Russia's lack of excise stamps shuts down alcohol producers

By Ahmed ElAmin

- Last updated on GMT

Related tags: Alcoholic beverage, Vodka, Russia

Russia's decision to change procedures on excise stamps and import
licences for alcohol has backfired, with several domestic producers
reportedly having to suspend production.

The problem stems from the lack of excise stamps and import licences, which the government has not made available in large enough numbers both for the local market and for the EU's exporters to Russia.

Effective 1 January 2006, Russia changed its procedures on excise stamps and import licenses for all alcoholic products. All alcoholic drinks in Russia must now carry a new excise stamp and barcode, under regulations brought in to help combat the country's large fraud problem in the sector.

Edwin Atkinson, the director general for the EU's Gin and Vodka Association, said his members are wondering what they will do once the old stamps run out.

"We are very concerned about the situation,"​ Atkinson told FoodProductionDaily.com.

Russia's government has currently set a deadline of 31 March when importers will have to use the new stamps. Articles bearing the old stamps will have to be sold by July. The deadline for selling product is too short, especially for high-priced liquor, Atkinson said.

He also believes that the new stamps may not become available until March or April, leaving those who do not have access to the old ones in the lurch.

The association is currently discussing the problem with the Russian authorities.

He is optimistic because Russia has already dropped one requirement after importers protested that it was too financially onerous. Russia dropped the requirement that the stamps must be applied within its borders, after importers complained that they would have to unpack all of their products on arrival within the country.

The Association of European Business (AEB) estimated that the new process would have increased costs for importers by as much as 10 times.

Russia will now continue to allow importers to apply the strip stamps at bottling or packaging facilities in the country of origin. Import agents will continue to receive blocks of the stamps from the Russian authorities and forward them on to the foreign companies for application before the products are packed.

"On the whole, the legislative changes has improved the situation but we are still looking at the details,"​ Atkinson said. "In Russia, the devil is in the details."

The AEB has predicted that the lack of stamps would affect the importation and distribution of alcohol until June 2006.

Interfax, Russia's news agency, reported last week that several domestic alcohol producers have suspended production while they wait for the stamps. Stoppages have occurred at Russky Alkogol and Rosspirtprom, the agency stated. Holdingovaya Compania Ladoga has also suspended production.

Around 37 per cent of Russia's vodka production was made outside of official channels in 2003, according to the Union of Alcohol Market Operators.

Russia's spirits market is worth €10.3 billion a year. The country imports about €853 million worth of alcoholic beverages a year.

From January to September 2005, Russia imported almost $300 million in spirits, wine, and beer from the EU's 25 members.

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