Alcohol prices will increase from January 1, 2024
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An increase in excise tax rates, higher prices for alcohol, materials and logistics will affect prices for alcoholic beverages. Manufacturers of vodka, gin, whiskey and wine have already notified chains of price increases of up to 10% from 2024, and importers expect suppliers to increase prices by 5–25%. Companies expect indexation to be gradual, but some consumers may still switch to cheaper brands.
Major alcohol producers are notifying chains of price increases effective January 1, 2024. Kommersant has copies of such letters from the Alcoholic Siberian Group (ASG; brands “White Birch”, “Sibbitter”, “Five Lakes”) and Ladoga (“Tsarskaya”, Barrister, Fowler’s). ASG, said in the appeal, plans to increase prices by an average of 7–10%.
The company refers to an increase in the excise tax rate by 4.9%, to 643 rubles. per 1 liter of alcohol, an increase in alcohol prices by 7% for nine months of the year and an expected increase in alcohol prices by 10% in the fourth quarter of 2023, an increase in the cost of materials, logistics, etc.
Ladoga gives similar reasons without disclosing the size of the indexation. The company clarified to Kommersant that, depending on the strength of the drinks, selling prices increase by 3–5% and, in order to avoid a sharp increase, they are trying to work out an optimal scenario with counterparties. The ASG told Kommersant that they plan to increase it below the inflation rate. They expect changes in retail prices for strong alcohol in February, as well as for all fast-moving consumer goods (FMCG), so they do not predict a strong impact on sales.
Tatspirtprom (Tundra, Russian Currency) says that they are monitoring the market and price changes will be strictly market in nature. General Director of Fanagoria Petr Romanishin said that from January 1 the company is increasing prices by 7–8%, including due to an increase in the excise tax rate. In Novabev Group (Beluga, Belenkaya), Rust Group of Companies (Russian Standard, Green Mark), Abrau-Durso, Kuban-Vino, AB InBev Efes, Baltika and United Breweries » No comments provided. Large retail chains did not answer Kommersant’s questions.
Suppliers of alcohol importer Simple Group plan to increase prices by 5–25%, the company said in a letter to partners, a copy of which is also available to Kommersant. In connection with this, as well as with the rising cost of logistics, rent, and increased personnel costs, the group plans to adjust prices for part of the range from January to April 2024, the appeal says. Founder and President of Simple Group Maxim Kashirin added that the targeted increase in prices for new supplies is also due to an increase in duties on imported wines. The Ministry of Finance told Kommersant that prices for alcohol are set by sellers independently, not lower than the minimum retail price (MRP). The largest alcohol producer, Rosspirtprom, did not answer Kommersant.
The executive director of the Fort wine trading company, Alexander Lipilin, notes that consumers, as a rule, are not willing to pay more for alcohol than they are used to, and if the price rises by more than 10–15%, many may switch to other brands or drinks.
In strong alcohol, the increase is smooth and not critical, he points out. The head of the WineRetail information center, Alexander Stavtsev, points out that the price increase, if adopted, is unlikely to immediately affect all sales channels. Small bars will have to quickly rewrite their menus, but large chains can extend the effect through stock and other categories, he explains.
AST General Director Leonid Rafailov believes that regardless of the speed of price increases, consumers most likely will not reduce alcohol purchases in volume, but will choose cheaper brands. In conditions of general inflation, buyers primarily save on non-essential products, which include premium alcohol, he notes.
Director of CIFRRA Vadim Drobiz warns that in 2024 alcohol prices may rise even more noticeably after the privatization of Rosspirtprom. Auction for the sale of an asset with a starting price of 10.6 billion rubles. scheduled for January 24. But, Mr. Drobiz adds, now vodka costs 350 rubles on average. per bottle of 0.5 liters, which is only 70 rubles. exceeds the MRP level, therefore the current price increase will not affect demand.
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