Union of Russian brewers calls for minimum price of beer
Russia | To secure a level playing field for all brewers, the Union of Russian Brewers, a trade body, wants to have a minimum retail price of beer introduced, but the country’s major brewers are against this.
Already, in March 2019, the Izvestia newspaper reported that the National Union of Barley, Malt, Hops and Beer and Soft Drinkers Producers, another industry body, took the initiative to set a minimum retail price (MRP) for beer.
The proposal was sent to Russia’s Ministry of Finance. It suggested that the MRP for beer should be at least RUB 35 (USD 0.53) for a 500 ml bottle of beer, without taking into account the margin of the distributor (about 10 percent) and the distribution network.
On 26 February 2020, Daniil Briman, chairman of the board of the Union of Russian Brewers, reiterated the plan. Although he refused to talk about a specific price level, he expressed the hope that a solution could be worked out in the coming months.
Big Brewers leave trade body
This appears unlikely. As reported the German newspaper Handelsbatt on 29 February 2020, brewers Heineken, AB-InBev Efes and Baltika have resigned from the Union of Russian Brewers over the MRP issue. The three control about 70 percent of the market and oppose a MRP, which would prevent them from gaining greater market shares through lowering prices.
At the end of December 2019, there were more than 1,600 registered breweries in Russia.
Another issue sowing discord among brewers is the imminent redefinition of beer. In 2021, the Eurasian Economic Union, which comprises Armenia, Belarus, Kazakhstan, Kyrgyzstan and Russia, will adopt a new “Technical Regulation On Safety of Alcohol Products”. It will allow brewers to replace half of the malt content of beer with other cereals. Currently, in Russia, the malt content of beer has to be 80 percent.
While the Union of Russian Brewers is lobbying the Ministry of Finance to maintain the original level, representatives from Heineken and AB-InBev Efes are supportive of the new regulation, Handelsblatt said.
Per Handelsbatt, Russian beer consumption is 47 litres per capita, or 68 million hl. In 2008, at its peak, per capita consumption of beer was 78 litres, and domestic beer production in excess of 100 million hl (Kirin Beer University data).
