Vodka and cognac consumer price dynamics affect alcohol sales statistics

16 august 2018 | Izvestia

The Izvestia journalists took an interest in statistics of alcohol consumption in Russia, according to which the sales of imported alcoholic beverages increased, but consumption of domestic spirits did not go down, however.

Elena Razumova
Elena Razumova
Department for Expert Analytics

So they turned to the Analytical Center's expert Elena Razumova with the question of why the sales of alcoholic beverages continue to grow despite the fact that, according to the Ministry of Healthcare official statistics, per capita consumption is steadily declining.

"We are unaware of what data sources the Ministry of Healthcare is using to assess consumption," admitted Razumova, "but, with respect to alcohol, the estimates include not only the total volume of consumption of alcoholic products, but consumption of pure alcohol as well, and there is indeed a reduction tendency considering this indicator, predominantly due to growth of beer ratio in the consumption structure." The expert presumed that the Russian Ministry of Healthcare is also using the data on official shipments of alcoholic products, which stabilized only in the last 2 years, as opposed to the 2012-2016 period when they were dropping every year, sometimes quite significantly.

"Besides that, medics have a number of indirect characteristics by which they estimate alcohol consumption, including surrogate alcohol — deaths from alcohol-related diseases," said the expert. "For example, by the number of accidental alcohol poisonings (including unintentional poisonings, and this indicator was introduced in the International Classification of Diseases only in 2011), the progress is very good indeed. Compared to the peak year of 2003, in 2016 the death rate due to this cause dropped by 63.6% (from 45 to 16.4 thousand people), and compared to 2010 – by 14%.

The statistics also indicate growth of cognac and whisky sales, while vodka sales remain unchanged. Speaking about purely economic factors, it is possible that vodka and cognac consumer prices are having an effect, assumed Razumova. "According to Rosstat data, whereas retail vodka price is steadily increasing since 2015, the price of domestic cognac is going down since 2017 (-1.8% in July 2018 vs. July 2017 and -3.3% in July 2018 vs. December 2016)," she informed. "In absolute expression, cognac is, of course, almost twice as expensive, but recovery of demand for expensive and premium alcohol could be also playing a role here. For example, according to the results of 4 months of 2018, the physical volume of whisky imports grew by 24% (+30.8% in 2017 vs. 2016), rum imports by +16.2% (+29%), gin by +23.4% (+25%). The import of cognac in January-April 2018 was unchanged compared to January-April 2017, but for the last year as a whole it grew by 57.5% compared to the year 2016."

Besides that, beer and wine beverages are going up sharply. In the expert's opinion, this tendency could be related both to increased control in this sphere and to lower cost of these products. "The government supports domestic winemaking both financially (in the form of vineyard maintenance subsidies) and by legal regulation (introduction of geographically protected wine concept and reduction of excise tax for this category). Therefore, the supervisory and regulatory bodies in this sphere could also have strengthened control over compliance of product naming and content with the current legislation, technical rules and state standards. This, in turn, became a factor for transition of these products in statistical reporting (both regarding production and sales) from classical wine and beer to beer and wine beverages," explained Razumova.

Source: Izvestia

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