President Putin cracks down on tobacco but shies away from vodka
Several media reported at the end of October 2012 that Russian President Vladimir Putin is stepping up his attempts to fight the bad health of Russians by banning smoking in public places and setting a minimum price on wine. Already it’s illegal to drink alcohol in public places.
Smoking and drinking kill 900,000 people a year in Russia, the world’s second-largest market for cigarettes and alcohol, according to official estimates. Alcohol and tobacco abuse cost the Russian economy at least USD 104 billion a year, or 5 percent of gross domestic product, the government estimates.
The government crackdown risks encouraging Russians to smoke counterfeit cigarettes. The illicit tobacco trade may expand to 40 percent of the market from 1 percent, media sources say.
Prime Minister Dmitry Medvedev on 16 October 2012 reportedly lashed out against four foreign-owned tobacco companies, blaming them for addicting millions of children and women to cigarettes. Thirty-nine percent of Russians smoke regularly, according to the World Health Organisation.
Incidentally, the four companies under attack control 93 percent of the USD 19.5 billion Russian tobacco market.
Doesn’t this sound all too familiar – the Russian government railing against foreign companies accusing them of all that ails Russian society? First it was the brewers – all foreign-owned and controlling 80 percent of the market – who were hit by a massive hike in excise, meant to curb alcohol consumption.
And now it’s the tobacco companies.
The Russian government will insist that the anti-smoking draft bill submitted in October be approved in its current form.
Unsurprisingly, the Russian government has shied away from using the same strong-arm tactics on the country’s vodka producers. True, the Russian government this year increased the minimum price of a half-litre of vodka to 125 rubles (USD 4) and plans to raise it to 200 rubles by 2015, according to the government daily, Rossiiskaya Gazeta. But for as long as ordinary Russians will be able to get hold of a bottle of cheap moonshine, the excise hike on legal vodka merely serves political window-dressing.
It will be interesting to watch what will happen once kiosks are banned from selling beer. From January 2013 the retail sale of beer in kiosks and pavilions, as well as at bus stops, open markets, railway stations, petrol stations and airports, will be prohibited at any time. At one time, kiosks accounted for 20 percent of total beer sales. In the worst case, that could leave two-thirds of these kiosks bankrupt, brewer Carlsberg calculated. Carlsberg hopes that the beer that’s not sold at kiosks will move to supermarkets.
Vain hope?
