Sunday, July 02, 2006

Russia: Foreign Wines Dry Up

After July 1, the imposition of a new law on liquor combined with usual bureaucratic tardiness threaten to dry up the Russian wine market by making imports of foreign wine virtually impossible for several months.

The new law aims at blocking the wide spread of counterfeit liquor by requiring mandatory excise labels on all wine and liquor bottles sold in the country. Despite the fact that the law has been long expected, Russian authorities have been slow in taking practical measures for it to work. Earlier this year, Russian liquor consumers were hit by a similar bureaucratic foulup, when there was a sudden lack of equivalent labels. Someone had simply forgot to order the labels in time for producers to put them on their bottles, which created a short but shaking "vodka crisis" for Russian society. Whether the issue was solved by postponing implementation of the law until now or if it is a case of separate laws with similar content is unknown. Nevertheless, the result is once again more or less the same.

This year, Russian liquor vendors have been especially hard hit by misdirected or poorly implemented government measures. In April Russia imposed an embargo on imports of the vastely popular Georgian and Moldovan wines, tendering a more traditional and low-price market. This might have been an eye-opener for consumers, but after some confusion Georgian wines were substituted with wines from other countries. This option now seems to peter out.

Indeed, representatives of liquor retailers do not expect that the market on imported alcohol will work properly again until November. Retailers expect a loss of some 900 million USD in revenues and that up to a third of Russian liquor stores might close indefinitely. Why the government has so blatantly bungled the issue remains unclear. Favouring a next to inexistant domestic wine production can hardly serve as an explanation, if the foulup is not directed at supporting Russia's vodka producers. The latter would, however, make no sense while such a move would but incur higher state costs for the consequences of alcholism. So, in lieu of any better explanation, one may only assume that this is yet another blunder of the infamous Russian bureaucracy.

1 comment:

Megan Case said...

Well, my conspiracy theory is that this "blunder" is intended to bolster the Russian beer, vodka and prepared cocktails industry. I mean, if you're looking for an alcoholic beverage and there's no wine available, most people aren't just going to go home, they'll buy SOMEthing, as Kostia and I, dedicated wine drinkers, have been doing.

The strange thing is, there are a few wines available with the new tax stickers. But they're either really bad wines or really expensive ones. Hmph.