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Russia and France are arguing over champagne law

Bottles of Brut Imperial sparkling wine produced at Abrau-Durso Russian Wine House, one of Russia’s most prominent sparkling wine brands, in Novorossiysk.

Dmitry Feoktistov | TASS | Getty Images

LONDON – French champagne producers are left smoky over a new Russian law that they say is trying to undermine their world-famous brand.

Champagne is a region in northeastern France, but more famous is the name of the sparkling wine produced there.

Russian authorities are challenging it with a new law passed earlier this week requiring French champagne producers to add the words “sparkling wine”

; to the back of the label if they want to sell their bottles in Russia. Champagne producers are proud of their name and brand and refuse to use any reference to “sparkling wine.”

The same law allows Russian producers of sparkling wine to use “shampanskoye” – the Russian word for champagne – on their bottles.

“We are just shocked,” Charles Goemaere, director general of the Champagne Committee, an industry association representing independent champagne producers and houses, told CNBC on Thursday.

The “first economic damage,” he said, is that producers “are unable to export champagne to the Russian market despite (previous) orders.” Changing labels on bottles that are ready to be shipped would be a technical and financial challenge.

A stone marker indicates that the vineyards belong to the Champagne Veuve Clicquot in the village of Ay in the region of Vallée de la Marne, champagne production in eastern France.

David Silverman | Getty Images News | Getty Images

The French champagne industry asked its members to stop shipments to Russia for the time being, saying the name “Champagne” is protected in over 120 countries.

In 2020 alone, Champagne producers exported 2.6 billion euros ($ 3.07 billion) bottles globally. The best buyers were the UK, US and Japan, according to data from the Champagne Committee.

“Russia’s new bill is, of course, designed to support domestic producers,” said Fredrik Erixon, director of the think tank ECIPE, via email.

A new WTO dispute

The protection of the name “Champagne” comes under what are called “geographical indications” or geographical indications. This concept in international trade recognizes that certain characters, usually names, identify a particular product with its territory. In essence, the quality and reputation of the product are attributed to its geographical origin.

This is the case for sparkling wine produced in Champagne, but also Scotch whiskey, Roquefort cheese and so on.

Goemaere from the Champagne Committee told CNBC that the industry wants French and European officials “to enter into discussions with the Russian authorities to find a solution.”

“We inevitably support our producers and French expertise,” French Trade Minister Franck Riester said earlier this week on Twitter.

This dispute could eventually reach the World Trade Organization.

The new Russian law “does not deny French producers in Champagne the use of the Champagne brand, nor does it deny that there is a Champagne designation unique to the French region. Therefore, France and the EU can not do a fair case if they are filing a complaint in the WTO, ”Erixon told CNBC.

He added, however, that France and the EU “can still win such a case as the Russians seem to be on the wrong side” of well-established geographical indicators.

In addition, Erixon said that “unless there is a bilateral solution soon, I am sure the EU will lodge a complaint. Protecting geographical indications is a key plan in EU trade policy and there is a risk that other countries will follow Russia example, if it would stand up. ”

Bottles of champagne Rene Geoffrey’s Rosé de Saignée Premier Cru Brut champagne is aged in cellars in the family – owned boutique winery.

David Silverman | Getty Images News | Getty Images

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