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Price Hike Sees Illegal Vodka on the Rise

Published: April 17, 2014 (Issue # 1806)



  • Illegal vodka accounted for 55 percent of the entire vodka market in 2013, Igor Kosarev, vice president of distiller Russky Standart, told Kommersant.
    Photo: Maxim Stulov / Vedomosti

Legal vodka production plummeted nearly 17 percent in the first quarter this year under the weight of a state-enforced price increase and a flourishing illegal market, Kommersant reported Tuesday, citing Rosstat data.

Illegal vodka accounted for 55 percent of the entire vodka market in 2013, Igor Kosarev, vice president of distiller Russky Standart, told Kommersant.

"Given the trend that we see now, by the end of the year this share will increase to 64 percent," Kosarev said.

Just as illegally produced vodka is increasing, there is an "avalanche of stores now selling alcohol without a license," said Alexander Mechetin, CEO of alcohol producer Synergy.

Sixteen percent of stores selling alcohol in large Russian cities do not have the necessary license, according to recent research by Infoline market analysts.

The legal market has lost even more business since the state increased the minimum retail price of vodka from 170 rubles ($4.72) to 199 rubles for a half-liter bottle on March 11.

Sales of legal vodka in the lower price segment "have noticeably decreased" since that time, said Vadim Drobiz, director of the Research Center for Federal and Regional Alcohol Markets.

The situation could be further exacerbated on Aug. 1, when the minimum price will go up to 220 rubles for a half-liter bottle.

Producers of other alcoholic drinks also cut back production in the first quarter: production of Russian brandy fell nearly 21 percent to 1.3 million decaliters, while table wine fell 14.5 percent to 6.3 million decaliters and sparkling wines fell 15 percent to less than 2 million decaliters.

Isaac Sheps, chairman of the Union of Russian Brewers, predicted late last year that the beer market could shrink 25 to 30 percent in 2014, Vedomosti reported.

The market has been struck in recent years by bans on advertising alcohol in the streets, Internet and mass media, and another last year which prohibited selling alcohol after 11 p.m. and banned beer sales from street kiosks.





 


ALL ABOUT TOWN

Monday, Oct. 20


Amateur pictures from World War I are on display for only one more day at Rosphoto’s exhibition “On Both Sides,” chronicling the conflict through the eyes of observers on both sides of the trenches. The price of entrance to the exhibition is 100 rubles ($2.50).



Tuesday, Oct. 21


The Environment, Health and Safety Committee of AmCham convenes this morning at 9 a.m. in the organization’s office.


Take the chance to pick the brains of Dmitry V. Krivenok, the deputy director of the Economic Development Agency of the Leningrad region, and Mikhail D. Sergeev, the head of the Investment Projects Department, during the meeting with them this morning hosted by SPIBA. RSVP for the event by emailing office@spiba.ru before Oct. 17 if you wish to attend.


Improve your English at Interactive English, the British Book Center’s series of lessons on vocabulary and grammar in an informal atmosphere. Starting at 6 p.m., each month draws attention to different topics in English, with the topic for this month’s lessons being “visual arts.”



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