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Russia spirits market: Synergya the largest spirit producer during 2012
Spirits in Russia - a new market research report on 2014-03-31 06:31:01
Synergya OAO is one of the largest producers of vodka and other spirits in Russia holding 9% volume share of sales in 2012. Synergya OAO registered a good performance over the review period, as it developed its distribution platform and addressed operations within Russia, allowing it to win share in many parts of the country. Net profits were reported to have risen to RUB1.7 billion in 2012 compared to RUB1.66 billion in 2011.

In early 2013 however, the company reported first-quarter sales falls of its brands amounting to 30%, which was attributed to increases in excise tax on alcoholic drinks, which prompted retailers to buy in bulk in the final quarter of 2012. As a consequence, the company´s data indicated a fall in vodka volume sales from 2.7 million dekalitres in the first quarter of 2012 to 1.9 million dekalitres in the first quarter of 2013. The company however, expects sales to return to form over the course of the year, as vodka stabilises and retailers again begin to make purchases as their reserves run out.

Governmental moves to reduce the amount of alcohol consumption in Russia have to no small extent been focussed on the country´s favourite alcoholic drinks, beer and vodka. Dramatic price increases were once again witnessed in the minimum price of vodka from RUB250 per litre in 2012 to RUB340 per litre, as the government continued its crusade against the cheap alcohol segment, with particular emphasis on low-cost vodka, which is considered to be one of the biggest facilitators to the over-consumption of strong spirits, as well as being one of the most dangerous to health given both its strength and the prevalence of counterfeit vodka in the country.

These price hikes are gradually making legal vodka too expensive for typical low-earning consumers, thus having a strong impact on the overall performance of spirits, as vodka continued to account for 80% share of volume sales. Legislative changes including the ban on alcohol advertising and restrictions on trading hours and sales channels also had a notable impact on the category, particularly through off-trade.

Spirits is expected to register further declines over the forecast period, with this primarily attributable to the poor performance of vodka. The government has imposed a series of progressive increases in excise duty on alcohol, with vodka expected to be subject to some of the highest levels of increase, as the state focuses on addressing the country´s alcohol problem by tackling the over consumption of vodka in particular. As the population is gradually weaned off its iconic tipple, consumers are likely to turn to other segments although notable price hikes will also have an impact on levels of consumption over the coming years.

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