Imported alcohol may rise in price within 10%

The weakening of the ruble is forcing large importers of alcohol to index prices. The cost of drinks may increase by up to 10%, which, according to experts, will worsen demand in the face of a record volume of alcohol imports in Russia. Local producers, however, are unlikely to take advantage of the situation, market participants believe.

Importers of alcoholic beverages may raise prices in July due to the weakening of the ruble, sources told Kommersant in the market. As the interlocutor of Kommersant among restaurateurs noted, the Moscow Brewing Company (MPK; a large distributor, including the brands Peroni, Tsingtao, etc.) has already indexed prices. The MPK told Kommersant that from July 17 they plan to increase prices due to for the growth of the exchange rate by 6-8%.

Simple Group can also revise prices, two Kommersant sources on the market say. Group President Maxim Kashirin specified that Simple “did not have and is not planning a global increase in prices for the range.” But the company plans to “closely monitor the dynamics of the ruble exchange rate in July and August”, point increases are possible “in case of deliveries at new prices from suppliers.” But so far these are isolated cases, the top manager assured: “We plan to return to the issue of studying a possible price adjustment in September.”

AST General Director Leonid Rafailov notes that his company “waits for a relatively stable ruble exchange rate”, after which it will make a decision on price changes. “Over the past year, the course has changed in a very wide range, and we do not want to disturb buyers with every strong movement in the market,” he emphasizes.

The executive director of the Fort wine trading company, Alexander Lipilin, believes that at a rate of 100 rubles. for the euro there will be no significant price increase, but the situation may change if it exceeds 120 rubles. According to him, the market is quite heavily overstocked due to record imports in the last quarters of 2022 and early 2023. “Everyone’s warehouses are full, and now raising the price means losing space on the shelf and in the wine list,” says Mr. Lipilin.

In addition, according to him, after the imposition of sanctions, most manufacturers switched to prepaid work. Now they are selling goods paid for at the rate of two months ago, which “creates a certain safety cushion for importers,” Alexander Lipilin explained. According to him, before the sanctions, everyone worked with a deferred payment that reached up to six months: when there were jumps in the exchange rate, the company’s revenue remained in rubles, and now the situation is reversed.

Igor Khavsky, co-owner of SWAM Group distributor and Gletcher brewery, admits that prices for imported beer may rise by 7–10%, but in this category “globally the situation is unlikely to affect sales.” Nikolai Zhelagin, founder of the Beru Vykhodny chain of beer stores, adds that the demand for imported beer was already under pressure due to prices that had already risen earlier.

Meanwhile, the growth of alcohol imports creates problems for local producers. According to the results of January-May 2023, according to available data from Kommersant, the import of alcoholic beverages, excluding the EAEU, increased by 46% year-on-year, to 206.14 million liters. Wine supplies increased by 43% to 167.54 million liters, while imports of spirits grew by 73% to 38.59 million liters year-on-year.

As Kommersant’s sources noted, distributors and retailers actively compensated for the failures in alcohol imports last year, accumulating stocks in the face of a weakening ruble. In Russia, a carry-over stock of 160 million liters of wine was formed against about 80 million liters a year earlier, WineRetail calculated: “The market is overstocked by an additional 60 million liters to the average annual values. Total inventory as of December 31, 2022 was approximately 22-23% of all sales last year.”

Deputy Finance Minister Alexei Sazonov said in an interview with Rossiyskaya Gazeta that the government is considering raising customs duties on wine imports in Russia from the current 12.5%. Director of TSIFRRA Vadim Drobiz believes that the increase in prices for imported alcohol will not lead to an increase in demand for Russian alcohol, since these products have different consumer groups.

Anatoly Kostyrev