The government plans to combat bootleg alcohol by setting the minimum
retail price for a bottle of vodka at 90 roubles.
The government's close eye on the alcohol market and the president's
instructions to sort out its problems, which include EGAIS (The Integrated
State Information System), have brought about some early results. Just last
week, an ad hoc commission under Deputy Prime Minister Viktor Zubkov was
created, and a package of measures and draft laws to introduce tighter
regulations on the alcohol sector has already been submitted.
The commission's creation was originally discussed back in July at a
meeting chaired by Prime Minister Vladimir
Putin, but now it has received official confirmation.
Proposals from the Federal Service for the Regulation of the Alcohol
Market (Rosalkogolregulirovaniye) - which started its work in March - were
reviewed.
Participants in the alcohol
market believe the creation of the service has contributed to the fact that the
government managed to develop a clear-cut strategy on the regulation of the
alcohol market. "The agencies that previously were in charge of the alcohol
market were constantly arguing, and it was impossible to understand what rules
had to be followed," Dmitry Dobrov, a representative of the Russian Association
of Alcohol Producers (SPAP), explained. "Now, for the first time in years, we
can actually talk about the market with a measure of optimism." Before the
creation of Rosalkogolregulirovaniye, the only large-scale measure used to
control the sale of products containing alcohol was the introduction of EGAIS
in early 2006. As some might recall, the system was introduced hastily without
any clear idea of how it would work, and all the accounting methods used
earlier were canceled. As a result, the system just became a nightmare for everyone
concerned. It failed to prevent mass
poisoning, half of all the market participants had their licenses suspended,
the merchants suffered million-dollar losses, and the taxmen working with the
system found it to be so unmanageable that they asked for it be scrapped completely
or handed over to some other agency.
At the moment, the frenzy over EGAIS has somewhat subsided. Still, some
market participants have complained that as a result of the system being handed
over from the research and development centre Atlas (a structural unit of the
FSB) to the Main Research and Computer Centre of the Federal Tax Service, the
cost of EGAIS has gone up 1.5-2 times. "It's hard to say exactly how much the
price of EGAIS has grown," Dmitry Dobrov said. "There are questions concerning
the initial installation and provision of hardware. Aside from that, part of
the equipment that Atlas demanded be installed, albeit a small part, has been
integrated into the system that is currently operating. Everything depends on
the size of the enterprise and its business."
Whatever the case, it's comforting to think that the system is working
and it's not misfiring or causing as many problems as it was before. "Without a
doubt, the system needs more improvements," Dmitry Dobrov noted. "I suspect
that the government will discuss the issue before the New Year." It should
still be fresh in everyone's memory that Dmitry Medvedev came very close to abolishing
EGAIS when he admitted in midyear that he himself had been convinced of the
system's uselessness all along. Yet, Putin
managed to convince the president that the system should not be scrapped, and,
on the contrary, it should be strengthened.
"Obviously, EGAIS is not a cure-all," SPAP's representative said. "But
it does perform certain functions and it's still too early to say that it
should be abolished completely. Especially since legal market participants have
paid quite a bit of money for it."
As for the actual measures to regulate the alcohol market, which the
State Duma is due to debate in the fall, they include the introduction of a
single excise rate on alcohol and products containing alcohol, the licensing of
transport carriage and the setting of a minimum price for vodka. Tougher
punishments will be introduced for illegal sales and sales of alcohol to
minors, without stopping short of imprisonment. Legal participants in the
alcohol market welcome all these measures. "We're all in favour of it," Dmitry
Dobrov confirmed.
According to SPAP, 30-50% of alcohol being sold on the market (excluding
wine) is illegal. Last year, a retail chain officially sold 177 million
decalitres of vodka and liquors, while production stood at only about 120
million decalitres. The difference of more than 56 million decalitres came from
moonshine vodka. The real share, of course, is much higher.
In his report to the president, the prime minister emphasised that
illegal vodka not only greatly harms people's health, but also reduces budget
revenue. Excise on every 0.5
litre bottle amounts to 38.2 roubles, and VAT on the
cheapest vodka is at least 10 roubles, meaning revenue shortfalls run into the billions.
The introduction of a minimum price for vodka should help solve these
problems. On the one hand, inspectors will be able to more readily determine
whether or not the price requirement is being observed, and in turn, catch
illegal goods. On the other hand, the buyer who chooses vodka within a certain
price bracket will most likely prefer a more well- known and trustworthy brand.
According to a SPAP representative, since taxes amount to around 48
roubles, the production cost is about 17-18 roubles, the wholesaler's markup is
about 15%, and the retailer's markup is about 20%. So, even if one excludes the
producer's profit, the price of a bottle of vodka works out to be at least 90
roubles. With these figures in mind, it's not so hard to imagine the origins of
vodka going for 50 roubles.
Anna Ovyan
