RUSSIA: Russia's alcohol retailers expect big losses over implementation of a new law on the import of foreign wines and spirits

Under a new federal law any bottle of wine or other alcohol imported into Russia is required to carry a newly designed excise stamp. Fitted with an individual electronic bar code, the new stamp has been introduced to curb smuggling and counterfeiting. But instead of bringing order to Russia's booming alcohol imports, the new law has created an alcohol crisis. Market players blame the government for the mayem. Passed by the lower house of parliament at the end of 2005, the new law requires all foreign wines and spirits to carry the new stamps from July 2006. But as the deadline passed, the government had issued the new excise stamps to only a handful of distributors, and stocks of French wines, Scotch Whiskey and English Gin became contraband overnight. Across Moscow, imported wines and alcohol disappeared from the shelves as shops had to send their stocks back to the importers for the new stamps. But a shortage of new stamps meant new bottles were not allowed in, leaving shops with stacks of empty shelves. Russian customs officials say they are working hard to resolve the situation, but more than a month into the crisis, foreign alcohol is only slowly finding its place back into shops and restaurants. "I think the situation is terrible, especially for wine lovers, because it is very difficult to find good wine. Especially so because the situation with the new stamps was created by the government. It could be much simpler. A lot of my friends, and people I know feel very bad about this, they want to buy good wine, alcohol of good quality, but they can't do it."" said Ilya, a 22-year-old student looking at empty wine shelves at a store in central Moscow. Under the new law importers are responsible for labelling the bottles with the new excise stamp. But big market players say the instructions for the new law came in too late, leaving them with no time to prepare for the change. "What has happened is that the government was not ready to implement the new law in the little available time. More over, the law was adopted on 21 of July (2005), and went into effect on the first of January (2006), but for six months no governmental degrees were written, all the documents were backdated and only issued in February 2006," said Peter Konigin, general director of Wine World, one of Russia's largest alcohol importers. Russia's custom service says it is working around the clock to issue millions of excise duty stamps to the importers. But even though enough labels are being printed, most industry insiders say it will still take months for shops and restaurants to restock. In the meantime, they say, half of the country's distributors and importers will go bankrupt. "For us, we estimate we have already lost millions of dollars and if the situation stays like this till the end of the year we will loose tens of millions. For the market as a whole, not only the import but the whole alcohol market, the loss has recently been estimated to be one billion of U.S. dollars," said Konigin. Hardest hit are the smaller shops and restaurants who lack the financial backbone to sit through the crisis. One of them is the owner of Jean Jacques, a French cafe in central Moscow famous for its large French wine collection. "About 60 percent of the turnover of this restaurant comes from the sale of alcohol. Our wine bar used to offer two hundred fifty different kinds of wine, but at the moment we only have thirty of even twenty five, that is one tenth of what we used to have. And we are even running out of these and we can't order more," said the restaurant's wine specialist Yuri Salnikov. Having grown accustomed to empty shelves during Soviet times, most Russian consumers don't seem to be willing to let the issue spoil their summer. "Of course we would like to have a big choice, we like to see full shelves in the stores, which different kinds of drinks. And of course we prefer to go to a restaurant and be able to choose from a long wine list and order the one you want. But when this is not the case, Russians very easily adapt to a new situation, and generally just hope for the best," said Milana, a Moscovite. Others said they would simply stick to Russia's best known alcoholic beverage: Vodka.

ITN Source | August 2, 2006

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