“If you have to pay 50 percent more for a bottle of vodka, problems will arise”

Alcohol is rising in price. Starting from 2023, the cheapest legal bottle of “little white” will become 20 rubles more expensive. The cost of cognac and brandy will also change upwards. Such indexing is considered traditional. Every year, liquor gets more expensive by about the rate of inflation. However, experts believe that an increase in the minimum threshold can give rise to a more significant increase in the price of the entire line of strong alcohol. And this, in turn, risks leading to a surge in demand for moonshine stills and counterfeit alcohol-containing liquids.

The Ministry of Finance proposed to raise the minimum retail price (MRP) for alcohol with a strength above 28%. For a bottle of vodka with a volume of 0.5 liters, the price will increase by 20 rubles – up to 281 rubles. Brandy will rise in price by 27 rubles to 375 rubles, cognac – by 37 rubles to 517 rubles.

Indexation of the MRC is an annual procedure. Now the Ministry of Finance justifies the decision on the need to raise the minimum selling prices for alcohol by increasing the costs of producers due to inflation, as well as difficulties with imports due to sanctions (a number of components from abroad are used in the production of alcoholic beverages).

Alcohol is becoming more expensive like other food products, but unlike all other product categories, excises account for a large share in the cost of alcohol, which grow annually. In past years, a bottle of vodka has risen in price by about the size of inflation – by 5-7%, says Vadim Drobiz, director of the Center for Research on the Federal and Regional Alcohol Markets. But now inflation is twice as high. So what will the increase in the MRP for spirits lead to?

“A significant part of the population, which receives a salary of 15-20 thousand rubles, has not gone to legal retail for alcohol, and will not. Nothing will change. Now, if you have to pay more than 50 percent for a bottle in legal retail, problems may arise,” he emphasizes. Recall that in 2012-2014 the excise rate doubled. After such a takeoff, the market literally collapsed. Sales of vodka in stores have halved. A giant shadow sector has formed. But the state has learned that lesson!

To a greater extent, the MRP affects the level of prices on the shelves of chain stores, and not the volume of counterfeit products, Anna Vovk, a member of the Council for Financial, Industrial and Investment Policy of the Chamber of Commerce and Industry of the Russian Federation, notes. “Alcohol is a source of replenishment of the budget. Now there are obvious reasons why the state treasury needs additional and quick injections,” she said.

Meanwhile, not only the MRP is growing every year, but also the excise tax on alcohol (as well as on tobacco products and fuel). These goods are the most massive, and the collection of excises in the production of these products is one of the replenishment items for the Russian budget. Excises on alcohol last year brought the budget almost twice as much money (441 billion rubles) than the tax on property of individuals (274 billion rubles). This excise is included in the TOP-5 main taxes for the Russian budget after personal income tax, VAT and other fees.

Usually, following the establishment of a minimum price level for alcohol, the state sets increased excise taxes on the entire line of alcohol – from vodka to champagne. Therefore, since the New Year, the cost of these products has been growing by an average of 4-6%. The same will probably happen in January 2023, says B&C Agency managing partner Ivan Samoylenko.

“The increase in the cost of food and drinks has already led to the fact that the Russians remembered summer cottages (where they began to grow their own vegetables and fruits), they are buying goods for home canning, the necessary household appliances (juicers, freezers, etc.). This is the trend of 2020, which has only intensified now,” he notes. — Demand for moonshine also began to grow during the pandemic. And now it continues – citizens buy such devices 7 times more often than in 2019. At the same time, the consumption of yeast and sugar has increased, and Russians buy such goods in bulk and in discount chains.”

Dynamics of the minimum retail price by years

Year Vodka, 0.5 l Change in MRC, % Cognac, 0.5 l Change in MRC, %

2023 281 rub. RUB 7.7,517 7.8

2022 261 rub. 7.4 480 rub. 7.6

2021 243 rub. RUB 5.7,446 3

2020 230 rub. RUB 7,433 11.6

2019 215 rub. RUB 4.9 388 4.6

…

2014 199 rub. 17.1 322 rub. fifteen

2013 170 rub. RUB 41.7 280 27.9

2012 120 rub. RUB 22.5 219 13.5