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Saturday, July 22, 2006

Total Bedlam in Alcohol Policy, SNAFU

If Russia can't even get its own domestic alcohol policy right, what possible hope is there for any other area of domestic or international policy? Nearly a month has now passed since La Russophobe documented the catastrophic failiure of Russian policy on the sale of alcohol, obviously the most fundamental type of failure there can be in a society whose lifeblood is alcohol, and the Moscow Times reports that the situation is still in total chaos and crisis:

From wine restaurants with no wine to hypermarkets with only one brand of whiskey, businesses are feeling the pain from the spectacular failure of a new system of alcohol excise labels.

Alcohol sales at Moscow's top restaurants fell 70 percent to 80 percent in July, as the changeover to a new computerized labeling system paralyzed importers across the country, according to Russia's Federation of Restaurateurs and Hoteliers.

With half of restaurant revenues normally coming from alcohol sales, this is a major problem, said Maria Orlova, a manager at the federation. "Restaurants are suffering serious losses," she said.

Small cafes appear to be bearing the brunt of the problems. The manager of one wine cafe said she expected to lose up to 40 percent of income because of the problems.

Major restaurant chains Rosinter and Arkady Novikov Restaurants said their selection had also been severely curtailed, but their buying power appears to have given them an advantage.

"The big and transparent restaurant companies and importers will come out of this strongest, although with some fall in profits," said Vladislav Rogov, deputy general director for operations at Rosinter, which operates several restaurant chains in Russia, including TGI Friday's and Il Patio.

Most major restaurants and shops polled said that, while choice had been badly affected, they were never left entirely without wine. Rosinter said its restaurants had seen a visible growth of beer and vodka sales during the wine shortages.

While the Moscow branch of specialist wine cafe Jean-Jacques is offering about 30 types of wine, up from less than half a dozen at the start of the month, strict local legislation in St. Petersburg has left their wine cafe there serving only beer, general director Maria Shin said. Most restaurants in St. Petersburg have the same problem, she said.

She said she expected July revenue to fall by up to 30 percent in Moscow and 40 percent in St. Petersburg.

Retailers are also suffering, with no end in sight to the shortages.

"It's still a sad situation," said Andrei Adrianov, deputy director of the Ramstore supermarket on Sheremetyevskaya Ulitsa in northern Moscow. "We only have two whiskeys -- Johnny Walker Red and Black -- and 10 types of wine."

Rival chain Paterson said it only had low-alcohol wines, which are exempt from the legislation. Earlier this month, Deutsche UFG estimated that the problems could shave close to 2 percent off annual sales at the country's largest retailers.

Measures being considered by the government could bring forward from January to October the restoration of a full range of supplies, said Vadim Drobiz, spokesman for the SUAR union of wine and spirit producers.

In recent days, pressure has been growing on the government to act, with major business organizations sending letters to the government to demand action. On Wednesday, the Public Chamber also weighed in, calling for action to sort out the mess.


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