For vodka, the time has come for infusion – Newspaper Kommersant No. 12 (7457) of 01/24/2023

Against the background of a general increase in the volume of vodka production in Russia by 4% in 2022, some of the largest players are experiencing a slowdown in growth rates. The companies attribute this to the sanctions of Western countries on the import of vodka from the Russian Federation in connection with military operations in Ukraine. Experts note the possible achievement of a peak in the production of alcohol and predict a narrowing of the market and a redistribution of demand.

Three of the five largest vodka producers in Russia have slowed down the rate of production of the drink in 2022 relative to 2021, it follows from the data of market participants available to Kommersant. Beluga Group (Beluga, Arkhangelskaya, Belenkaya brands), which occupies the first place in terms of volumes, reduced its production by 104 thousand deciliters, to 10.01 million decaliters. In 2022, the Traditions of Success (Khorta) Group of Companies produced 7.1 million deciliters of vodka, which corresponds to last year’s level. And the production of Rust Group of Companies (Russian Standard, Parliament, Green Mark) decreased by 34%, to 6.32 million dal. In 2021 the output of vodka from these players grew by 5%, 45% and 5% respectively. In general, in 2022, the production of vodka in Russia increased by about 4%, to 84.05 million decalitres, according to Rosalkogolregulirovanie.

The Traditions of Success Group of Companies noted that production is supported by the low price on the shelf compared to other strong alcohol and the narrowing of supply in the economy segment imports. The Beluga Group told Kommersant that the decline in the volume of 104 thousand decaliters was influenced by sanctions in the export direction, as well as deviations between sales and production on the size of the balances. After the outbreak of military operations of the Russian Federation in Ukraine, the EU, US and UK authorities banned the import of vodka from Russia. And in 2021, about 45% of the export of strong alcohol from the Russian Federation in money terms fell on Latvia, Great Britain and Germany, calculated in Agroexport. The Rust Group noted that, as the largest exporter of vodka from Russia, production volumes were reduced due to the embargo.

The head of the WineRetail information center Alexander Stavtsev says that several years ago the Beluga Group refused to sell vodka in the MRP segment (minimum retail price), and today it sells more and more expensive products through its Winlab network, receiving all the profits, so a slight decrease in sales in volume does not significantly affect the business. The Beluga Group itself noted the positive dynamics of sales of its own premium brands, in particular Beluga – by 36% year-on-year.

Among the five key players, Tatspirtprom, owned by the government of Tatarstan, increased the production of vodka most noticeably in 2022 by 13%, to 9.3 million decaliters. The company attributed the dynamics to the growth in sales of the flagship brand Tundra by 38% in the category and the launch of new products. The Alcoholic Siberian Group (ASG), which in 2022 increased the production of vodka by 7%, to 7.92 million decaliters, notes an increase in key brands. In the premium segment, sales of Belaya Beryozka grew by 43% due to an increase in volumes in the modern trade channel, in the middle segment the drivers were Five Lakes, Husky and the new Remeslo brand, the ASG says.

The Tula distillery 1911, which increased the production of vodka by 43%, to 2.9 million decalitres, was among the ten fastest growing producers. The company says that the increase in production was provided by its own brands, primarily vodkas Medved, Starley, Penega and IKRA. Sources of “Kommersant” in the market noted that the demand for the products of the Tula distillery 1911 is primarily provided by economy segment vodka. So, “Starley” in the network “Red & White” costs 289.99 rubles. for a bottle of 0.5 liters, which is cheaper than Tundra (298.99 rubles for 0.5 liters). “Bear”, for comparison, is sold at 499.99 rubles. for 0.5 l, and IKRA in the Lenta network, excluding discounts, costs about 870 rubles. for a bottle of 0.5 liters.

As follows from the CIFRRA data, the production of vodka in 2022 grew in the first nine months, and in the fourth quarter it decreased by 5.85% year-on-year, which may be due to the accumulation of stocks in previous months. Director of TSIFRRA Vadim Drobiz notes that in 2022 the peak of production could be reached in the Russian alcohol market and the dynamics will stabilize in the near future. As Alexander Stavtsev notes, in 2022 the alcohol market was still developing largely by inertia, and this year, the consequences of the crisis, apparently, will begin to affect. According to his forecasts, a narrowing of volumes is possible against the backdrop of an already high base and a redistribution of demand between categories. Thus, the production of alcoholic beverages with a strength of 25% or more, which include whiskey, gin, tinctures, increased by 42% in 2022, to 13.8 million decalitres. In 2023, the Beluga Group expects the performance of the vodka category to remain unchanged or slightly increase.

Anatoly Kostyrev