offensive and dealing with third parties using their protected terms but this move by Russia to reserve these terms (even if it is only in their translations) for local producers, creates the reverse situation and puts them on the defensive.  

As for the Russians, could they also claim ownership over other protected names? Could there be a future of Russian Stilton and Melton Mowbrays? Or maybe Russian Prosciutto di Parma?

Stay tuned for further developments!

Edit: A version of this article was re-published in WTR Daily on 19 July 2021.

With special thanks to trainee, Sophia Steiger, for her contribution to this blog.