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The Russian alcohol market: a heady cocktail

Russia and alcohol have a long, intertwined history. Russian consumption of alcoholic beverages has long been high and so it remains. Even so, forget what you thought you knew about Russia’s drinking habits. The market is going through some intriguing changes - creating a more varied landscape for exporters to navigate.


Russia: A major alcohol drinker


Consumption of alcohol has been a part of Russian life for centuries. Russians are the fourth biggest drinkers in the world in volumes of pure alcohol. In 2016, an average of 15 litres was consumed nationwide. 

A survey from the Levada Centre, a Russian non-governmental research body, revealed that as many as two thirds of Russians regularly consume alcohol, at least twice a week.  That’s a potential market of over 98 million people.

So Russians like a drink. In fact, they enjoy alcohol so much to make it a $40 billion industry. Domestic production is thriving at present, with vodka production up 66% year-on-year in Q1 2017. Even so, it is not been entirely smooth sailing for the Russian alcohol sector in recent years.

The major issue facing Russia’s alcohol market at present, though, is consumption of illegal alcohol. As much as 10% of the population drinks spirits distilled with dangerous ethyl-alcohol and industrial substitutes like methanol.
 
Russia’s economic crisis meant its citizens had reduced purchasing power – meaning less money to spend on legitimate products. As such, the nation was hit by a deficit of premium, quality drinks in 2016.

Crucially, the rouble is stabilising, backed by a resurgence in oil prices. The market for properly labelled, legally manufactured alcoholic drinks in Russia is regaining its strength. After a couple of years in the wilderness, imports are showing the exciting green shoots of recovery.
 

Russian alcohol imports rise for the first time since in a year in 2017


Imports of crucial product varieties, including spirits, beers, and wines, were up in the first two months of 2017. This is great news for exporters, as levels dropped off in the wake of the Russian recession in 2014. After that, volumes remained stagnant.

Forgot those negative feelings though. Imports of spirits were up 58% in January and February of 2017, compared with 2016’s levels. The value of imports amounted to $93.5 million during this time, with a physical volume of 28,300 tons (another increase of 67%).

During this time, total imports of alcoholic drinks matched spirits individual increase, posting a 58% rise in monetary values for a total of $226.7 million. In volume terms, this was a 44% increase against 2016’s levels with Russian alcohol imports weighing in at 134,170 tons.

Surprisingly, vodka featured on import manifests during this period – even though the nation is a major exporter of the clear spirit. Selecting premium products from Finland, Sweden, France, and Belarus, meant importers spent $6.23 million on vodka in Jan-Feb 2016 – 2.43 times more than in 2015.

Alcohol imports collectively came to $1.6 billion in 2016 – exceptionally high given that Russia imports around $20 billion worth of food and drink products annually in the post-sanctions environment.  
 

Beer & wine: the new Russian alcohol market drivers


When you think of Russia’s favourite drink, your thoughts will inevitably turn to vodka. While vodka has been ingrained in Russian culture and society for centuries, its days may be numbered. Beer and wine in Russia are gaining major ground.

Beer in Russia is particularly surging in popularity. 45% of 2016’s total alcohol sales were made up by beer, and imports rose by one and half times this year as well. 

Germany and Belgium, known the world over for their brewing culture and quality beers, have become the chief suppliers of beer to Russia, with their exports totalling $17.2 million across 2016. German and Belgian brewers rose their Russian bound export levels by 93% and 122% respectively this year too.

Elsewhere, we find wine is being imported, bought, and drank, in larger numbers by Russians. Last year, imports of sparkling and table wines grew in volume terms by 4.5%, totalling 174.73 million and 34.85 million litres each.

Viniculture, despite the government’s best efforts, is comparatively underdeveloped in Russia, and any domestically-produced labels are often outstripped in price by foreign vintages. Russia’s wine market is here to stay and growing stronger with every passing year.

Even with beer and wine emerging as essential market members, spirits are not going anywhere. 42% of alcohol sales across Russia were spirits. This includes drinks such as whiskey, rum, brandy, and, of course, vodka.
 

Premium alcohol in demand across Russia


Premiumisation, i.e. consumers moving towards more expensive products, is re-establishing itself on the Russian alcohol market. 21.4% of Russian vodka drinkers deliberately went for higher-end luxury items in 2016, signalling that more money is the hands of Russia’s drinkers than in previous years.

Likewise, as mentioned above, imported labels are scoring big wins in the beer and wine sector. Foreign-produced drinks are in an enviable position on Russia’s alcohol market – even for those nations under embargo in other food and beverage sectors. The UK and Ireland, for example, accounted for 27% of total distilled spirit imports in 2016, showing how there is still the demand for products from sanctioned nations in Russia.
 

Want to meet Russia’s alcohol imports? Be at WorldFood Moscow


Russia’s $40 billion alcohol market is strengthening every day – and its thirst for internationally-sourced goods is getting larger. If you want to meet Russia’s leading alcohol importers, distributors, and retailers, to expand your operations, you need to be at WorldFood Moscow.

For over 25 years, the event has been connecting the leading lights of Russia’s food and beverage industry with foreign producers. This is your chance to get your products in front of a dedicated audience of industry professionals while they are actively looking to source new suppliers and product varieties. 

The deadline for exhibitor spaces is approaching fast. If you do not want to miss out on the opportunities Russia’s newly confident alcohol sector holds, contact us now to book your stand.


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Event17 Sep

WorldFood Moscow..

17-20 September, 2018
RUSSIA

MOSCOW, RUSSIA
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