The Ministry of Finance will consider the issue of establishing minimum retail prices (MRC) for all alcoholic beverages – such a recommendation to the department was addressed to the Federation Council, follows from the minutes of the meeting of the Federation Council Committee on Economic Policy (available from Izvestia). The ministry clarified that for this it is necessary to amend the agreement on the EAEU – the document has already been prepared, consultations with the Federal Antimonopoly Service are underway. The Eurasian Economic Commission clarified that they received the draft law of the Ministry of Finance and are discussing it with experts… Analysts interviewed by Izvestia believe that the measure will help cleanse the market from counterfeit goods and protect young people from alcohol abuse. The opinions of industry participants were divided: small and medium-sized manufacturers support the introduction of the MRC, the largest transnational corporations oppose…
The right to a minimum
Now the MRC is installed for drinks with an alcohol content of over 28%, as well as for sparkling wines. The introduction of a minimum bar for less strong alcohol is possible only after adjusting the agreement on the EAEU… The Ministry of Finance has prepared a draft amendments to this document, said Alexander Korobutov, Deputy Director of the Department of Customs Policy and Regulation of the Alcohol Market of the Ministry, at a meeting on the problems of the brewing industry. The meeting took place at the Federation Council Committee on Economic Policy; Izvestia has a transcript of the event.
According to the official, the amendments of the Ministry of Finance provide for the granting of the EAEU member states the right to establish the MRC for all types of alcohol and ethyl alcohol.
– These changes were agreed by everyone in the Russian Federation, and there was already a discussion, it is going on on an interstate basis between representatives [стран ЕЭАС], but, unfortunately, at the last meeting, the representative of the Federal Antimonopoly Service expressed doubts about the advisability <...> of making such changes to the agreement [о ЕАЭС], – said Alexander Korobutov.
Photo: Izvestia / Konstantin Kokoshkin
According to him, at the moment the Ministry of Finance is analyzing how the opinion expressed by the FAS official corresponds to the position of the department as a whole. The ministry hopes that amendments to the agreement on the EAEU will still be adopted, as a result of which it will be possible to consider the feasibility of establishing an MRC, he added.
Following the meeting the Federation Council recommended the Ministry of Finance to intensify the work on making amendments allowing the Russian Federation to determine the MRC for all types of alcoholic beverages, says the protocol signed by the head of the committee, Andrei Kutepov. The minutes of the meeting have been sent to the government.
Izvestia appealed to the Ministry of Finance, the EEC and the Federal Antimonopoly Service with a request to clarify at what stage the issue of amendments to the agreement is now and whether it is planned to limit the minimum prices for alcohol with a strength below 28%, if adopted.
The EEC clarified that they are holding industry meetings to improve the contract, including a clause regulating the ability of union members to regulate prices… In addition to the proposal of the Ministry of Finance to allow states to establish an MRC for all types of alcoholic beverages, the commission received other initiatives, it was specified there. In particular, about the broader possibilities of price regulation of the alcoholic market, and not just the definition of the MRC. However, at present only the proposals of the Russian Federation are being discussed at the expert level. One way or another, amending the agreement on the EAEU is a long process, summarized in the EEC.
The FAS is actively involved in the discussion of this issue at the EAEU site, the service said. In 2021, the department plans to conduct an analysis of the alcoholic beverages market, including the pub, and has already sent inquiries to its participants. According to the service, in order to form a balanced position on the MRC, it is necessary to wait for the results of the study.
How much for a bottle
Izvestia turned to market participants with a request to assess the effect of the introduction of the MRC on alcohol with a strength below 28%. The Union of Russian Brewers recalled that they have long supported this idea. The introduction of a minimum retail price for beer will help improve competition in the industry… In the last few years in Russia, every second liter of the drink has been delivered to consumers as a promotional product: almost free of charge or at a price significantly lower than the cost price. In legal retail, you can constantly buy certain types of beer cheaper than drinking water, for example, at prices below 40 rubles for a half-liter bottle… Moreover, as a rule, these are products of only a few manufacturers who can afford to sell at bargain prices.
The union offered the following pricing policy: 85 rubles for 1 liter of keg beer and beer drinks, 110 – for packed (glass bottle, aluminum can), 90 – for factory PET packaging…
Photo: Izvestia / Dmitry Korotaev
In general, representatives of the wine industry expressed a similar position. President of the Union of Winegrowers and Winemakers Leonid Popovich told Izvestia that producers support the introduction of a minimum retail price… The MRC is already used for champagne, so it would be logical to set the bar for other wine products, he noted. In his opinion, the MRC should be tied to the cost price of a bottle of wine, which will help to neutralize manufacturers who dump on the market at the expense of drinks of dubious quality.
However, toThe largest market players – transnational corporations – did not support the idea of introducing the MRC. The minimum retail price for beer is an extremely harmful measure for both business and government and consumers., said Oraz Durdyev, Director for Legal Affairs and Corporate Relations of AB InBev Efes. Its appearance will lead to disastrous consequences for everyone – it will limit the ability of consumers to buy their favorite brands at an affordable price, will increase the share of counterfeit alcohol on the market and increase the regulatory burden on bona fide producers.…
Now prices are regulated by market laws and consumer demand, and this is a normal situation – there are no prerequisites for establishing an MRC for brewing products in Russia, agreed Irina Fedorova, senior director for work with government authorities in the Eastern Europe region of the Baltika brewing company (part of the Carlsberg group).
The main task of introducing a lower threshold for the retail price of alcohol is to reduce price competition between bona fide and clandestine producers of products., primarily in legal retail, said adviser to the president of the CSR Elena Razumova. In the presence of an MRC, counterfeit manufacturers, although they will not begin to pay excise taxes, their products on the shelf will not cost much less than that of a law-abiding enterprise, and the latter will retain the level of profitability.
The second the reason may be related to the deliberate restriction of the availability of alcoholic beverages for the population, especially for young people over 18 years of age… With the MRC, many promotions will become either unprofitable or impossible.
Photo: Izvestia / Artem Korotaev
Due to the introduction of the MRC, it is likely that the general level of prices for low alcohol products will grow, which will lead to an increase in income tax and VAT… But, for example, in the brewing market, high competition will restrain the rise in product prices.
Today, vodka and other strong alcohol, as well as sparkling wines have an MRC, so a natural question arises as to why there is no threshold for other products, thought the head of the Center for Research on Federal and Regional Alcohol Markets (TsIFRRA) Vadim Drobiz. Despite the fact that the EGAIS system already regulates the legality of products, the MRC is rather a mechanism for controlling the quality of alcoholic beverages. Its distribution to all products will make the system universal and uniform.