The reason why citizens are switching to the consumption of budget alcohol has been named
Russia shares with India the third place in the world in terms of alcohol sales on the domestic market — a little more than $20 billion each. From the point of view of the health of the nation, there is absolutely nothing good in this, given that there are 144 million Russians, and about 1.4 billion Indian citizens. The role of the alcohol industry in the domestic economy’s coordinate system should not be exaggerated: its share in GDP does not exceed one percent and, according to experts, has a clear downward trend.
According to a study published by the World Spirits Alliance, the leader in the ranking of countries in terms of alcohol sales is China ($215 billion). Next come the United States (more than $60 billion) and India and Russia, with Great Britain in fifth place. As for the market from the perspective of manufactured alcoholic products, the situation looks different: China accounts for 36.8% of global production, the UK — 12.7%, the USA — 8.2%, France and India — 5.7% each %, for Mexico — 5.1% and only 2.3% for Russia (seventh place).
Overall, the alcohol industry accounts for 1 in 84 jobs in the global economy (36 million in total) and contributes $1 in every $140 of global GDP, according to the World Spirits Alliance. Its employees receive $15 billion annually. “If the alcohol industry were a separate country, it would be one of the 20 largest economies on the planet,” noted World Spirits Alliance President Philippe Schaus. In terms of volume, beer remains the most popular drink (75.2% of all alcohol produced), wine is in second place (10.4%), strong alcohol is in third (9.9%), and cocktails are in fourth and fifth place, respectively. RTD, that is, ready-to-drink (3.4%) and cider (1.1%). But what is happening with the alcohol market in Russia today, where is it heading?
“It is obvious that we drink 15 times more than the same Indians, given the enormous difference in the number of inhabitants,” says Pavel Shapkin, head of the Center for the Development of National Alcohol Policy. – This cannot be a reason for optimism; there is nothing to be proud of. It turns out that our share of alcohol per capita is the highest among the leaders. Although, according to the World Health Organization, our country is not considered the most drinking country: according to this indicator, it is ahead of the Baltic countries, Moldova, and Belarus. However, there are incomparably fewer inhabitants there than in Russia. By the way, China is closer to us in this regard, not India: in dollar terms, the Chinese drink ten times more than Indians. More than 80% of domestic consumption there comes from Baijiu, a local analogue of vodka with an alcohol content of about 60%.
-Due to the departure of transnational brands from Russia, our premium segment has shrunk very much. In addition, an economical consumption model is being adopted. So the trend is rather the opposite. Because of the sanctions, logistics have become more complicated, and serious problems have arisen with interbank payments. This strengthens the trend associated with the localization of production of the same vermouths and liqueurs. We will soon begin producing tequila, as well as spritzes – low-alcohol cocktails based on sparkling wine and mineral water. I think that in the future, explosive growth in this category is likely, although there will not be a heated discussion about taxation: spritz products are not specified either in the technical regulations or in the Tax Code. The current economic situation is pushing people to switch to a more budget-friendly, accessible type of consumption — towards beer drinks, ciders, and mead.
-Definitely good: WHO recommends diluting heavy alcohol. By the way, the popularity of completely non-alcoholic whiskey, cognac, gin, and wine is growing at a triple-digit rate around the world. This segment is also growing in our country. Among relatively recent trends, young people in Russia have begun to drink less. As for production, bottling, in particular, of rum and whiskey is growing at a faster pace: distillates are actively imported into the country. Among the main trends, I would highlight, firstly, the growth of import substitution, secondly, depremiumization (people count money), and thirdly, a gradual reduction in the industry’s contribution to Russian GDP, which in 2023 amounted to 171 trillion rubles. Today this share does not exceed one percent.
-Yes, but what percentage of consumers buy this wine? I suspect that we are talking about an astronomically small value. Most likely, whoever produces such wine drinks it himself. All so-called premiumization in the wine segment is due solely to the increase in duties and excise taxes. From May 1, we tripled excise tax rates, which, among other things, serve as the tax base for VAT. Accordingly, it’s not about the quality of the drinks, but about all sorts of mark-ups.