The Russian Ministry of Finance has proposed raising the minimum retail prices for strong alcohol starting from June 1st. It is expected that the prices for vodka, cognac, brandy, and liqueurs will increase. For instance, the price for 0.5 liters of cognac could rise to 556 rubles, vodka to 300 rubles, and brandy to 403 rubles.
The ministry emphasizes that the increase in retail prices is due to the level of inflation, higher excise rates on strong alcohol, and increased production costs.
Another proposal from the ministry suggests raising prices for ethyl alcohol from non-food raw materials and denatured ethyl alcohol from food and non-food raw materials. The price is expected to increase to 55 rubles. Additionally, the minimum purchase prices for ethyl alcohol are proposed to be raised from 68 to 73 rubles per liter. The ministry’s financial experts also attribute these measures to rising production costs and the level of inflation.
Currently, the average price for 0.5 liters of vodka is 420 rubles, cognac is 930 rubles, and brandy is 634 rubles. Therefore, the current prices are already higher than those proposed by the Ministry of Finance. If the bill is passed, strong alcohol could increase by 6-7.5% from the beginning of summer.
Additionally, prices for other alcoholic beverages are expected to rise as consumers seek alternatives to more expensive alcohol. Analysts estimate that the increase could be up to 4%.
Nevertheless, the increase in minimum retail prices is largely seen as an expected measure that will allow producers to account for rising costs and avoid selling products below cost. Moreover, minimum prices are a measure to combat counterfeit alcohol.
Experts believe that initially after the increase, demand for alcohol will decrease and may only recover by mid-autumn.