Russian vodka production plummets

Legal vodka production in Russia has fallen by nearly 30% in the first six months of this year, with a minimum price hike and higher duty rates being blamed for a rise in illegal distillation.

Data released this week by the country’s State Statistics Service showed a 28.3% fall in legally produced vodka compared to the same period in 2012.

Despite this decline, Sergei Kleshchukov, CEO of Organic Vodka Group told the Russian media that domestic demand remains relatively unchanged, claiming that illegal products were filling the shelves instead.

“The main fall is observed in the so-called ‘popular product’ segment, where vodka costs 170 rubles to 200 rubles,” he said. “The other segments are not falling, whereas the premium segment is even rising.”

This year saw the Russian government try to tackle the country’s alcohol-related health issues by increasing the minimum price of a half-litre bottle of vodka from 98 rubles (£1.98) to 170 rubles (£3.44). The rise was linked to a duty escalator hike of 33% from 1 January 2013.

The apparent resurgence of illegal distillation would undermine the government’s 2011 tightening of licence legislation, which saw the number of domestic producers fall by one third and wholesalers fall by one fifth, according to Russia’s Alcohol Market Regulator.

In 2012 Russia accounted for nearly half the 4.44 billion litres of vodka consumed worldwide, as calculated by the IWSR, with annual per capita consumption of 14 litres.