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Source: Carlsberg?s 2010 Financial Results presentation 21 February 2011
11 March 2011

Beer to be classified as alcohol for first time in Russia

Readers will be forgiven for not watching Russia’s daily talk show “Let them speak” hosted by Andrey Malakhov, Russia’s answer to Oprah Winfrey. If they did, they would be aware of the plight of many Natashas, Tatjanas and Galinas who regularly call in to this show to tell tear-trenched stories about their husbands’ alcohol problems. Alcoholism and under age drinking in particular have taken on epidemic proportions in Russia. So much so that the Kremlin has pushed for a bill in the Duma that will classify beer as an alcoholic drink.

Until now, the beverage has been technically classified as a foodstuff, an anomaly that has allowed producers to avoid a sweeping new crackdown on alcohol advertising and night-time sales.

But the new Kremlin-backed bill that passed its first reading in the lower house of the Russian parliament on 22 February 2011 will abolish beer’s special status.

The new law would restrict nationwide sales of beer from 11 pm to 8 am. The current night-time clampdown is in force across 63 regions. Moreover, the new law would ban its sale in or close to many public places such as schools, and limit cans and bottles to a maximum size of 0.33 litres, it was reported.

Although vodka, the national tipple, remains extremely popular, Russia’s beer consumption has doubled in the past ten years, boosted by low prices, ready availability and lax regulation.

In 2009, Russia with a production of 109 million hl was the third biggest beer market in the world after China and the United States. But with a historic penchant for strong spirits such as vodka, many ordinary Russians still regard beer as a soft drink. It is not uncommon to see men swigging a can of beer on their way to work or teenagers emptying one of these large plastic beer bottles in the park at lunchtime.

Regularly rated among the heaviest drinkers in the world, the Kremlin is worried that excessive alcohol consumption will continue to shorten Russians’ life expectancy as well as dent population growth.

Russia’s population fell by 6.4 million between 1991 and 2009, it was reported, and it is feared that it could fall to less than 127 million from just under 142 million now by 2031 in a worst-case scenario.

Meanwhile, Russian officials estimate that 500,000 people die from alcohol-related reasons every year, a state of affairs that has prompted President Dmitry Medvedev to declare the country’s drinking problem "a national disaster".

This being Russia, brewers should not lose too much sleep over this new bill. With two more readings to go in the Duma, there also remains time for amendments to the current bill.

Russia’s beer consumption has declined for two years now due to a combination of economic and excise-related factors. Will it drop further once the proposed legislative changes come into effect? Many think the new bill will not have any material impact on brewers’ businesses in Russia.

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