Shares in a sparkling wine company owned by the family of Vladimir Putin’s “business Tsar” leapt on Monday after Moscow stunned French champagne producers by saying they would no longer be able to sell their wares as “champagne” in Russia.
Mr Putin last week signed in a law that would require French winemakers to label their produce as “sparkling wine”, while only drinks made in Russia could be called champagne.
No reason was given for the change, which saw Moet Hennessy – producer of renowned brands including Moet Chandon, Dom Perignon, and Veuve Clicquot – suspend imports until it could amend its labelling.
Following news of the halt in deliveries, shares in Abrau Dyurso, one of Russia’s most popular wine brands, climbed almost eight percent in early trading.
Abrau Dyurso, which has produced wine in southern Russia since the late 1800s, was bought by businessman and politician Boris Titov in 2006. In 2012, Mr Titov went to work for the Kremlin and transferred management of the company to his son.
Earlier this year, Mr Putin joked that he would work as an advisor at Abrau Dyurso if and when he did step down from the presidency, a statement that also led to a jump in the company’s shares.
Mr Titov said there was “no entrepreneur in the world who would refuse such an offer”.
Russian restaurateurs and wine distributors criticised the new champagne labelling law, while some experts questioned whether Moscow had the authority to force foreign companies to rebrand.
The "champagne" designation is protected by strict standards in France, which state that the wine must originate from a small area in the Champagne region, be made with approved grape varieties and mature for a minimum of 15 months.
Co-presidents of the French Champagne group, Maxime Toubart and Jean-Marie Barillere, called on its members to halt all shipments to Russia for the time being.
They said that the champagne name, which refers to the region in France where French champagne comes from, had 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," it said, adding the law undermined two decades of talks between Russia and the European Union.