Ban on sales of beer in big plastic bottles

Russian President Vladimir Putin in June 2016 has signed a bill prohibiting the production and sale in Russia of beer in plastic bottles larger than 1.5 litres. The bill affects the production of such bottles from 1 January 2017. Sales will be banned from 1 June 2017.

Initially, the law would have banned bottles over 0.5 litres, but was changed after complaints to the Kremlin from beer producers.

About half of all beer in Russia is sold in plastic bottles because it is cheaper than glass, and sales of bottles affected by this bill account for 20 percent of all beer sales. Making the switch to glass and downsizing will be costly and likely drive the price of beer even higher, Russian media say.

In the past, Russia’s brewers packaged their beer in PET bottles even larger than 2.5 litres, but in 2013 discontinued them.

Since 2008 the Russian government has rolled out a strict anti-alcohol campaign, which not only legally recognised beer as an alcohol drink, but increased excise taxes for beer, applied limitations to beer advertising and banned the sale of beer in kiosks. In 2007 Russia’s beer market peaked at 120 million hl. In 2015 it was down to 69 million hl. The beer market has not quite halved, but that is a loss of 40 percent and there are no indications that the decline will bottom out any time soon.

Currently, breweries in Russia are working at half capacity and companies are reducing costs by closing plants. Last year, Carlsberg’s Baltika brewery had to bring down the shutters in three of its ten breweries across Russia, while sales declined and profits dropped. Compared with its competitors AB-InBev, Heineken and Turkish Efes, Carlsberg has steered through the crisis relatively unharmed. Its profits in 2014 were RUB 16.8 billion (EUR 230 million/USD 317 million), while Heineken booked a loss and the other two scraped by, according to data released by the Russian Federation of Brewers (February 2016). Bearing in mind that Carlsberg had originally forecasted over EUR 1 billion in annual profits from Russia from 2010, this can be no consolation.

Media also say that the government will crack down on counterfeit alcohol next, which some Russian companies produce and sell cheaply.