And whether to expect an increase in the supply of counterfeit
The Ministry of Finance raised the minimum retail prices (MRP) for strong alcohol for the third time in the last two years. The cheapest vodka and brandy went up by 7.5% on average. Experience shows that if the minimum prices rise, then soon everyone else will follow them. Experts warn that in terms of growth rates, the cost of strong alcohol can outstrip inflation. However, Russians are unlikely to agree to drink less, moreover, it is possible that the attention of some lovers of pawning behind the collar will switch to illegal alcohol.
The cost of the cheapest vodka rose from 243 to 261 rubles, cognac – from 445 to 480 rubles, and brandy – from 324 to 348 rubles per 0.5 liter. As a result, the minimum price of “little white” over the past two years has increased by a total of 20%, and the other two popular strong drinks – by 10%.
The initiative of officials to once again increase the starting threshold for strong liquor became known on the eve of the New Year holidays, when the state usually carries out tariff modernization of the alcohol market. The Ministry of Finance has been setting a minimum wage for alcoholic beverages since 2009 in order to combat the shadow production of alcohol. The state, as it were, gives the consumer an installation: the plant honestly paid excises and other taxes for this product, and other cheaper analogues are counterfeit. It is worth noting that in addition to the MRP this year, excise rates for alcoholic products in general should also increase. According to the amendments to the Tax Code on gradual indexation, the percentage of their growth is determined by annual inflation.
According to experts, due to the increase in the MRP, those who like to give up a glass of strong intoxicant have shown only the initial level of growth in prices for their favorite drinks. According to the investment strategist of BCS World Investments Alexander Bakhtin, an increase in the minimum threshold can give rise to a higher appreciation of the entire line of strong alcohol: on average, prices can rise by 5-15%. However, so far, even despite the increase in prices and the spread of new strains of coronavirus, the Russians have not lost interest in strong alcohol. Sales of vodka last year remained at the same level, and our compatriots drank almost 5% more cognac than before.
In turn, it is still quite difficult to unambiguously predict the ability of the MRC to cope with the gray market of strong alcohol. According to the Moscow School of Management Skolkovo, the share of illegal 40% alcohol in our country reaches 30-40%, which is much higher than in other industry sectors: in the brewing segment – 4-7%, in winemaking – 0.5%. “Still 8-10 years ago, the volume of left-handed alcohol on the domestic alcohol market was estimated at 60-70%,” recalls Natalia Milchakova, deputy head of the Alpari IAC. — That is, the long-term trend is still falling, not growing. In the short term, the shares of counterfeit products can fluctuate in any direction within one or two percent, but such changes are too small to speak of a sustainable impact of the MRP on the size of the illegal market.”
Moreover, there is an opinion that the increase in the minimum prices may even become an additional factor in the growth of the counterfeit alcohol sector. “Against the background of accelerating inflation, the level of solvency of the population is falling sharply,” argues Bakhtin. – The key to refusing to buy strong alcohol is the absence of new lockdowns, when citizens can freely visit open restaurants and cafes everywhere. Rising prices have a greater impact on the distribution and share of illegal alcohol on the market.”
It remains to be hoped that the increase in minimum prices will still have more pluses than minuses. “Russia is far from being the most drinking nation on the planet,” Milchakova notes. — For example, the OECD annually puts our country only in 8-10 place in the world in terms of per capita alcohol consumption. The first places are constantly occupied by the Baltic countries and Northern Europe. Perhaps the rise in prices of some of our compatriots will force us to improve these statistics.”