Russia’s vodka price slash takes effect

The Russian government’s u-turn on minimum vodka prices has come into effect this week as it attempts to curb illicit alcohol production.

Russia’s battle to curb illicit alcohol production has seen minimum prices rise to an all-time high

As of 1 February, the minimum price of vodka has been reduced to 185 rubles (£1.75) for half a litre, down 16% from a record high of 220 rubles (£2.08).

The minimum retail price was introduced in 2009 as part of a government crackdown on binge drinking, a major cause of death among male adults in the country.

At the time, the Federal Service for Alcohol Market Regulation (Rosalkogolregulirovanie), raised the minimum price from 89 rubles to 170 rubles (£3), before a further hike in January 2014 to 199 rubles (£3.70). Rosalkogolregulirovanie then raised prices once more the all-time high of 220 rubles in August 2014.

Last month’s decision to reverse the price increase comes as official vodka production fell 17% between January and November 2014, according to the Federal Service of State Statistics.

It’s thought the fall in sales is indicative of a flourishing illicit trade in Russia, driven by the high cost of legal products.

According to the Center for Federal and Regional Alcohol Market Studies, consumption of counterfeit alcohol has risen by up to 65% since the minimum price strategy was implemented in 2009.

Vadim Novikov, senior researcher at the Russian Presidential Academy (RANEPA) Vadim Novikov, told Russian news agency, TASS, that the government “is trying to find an optimal price,” but warned the reduction in vodka prices this week is unlikely to help curb the counterfeit alcohol market.

“This should be achieved through tighter administrative control over alcohol production,” he said.