Can the Russian drinks industry survive?

Published Feb 9, 2024

Tridge summary

The Russian drinks industry, especially spirits, is grappling with challenges due to the Ukraine war and subsequent sanctions, including a ban on exports to Western markets and corporate bans from Western companies. This has led to Russian producers exploring alternative markets in Asia and Latin America, despite lower consumption and procurement prices. Domestically, they face high loan costs and a shortage of packaging and other components, leading to a price increase of 20%-50%. Despite rising excise taxes, production costs, and logistics, analysts do not foresee a significant sales drop as consumers may switch to cheaper domestic brands. The whiskey sector is severely impacted due to a suspension of imports from the West, while the Cognac segment is doing better due to Armenian suppliers. There is also a growing demand for rum from Latin American states and Cuba.

Disclaimer:The above summary was generated by Tridge's proprietary AI model for informational purposes.

Original content

The Russian drinks industry has faced serious issues since the beginning of the Ukraine war with increasing isolation putting pressure on the sector. Eugene Gerden reports. In the time before 24 February 2022, Russia’s drinks sector was one of the fastest growing segments in the entire Russian food and beverages’ market with the annual growth rates up to 15% in some market categories. But the beginning of Russian-Ukranian war put an end for hopes of the further growth of the industry, at least at the same rates. The most negative news for producers has been an imposition of a ban on the exports of Russian drinks, and primarily spirits, to Western market, as a result of 5th package of sanctions of the EU. Many firms had significantly increased their supplies to the EU previously, the UK and even the US markets in recent years. While some of their supplies are still ongoing, according to Russian producers, there is a high possibility that they will be also suspended, as sanctions’ ...

Source: Thedrinkbusiness