Is Russia facing a shortage of alcohol for the New Year?
Trade networks are associated with a shortage of certain categories of strong drinks and champagne before the New Year holidays. At the same time, there is a serious increase in the production of game wines in Russia – by almost a third. Large retailers expect foreign alcohol residues to be washed off the shelves and prices to rise. Is the situation really critical and which brands disappear first, writes Tatyana Melikyan in the magazine “Profile”.
Stocks of whiskey and rum are running out
Shops and supermarkets expect shortages by December. Dewars and Jack Daniel’s whiskeys, Bacardi rum and Baileys liqueur may be the first to disappear from the shelves – their stocks are depleted. European brands of cognac and tequila are also leaving.
According to the Association of Retail Companies (AKORT, includes X5 Group, Magnit, Lenta, Auchan, Azbuka Vkusa), the representation of whiskey on the shelves decreased by 50%, sparkling wines from the Champagne region – by 95%, imported beer – by 40%, other categories – by 35%. At the same time, purchase prices for imported alcohol have increased by 27-40% since February, and by 70% for some items.
Large foreign producers of strong alcohol began to appear on the Russian market by weight. Suspended the activities of the American company Brown-Forman, which owns the brands of Jack Daniel’s whiskey and Finlandia vodka. Following is the British Diageo. Her portfolio includes Johnnie Walker and White Horse whiskeys, Smirnoff vodka, Baileys and Sheridan’s liqueurs, Captain Morgan rum, and Guinness beer.
The United States, within the framework, covers a ban on the shipment of all alcohol in Russia, and the EU limits the consumption of 300 euros per unit of goods. Since November, imports are banned and New Zealand wines. In addition, the Russian wine market may lose one product from the oldest Italian producers Antinori, the mistake of the main estates are concentrated in Tuscany. However, these victories were never widely available.
Redistribution of the strong alcohol market
Against this background, in mid-September, the Ministry of Industry and Trade offers a wide range of goods that can be imported through parallel imports, including drugs from alcohol brands. The import of products without the permission of the copyright holders and bypassing official distributors has been allowed since May 6 in relation to more than 50 categories of goods and one and a half thousand brands, cars and spare parts, including Apple and Samsung equipment, clothing and industrial equipment. Vice Prime Minister, Head of the Ministry of Industry and Trade Denis Manturov said that the forecast for the volume of parallel imports has been adjusted from $16 billion to $20 billion by the end of the year. The mechanism itself, designed until the end of 2022, was decided to be extended to 2023.
However, the Association of International Spirits Producers is against such offenders, due to the possibility of analyzing the import of discussions even for the products that the right holder himself brings into the country. For example, the owner of the Martini and Chinzano brands, Bacardi, still imports its drinks. In addition, the association fears that counterfeit products will flood in the country.
Director of the Center for Research of Federal and Regional Alcohol Markets Vadim Drobiz doubtful in this perspective: if analytical imports are managed, delivery remains a small circle of authorized companies, which minimizes the risk of counterfeiting. However, in general, Drobiz considers the problem far-fetched.
Trade networks and restaurants complain about the lack of products. Among themselves, they sold strong drinks at retail, not delivering from abroad. This function is performed either by owners of expensive premium brands or by importers. And if in the turnover of large retailers the share of alcohol is absorbed by about 10-12%, then in restaurants it reaches 50%. Especially high marginality of Hennessy cognac and French Moet&Chandon gameplay.
“I doubt that comparable imports will be introduced, but the Ministry of Industry and Trade would like to give this opportunity to the network, arguing that logistics is becoming easier, and the margin is for a smaller number of users,” says Vadim Drobiz. – Since about 2015, the network began to import wine, but the business of importing strong alcohol was closed to them. Therefore, in fact, now there is a redistribution of the hard premium alcohol market in chains.”
He also draws attention to the fact that the news about the reduction of expensive imported products did not provoke a rush of demand. This means that consumers have found other cases – direct connection with suppliers, gray imports, duty-free trade.
Assortment of Russian wines
Imported wine last year occupied half of the market, sparkling – a third. Taking into account restrictions on imports from the USA, Australia and New Zealand, the share of the segment may be limited to 25–30%. Countries in the CIS, as well as in China and India, are looking for replacement distributors. Options for proposals for wines from Argentina, Chile, Uruguay and South Africa are also being considered.
The affordable price segment is within reach. Domestic products account for more than 75% of bottled sales. The higher the price segment, the more competitors from imports.
“The range of domestic products is expanding primarily in the segment of 500-1000 rubles per bottle of 0.75 liters”, – economy Olesya Bunyaevadirector of the department for research and promotion of domestic wine products of Roskachestvo, head of the Wine Guide of Russia.
It is worth noting that Russian wines have also appeared in premium retail formats – in expensive supermarkets. The ratio of imports and domestic production will be approximately from 50/50 to 40/60 by the end of 2022. In 2023, at least two-thirds of the wine products sold in the country will be Russian-made.
According to the results of a survey by the Center for the Study of Consumer Behavior of Roskachestvo, in June 2021 the share of citizens choosing Russian wine was 40%, and today this figure has grown to 49%. The number of buyers decreased from 60% to 51%. This is connected with greater awareness of the Russian product, and with an increase in its quality, and with the expansion of the range offered. And also with the tourist boom in the south of Russia in the last two years. Trading networks stand out on the shelves of wines not only in the Crimea, but also in South Dagestan, Anapa, Gelendzhik.
New wine-growing regions are developing, the structure of vineyards in the Kuban and Crimea has been qualitatively changed. According to the federal project “Stimulation of the development of viticulture and winemaking” by 2030, the area of vineyards should be increased by a third. The annual planned state support is about 2.4 billion rubles. Grants are allocated to farmers to develop the tourism situation. There are subsidies for agricultural machinery, preferential loans. The cost of a production license has been reduced by more than 10 times. Thanks to an amendment to the legislation, it is now possible to sell wine at festivals.
“As for game wines, public consumers will drink, since a contact for delivery is made in March,” Olesya Bunyaeva, a converter. – And the prices for the New Year, most likely, will not rise. Traffic waves occur in January and June. Although there were factors related to logistics, Abrau-Durso, Kuban-Vino, Myskhako, Zolotaya Balka, Inkerman, and Fanagoria say they do not plan to raise prices for the holidays “.
Millions of decaliters of beer
At the same time, Russia as a whole began to produce more alcohol. Since the beginning of the year, the volume has increased by 12%. Compared to the previous season, it was noticed that the production of cognac (+18%), vodka (+9%) and business products (+6%) increased. In total, since January, about 140 million decaliters of various drinks that do not consume beer, cider and mead, included in the Rosalkogolregulirovanie, have been bottled.
The production of liqueur wines grew the most – by 450%. A noticeable increase in production and brewers. Since January, 410 million decalitres have been brewed in the country. This is 2.7% more than last year, according to the report of the Association of Beer Producers (APP). At the same time, the cost of production increased by 13% – up to 165 rubles per liter.
It is hardly appropriate to talk about serious competition with foreigners here, because the share of imported beer has never exceeded 6% of the total volume of sales in Russia. Now foreigners account for only 1.5-2%, they say in the AMS. Partially, the demand was replaced by the French brand. Some of the international brands began to be produced at Russian enterprises.
The appeal draws attention to the fact that the import segment is necessary for the formation of consumption in Russia and the expansion of the range. Therefore, fully demand for imported products to account for is not easy.
A big risk for the Russian brewing market is 100% dependence on the import of hops, which are grown in small quantities in our country. Domestic brewers are looking for new opportunities to search. And they emphasize that an extremely high proportion of hop-growing ownership. For this, the necessary tension is both business and the state.
Although there are absolutely exceptional drinks that cannot be replaced, such as tequila or rum, everyone noted that the market situation is not considered critical.
“The consumer will solve his own problems, and, believe me, no one sober belongs to the New Year because their favorite whiskey is gone. reorientated”, Vadim Drobiz is sure.
Stockpiling is also not worth it, says the head of the WineRetail Information Center Alexander Stavtsev:
“For some positions, prices fell lower than they were at the beginning of February. Retailers are starting to stimulate demand and hold promotions even now – in the high season. Remember: no one rewrote the price tags when the dollar cost up to 120 rubles. This is not a product of the realization of necessity, it is necessary to comply with demand. The store is not a museum, he wants not to show the product, but to sell it.”