MOSCOW, July 17 (RIA Novosti) – Licensed vodka makers in Russia are distilling much less of the country’s most famous spirit because, market watchers say, it is increasingly being made illegally.
According to data released by the State Statistics Service on Wednesday, legal vodka production plummeted 28.3 percent in the first six months of this year, compared with the same period last year.
This year, the government-imposed minimum price for a half-liter bottle of vodka was raised to 170 rubles ($5) from 98 rubles ($3). That price is reinforced by higher excise duties for alcohol.
Russia’s Union of Alcohol Producers had protested that such a hike would likely translate into more counterfeit products flooding the market.
Vadim Drobiz, who heads the independent Center for the Study of Federal and Regional Alcohol Markets, said in an interview that the state had failed to prevent illegally produced vodka from being sold in stores. “That translates into growth of the illegal market,” he added.
He said he expected sales of licensed vodka to fall 10 percent this year, and production – 20 to 25 percent.
Kleshchukov, CEO of Organic Vodka Group, said he anticipated that license vodka production would drop 25 percent this year. He said demand for vodka had remained relatively unchanged, and the output contraction was due to legitimate products being replaced with illegal ones.
“The main fall is observed in the so-called ‘popular product’ segment, where vodka costs 170 rubles [$5] to 200 rubles [$6],” he said. “The other segments are not falling, whereas the premium segment is even rising.”
He added that production for the lower-price segment would continue to contract next year.