Price of Vodka to Rise Because of Grain
A sharp rise in the cost of grain has caused a chain reaction on the alcohol market. The price of ethyl alcohol will rise 20-25 percent at the beginning of the next quarter. That will force up the cost of a bottle of vodka by about 2 rubles, which will cut into the profits of producers of inexpensive alcohol. The cost of grain has risen more than 10 percent this month because of a predicted small harvest in Russia this year (76 million tons as opposed to 78 million tons last year) and rising prices on the world market.
Dmitry Dobrov, a spokesman for the state enterprise Rosspirtprom, confirmed that its plants will sell ethyl alcohol for 600 rubles per dal. in the fourth quarter, compared to 480-520 rubles in the second quarter. This is the second serious price hike on alcohol in the last year. On July 1, 2006, the government places a minimum authorized capital requirement of 10 million rubles on ethyl alcohol producers, forcing some to close and leading to a price increase of 20-30 percent, from 420 to 480-520 rubles.
There are now about 130 ethyl alcohol producers in Russia, but the latest price rise could thin out their numbers again. Market leaders include FGUP Rosspirtprom, OAO Tatspirtprom, OAO Talvis and GUP Bashsiptprom. The cost of a bottle of vodka includes production cost (14 rubles), excise fees (32-33 rubles), VAT (8-9 rubles) and wholesale and retail markups. Competition is fierce on the market for low-price (70-80 rubles per bottle) vodka.
www.kommersant.com
All the Article in Russian as of July 27, 2007
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