Recession and the Russian Vodka Industry
- New Europe Investor
- January 26, 2015
Russia’s economic woes are having a growing impact on the national drink, vodka.
The government have been making great steps to combat alcoholism in the country. The national alcohol regulator set a minimum price on a half litre bottle, currently at 220 rubles (€3.06).
However, the creeping impact of the recession has led people to switch to the more dangerous contraband versions of the drink.
This is frustrating the government’s policies of combating the alcoholism problem, by creating a potentially lethal side effect. Such side effects from the ‘bathtub’ vodka, can be blindness and even death.
In response, last December, Vladimir Putin’s government took the unusual action of not increasing a minimum price for alcohol as was planned, but lowering the minimum price of a half litre bottle of vodka, to 185 rubles (€2.85), or a 16% decrease.
The new price is set to be implemented on 1st February.
The Russian vodka industry will be pleased with the news. Russian newspaper, Kommersant, recently reported that the National Statistics Office numbers show Russia produced 666 million litres of vodka in 2014, a 22% decrease of the year before.
Some say these statistics are partly due to Russia’s increasing teetotaller population and a move towards more fashionable drinks, however, these factors are only significant in the major, modern cities of Moscow and St Petersburg.
The lowering of the minimum price was criticised by some as a populist move, made to make people feel better in a climate of double digit inflation and recession.
Food inflation alone for example, is said to be as high as 15% at present.