Russians will be crying into their vodka as beer taxes are heading up
Carlsberg’s Chief Executive Jørgen Buhl Rasmussen told the media that his company, which has 41 percent of Russia’s beer market, has been in talks with Russian authorities over the increased duties. Mr Rasmussen said the proposal, if it took effect, would cause the Russian beer market to shrink.
He declined to give an estimate of by how much. Carlsberg, which earns almost half of its profits in Russia, retains a positive long-term view on Russia’s prospects. However, during the second quarter this year Carlsberg’s beer sales in Russia declined 9 percent year-on-year.
Beer consumption per capita there increased by two thirds between 2001 and 2007 to reach 75 litres.
The Government’s proposed levy increase would apply to both locally produced and imported beer. It calls for duties to rise to RUB 9 (EUR 0.20) from RUB 3 per litre. The most popular beers in Russia are sold for around RUB 60 (EUR 1.30) per litre.
The proposed bill also calls for a much smaller 10 percent increase of excise duties on strong alcohols like vodka, according to Carlsberg.
Many analysts think that the proposed hike would be quite negative for the Danish brewer. The stock has lost 15 percent since the news of the planned beer tax hike broke in August 2009.
