RUSSIA: Russian vodka production falls as industry battles black market

By Chris Brook-Carter | 6 September 2000

Russian vodka and liquor production is set to fall this year to between 1.27 and 1.3 billion litres from 1.35 billion litres last year, according to the scientific-technical association Spirtprom.However, president of Spirtprom, Vladimir Yarmosh said: "The shock incurred from this year's hike in alcohol excise rate (by 40%) has evaporated, falling legal alcohol sales have been curtailed and the situation has begun to slowly stabilise."According to the figures Russia produced 625m litres of vodka from January to July of this year, a fall of 12.4% on the same period last year.Despite the fall in legal alcohol production Spirtprom was also confident that the hard liquor business was continuing to be successful in attempts to combat the black market."The market is being slowly brought back into the fold of the legal sphere and away from black marketers," said Yarmosh. According to Russian press reports the figures showed that legal producers account for 45.8% of the alcohol market, a 0.8% increase on the first four months of this year, but a fall from last year's figure of 54%.Further tax increases are expected and a planned 5% rise is justified according to Yarmosh "as the country is facing inflationary pressure".However Russian sources are worried about plans to make producers and wholesalers pay 50% of the tax each. At present the entire amount is levied on producers. One Russian press report said that making sure the wholesalers pay their way will be difficult, as the number of wholesalers is six times the number of producers.