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Sergey Panov

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The Insider

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War and wine: While Russia bleeds money and battles drones, Putin's wine business is booming

The Krinitsa winery, just down the road from Putin's Gelendzhik palace, is estimated to be worth over 27 billion rubles ($330 million), making it Russia's most valuable winemaking operation. Plans are underway to build a wine tourism center there, with three more in the works for other properties near Gelendzhik and in Russian-occupied Crimea. Bank Rossiya — widely known as the “bank of Putin's friends” — is funding the projects. Italian and French experts are helping Putin grow the business, even though his wines never make it to Europe. Instead, they're poured at diplomatic receptions and during rare visits from foreign leaders like Kim Jong Un and Xi Jinping. The whole operation loses money — more than 10 billion rubles ($120 million) over its lifetime — but even with Russia facing a budget deficit and recession, the commander-in-chief isn't cutting back on what matters most to him personally. Much of the winemaking empire is registered under the name of Bank Rossiya Chairman Yuri Kovalchuk, who snapped up the assets for a fraction of their actual price.

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Palace wineries

Construction of Putin's infamous Black Sea palace and the surrounding vineyards began in 2005, but the inspiration came two years earlier, when Putin visited the Sardinian Villa Certosa of Italian prime minister Silvio Berlusconi. The Russian leader was so taken with it that he hired Berlusconi's architect, Lanfranco Cirillo, to build him his own — only bigger. Some features, like the amphitheater in classical style, the artificial lake, and the vineyards, were simply copied, while others were adapted to Putin's taste — the football pitch, for instance, was swapped out in favor of an ice rink. Berlusconi's estate, with its 48 hectares of vineyards and olive groves, was already considered extravagant for a politician in Italy. Putin, unsurprisingly, decided he needed more: the vineyards on his palace grounds cover 300 hectares.

Even after Alexei Navalny drew widespread public attention to Putin's palace, the winery business carried on almost unchanged. However, one of the palace estates, Stary Provence, was renamed Krinitsa. In 2023, the Krinitsa winery began welcoming tour groups and remains open to visitors today. Meanwhile, the Usadba Divnomorskoye winery, located west of the palace in the village of Divnomorskoye, remains reserved for a select circle of privileged guests.

Gastronomic dinners at the Krinitsa winery

The courtly status of wines from both Divnomorskoye and Krinitsa is underscored by their presence at nearly every diplomatic reception Russia has hosted in recent years. Divnomorskoye was served to Emmanuel Macron in 2022, and also at visits by Xi Jinping, Recep Tayyip Erdoğan, and Kim Jong Un in 2023. At the BRICS+ summit in Kazan in 2024, Krinitsa wine was poured, while at the CIS leaders’ meeting later that year, both wineries were represented.

The chief winemaker at Divnomorskoye is Italian Matteo Coletti, while production at Krinitsa is overseen by Frenchman of Russian descent Alexander Mourousi. Consulting is provided by Bordeaux Sovivins co-owner David Pernet, who continues to make regular trips to Gelendzhik.

David Pernet (left) and Alexander Mourousi (right) hosting a Krinitsa wine tasting in autumn 2024

Billions in losses are not a problem

The palace wineries are tied to a network of legal entities with different functions. Apex Yug JSC owns the vineyards in Divnomorskoye, while Divnomorye JSC produces wine from those grapes. The vineyards in Krinitsa belong to Lazurnaya Yagoda LLC, with wines under that brand produced by Axis Investitsii JSC.

All of these enterprises are managed by Moe Vino JSC (“My Wine”) — a consulting company without assets of its own operating under a name that Vladimir Putin appears to have chosen himself. Over the past year, two more businesses were added to the group: Lazurnaya Yagoda LLC acquired Mayak LLC, which leases real estate, while Divnomorye JSC bought Grandevin LLC, a wine shop in Gelendzhik that has since been turned into the flagship boutique of Divnomorskoye.

The Insider analyzed the 2024 financial reports of these companies. According to the published data, Krinitsa is the most expensive winery in Russia. The combined assets of Lazurnaya Yagoda and Axis Investitsii amount to 27 billion rubles ($330 million) — surpassing such industry giants as Kuban-Vino (20 billion rubles; $240 million) and Massandra (15 billion rubles; $180 million).

In 2024, Krinitsa became the most expensive winery in Russia

As a result, Putin’s wine estate turned out to be more valuable than Kuban-Vino, which encompasses three large-scale wineries spread out over 10,000 acres. The company produces more than 80 million bottles annually and also boasts the largest grape seedling nursery in Russia, nine regional distribution divisions, a restaurant, a café, and 19 shops.

Despite massive investment and state-level promotion, both “court” wineries remain unprofitable. This is particularly evident in the case of two entities tied to Krinitsa. Since their creation, Lazurnaya Yagoda and Axis Investments have racked up losses of 10 billion rubles ($120 million). That figure exceeds the entire annual budget of nearby Gelendzhik — 2024, the Black Sea resort city, home to 117,000 people, spent just under 10 billion rubles on municipal outlays.

It is difficult to describe the “palace” companies as commercial organizations. Both Divnomorskoye and Krinitsa lose money on what ordinary wineries make their living from: selling wine. For example, in 2024 Axis Investments reported revenue of 158.5 million rubles ($1.9 million) against production costs of 265.1 million ($3.1 million). If the published accounts are accurate, the company was selling wine at close to forty percent below its cost.

However, these entities do earn some money — albeit in ways that are far from typical for wineries. For instance, on Jan. 10, 2024, Divnomorye placed a deposit of 84.5 million rubles (just over $1 million), closed it the next day, and collected 32,300 rubles in interest ($390). On Jan. 11, it placed another deposit of 80 million rubles ($1 million), closed it on Jan. 12, and earned 30,600 rubles ($370). Over the course of the year, the company made hundreds of such deposits with Sberbank and ABR, ultimately netting 45.7 million rubles ($550,000) from short-term placements over the course of the year.

By the end of 2024, the total assets of all seven legal entities tied to the winery operations at Putin’s palace amounted to 32.2 billion rubles ($388 million). At the same time, they carried long-term debt of 35.5 billion rubles ($427 million) — hundreds of times greater than their turnover. And judging by ambitious construction plans, the wineries’ losses are likely to grow. A tourist complex is now being built next to Krinitsa. It will feature a wine museum, a grotto-style wine cellar, a restaurant, and several tasting halls.

Putin’s Krinitsa Winery

Putin seems unfazed not only by billion-ruble losses but also by drone attacks. On Aug. 28, authorities in Gelendzhik reported a fire in the village of Krinitsa caused by debris from a Ukrainian drone. According to NASA FIRMS data, one of the hotspots was just 850 meters from the winery. Local officials paid unusual attention to what was, by all accounts, a small blaze. Perhaps the threat was minor, but the resources allocated to extinguish it were anything but insignificant. Gelendzhik mayor Alexey Bogodistov reported that 330 people and 82 pieces of equipment were deployed, including a Be-200 aircraft and an Emergencies Ministry helicopter.

Not exactly premium wine

Although Putin’s wines are poured for some of Moscow’s most prestigious guests — from Emmanuel Macron (who, presumably, knows a thing or two about wine) to Kim Jong Un (who favors whiskey and cognac, but has surely tasted fine wine as well) — the vintages can hardly be described as elite. Experts classify the wines of Krinitsa and Divnomorskoye at the lower end of the premium price segment, alongside Chianti Classico or Rioja Reserva. Prices reflect this: bottles from the “court” wineries retail for between 1,500 and 4,000 rubles ($18-$48), depending on the label and the outlet.

Technically, these are competently made wines, but they are far from outstanding. It seems the client’s primary motivation was to have picturesque vineyards on the Black Sea coast rather than to produce the best wine in their class. Otherwise, it is hard to explain why cabernet sauvignon, a grape with a long ripening cycle, or riesling, which thrives in cool climates like the banks of the Rhine, were planted in a region with hot but short summers.

“Bely Mys”: a wine city for Vladimir Putin

Meanwhile, an even larger wine-themed tourist complex is under construction on Gelendzhik’s waterfront. The Bely Mys complex will house the largest wine shop in the country, along with an interactive wine museum, tasting halls, a school for sommeliers and winemakers, an expo center, and a seaside promenade replete with a private beach. The plans also include 21 shops, five cafés, two restaurants, and 10 tasting areas.

Wine and tourism complex “Bely Mys” in Gelendzhik, project

In the summer of 2024, the independent online outlet Agentstvonoted that several companies with ties to Vladimir Putin were involved in the construction of the complex. Among them are Veles-Stroy, which handled the reconstruction of the palace at Cape Idokopas, and Politekhstroy-Svargo, whose director, Alexey Borodin, previously served as an aide to the presidential envoy in the Volga Federal District.

Shortly after the publication, restaurateur Dmitry Levitsky, the project’s nominal head, openly admitted that the investor behind it is Bank Rossiya. Three of the wineries set to open their branded restaurants in the new complex are tied to longtime Putin moneyman and Bank Rossiya chairman Yuri Kovalchuk — Massandra, Inkerman, and Novy Svet — while the other two, Krinitsa and Divnomorskoye, are directly linked to Putin himself.

It remains unclear how the project’s formal openness to thousands of visitors will coexist with Putin’s concerns about personal security. By all indications, alongside the publicly accessible areas, there will also be a section reserved for a narrow circle of insiders — complete with a private yacht pier and an exclusive rooftop VIP terrace.

Several elements of the future complex — from a private yacht pier to an exclusive rooftop VIP terrace — are being designed for a select inner circle

The complex will likely operate on a regular schedule, closing on certain days for VIP visits, much like the panoramic restaurants on the upper floors of Moscow City towers.

“My Wine”: Putin acquires multibillion-ruble winery assets for next to nothing

The extent of Putin’s passion for winemaking can be illustrated using the story of Massandra. Less than a month after the March 2014 “referendum” on Crimea’s independence, armed men in balaclavas without insignia blocked operations at the winery in Livadia. In other words, in the spring of 2014, Russian special forces were effectively used to change Massandra’s management, paving the way for the historical winery to fall into the hands of Yuri Kovalchuk, widely known as “Putin’s wallet” given that he serves as the nominal owner of assets that in reality belong to Putin.

Only two participants took part in the 2020 auction for Massandra’s purchase: the newly registered Estate Group, with charter capital of just 10,000 rubles (less than $150, even under the pre-war exchange rate), and Yuzhny Proyekt, a subsidiary of Bank Rossiya. The entire Massandra cellar complex, nine wineries, 11,000 hectares of land along the Black Sea coast (including 4,000 hectares of vineyards), and a collection of one million bottles of wine went to Kovalchuk’s Yuzhny Proyekt for just 5.3 billion rubles (around $75 million) — this despite the fact that, according to an estimate published by Novaya Gazeta, the wine collection alone was worth upwards of 4 billion euros. Even allowing for the speculative nature of that figure, it is clear that the thousands of hectares of land on the Crimean coast were worth orders of magnitude more than the sum Kovalchuk paid for them.

Thousands of hectares of land along the Crimean coast were worth orders of magnitude more than the sum Kovalchuk paid for them

Today, in addition to Massandra, Kovalchuk’s structures own the Crimean wineries Novy Svet, Inkerman, Bakhchisaray Wine and Brandy House, Agrofirma “Zavetnoe,” and Burlyuk. Altogether they control more than 7,000 hectares of vineyards — over a third of all vineyards in Crimea.

In 2017, the Novy Svet Champagne Winery JSC was acquired for 1.5 billion rubles (around $25 million at the time) by a Bank Rossiya subsidiary, Yuzhny Proyekt LLC. Since 2020, Novy Svet has been managed by the same company, My Wine JSC, which also oversees the wineries at Putin’s palace and is now building yet another wine-tourism center there.

This new complex will include a museum of Soviet winemaking, a cinema, tasting halls, and exhibition spaces. Next to it will be a yacht pier, observation decks, a “floating” bridge, a tourist square, craft centers, restaurants, and shops. The site will cover 87,000 m², with 35,000 m² of that constituting developed area. No completion date has been announced.

Project of the wine-tourism center at the Novy Svet winery

Another historic enterprise, Inkerman, is owned by Optima JSC, whose formal beneficiary is former colonel Valery Zakharyin. Inkerman is managed by the now familiar My Wine JSC, which is also developing another wine-tourism cluster at the Crimean winery. Five billion rubles ($60 million) for the lavish project were allocated to the retired officer by Bank Rossiya. According to the project description, the 56,000 m² site will host three large buildings: a three-story tourist complex with a restaurant and shop, a three-story administrative and utility building, and a separate tasting hall.

Project of the wine-tourism cluster at the Inkerman winery

In addition to financing from Bank Rossiya and management by Kovalchuk-linked structures, the four wine-tourism centers share another common feature. Bely Mys and Novy Svet include the construction of yacht piers, while Inkerman and Krinitsa are located near already existing piers. However, Putin’s yacht Scheherazade, built for Alina Kabaeva, will not dock there — it remains under seizure by Italian authorities.