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Thursday, 20 June, 2002, 09:06 GMT 10:06 UK
Russian vodka faces flood of beer
Russian vodka bottles
70% of Russian alcohol spend goes on cheap vodka

Russia's love affair with vodka goes back centuries.


"Beer is, under Russian law, considered as a soft drink"

Richard Musson, Sun Interbrew

In the days of the Soviet Union, you would have been hard pressed to find any other decent alcoholic drink in the average Russian bar.

But in the last seven years the vodka industry has been facing increasingly stiff competition from a rival product.

Beer has become one of Russia's biggest success stories with the population already spending about $5bn (3.4bn) a year on the drink.

"European" image

Alexei Krivoshapko, who follows the Russian brewing industry for United Financial Group, said the industry had grown 20% by volume on average over the past seven years.

Alexei Krivoshapko, United Financial Group
Krivoshapko: low taxes give vodka producers the advantage

"The Russian beer market has become the fifth largest in the world as of last year - after China, the States, Germany, Brazil," he said.

The prospects for further growth are excellent, according to Richard Musson from Sun Interbrew.

He said beer is already dominant over vodka in the under 30s age bracket and is seen as "extremely European".

"When Russians go abroad... they see Europeans drinking a lot of beer," he said.

"So beer has this very modern, European image, whereas vodka is very much what your father drank."

Upmarket

Rustam Tariko, who owns one of the country's leading brands, Russian Standard, said the smart manufacturers were going upmarket.

Roustam Tariko, owner of the Russian Standard brand
Tariko: smart manufacturers are going upmarket
But despite the growing market share of both beer and premium spirits, the truth is that 70% of alcohol spending in Russia still goes on cheap vodka.

Because it's cheap, you get a lot more alcohol for your money.

Alexei Krivoshapko said very low taxes on vodka mean there's no prospect of a level playing field.

"Currently there's a very high price for beer and a very low price for vodka... in fact you can get drunk for $2," he said.

Beer as a soft drink?

With the average Russian man currently dying below the age of 60, and many health professionals blaming cheap vodka as a major factor, Richard Musson from Sun Interbrew says Russian brewers are in an unusual position.

"Beer is, under Russian law, considered a soft drink," he said.

"Beer is something that you have for refreshment when you don't want to really drink.

"It helps men to communicate without making you fall over and beat up your wife and do other terrible things."

 WATCH/LISTEN
 ON THIS STORY
The BBC's Alex Ritson
"Russians are already spending around $5bn a year on beer"
See also:

13 Mar 02 | Science/Nature
13 Feb 02 | Europe
01 Feb 02 | Business
17 Aug 01 | Europe
02 Aug 01 | Business
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