Russia cuts vodka prices as economy bites

Russia will slash vodka prices by approximately 16% from February 2015 amid fears spiralling costs are driving consumers to drink bootleg spirits.

Russia will reduce vodka prices by 16% from February 2015

The minimum retail prices will fall to 185 rubles (£1.96) per half-litre bottle,the Russian alcohol-market regulator reported on its website.

It follows concerns raised by President Vladimir Putin last week regarding exceptionally high alcohol prices that were forcing consumers to drink illicit alcohol, thus hindering the government’s campaign to tackle alcohol misuse.

Bloomberg reported that official vodka production fell 17% from January to November 2014, according to Federal Service of State Statistics.

“This is clearly a populist measure as Russia is entering an economic crisis that may be several years long,” said Vadim Drobiz, head of Ciffra, an alcoholic-beverage market researcher.

“Russian vodka prices are already the world’s highest relative to people’s incomes, and real incomes are declining.”

The ruble has collapsed to a record low as a result of sanctions from the US and Europre regarding President Putin’s takeover of Crimea from Ukraine.

In August 2014, Russia increased the minimum price of vodka up to 220 rubles (£2.33) for a 500ml bottle, a further hike on a previous increase in March the same year from 170 rubles (£1.80) to 199 rubles (£2.11).

However, last month the government decided not to raise the minimum price of vodka in 2015 following the black market growth.

Last year, an alcoholic drinks analyst warned rising tensions in the west could prove a “fatal blow” to spirits producers.