Vodka overcomes crisis

Russian Alcohol retains leadership in vodka class, key category on alcohol market. Its vodka, Zelenaya Marka, has been the top-selling for the 8th year in a row despite heavy competition with Belenkaya (Sinergy) and Five Lakes (Alcohol Siberian Group Ltd.).  

Increase in production of spirits in year 2012 was forecasted by all experts and market insiders. Among other reasons one may mention stabilization of market environment after challenging year 2011 (decrease in bottling on 9,5%) when 80% of companies had to endure complicated procedure of re-licensing. Market clean-up forced a significant number of small and medium sized enterprises to shut down production, and caused troubles to many major players who had to halt production until finalization of credentials.

Second, and probably more important factor, is a record-breaking for the sector increase in excise cost: it has been increased for spirits on 20% in July, starting this year it has been increased on 25% more. Producers strived to minimize taxes by building up maximum stocks at warehouses prior to increase of excise burden. Growth peak fell on the first half of the year. Increase in vodka output on 17,3% was registered according to six months’ results of the year 2012, brandy output increased on 30,2%.

Growth halted in the second half of the year but stocks built up in the beginning of the year allowed to close the year 2012 with a surplus in all spirits’ categories. Federal State Statistics Service data (as informed RBK daily) showed that Russian enterprises produced in total 112,7 mln dal of spirits (over 25 degrees), which is on 13,9% more than in year 2011. These results are record-breaking after pre-crisis year 2008.

Vodka sector leaders’ positions are without changes. Group of Companies Russian Alcohol is still Russia’s major producer of spirits. Three distilleries of the Group making part of Polish CEDC increased output on 5,3% up to 14,88 mln dal (including 14,31 mln dal of vodka). Company’s share on vodka market equaled to 14,64%, whereas Topaz distillery, which is makes part of the Group, has become the biggest vodka manufacturer despite output decrease on 10% according to year’s-end results.

Nielsen data evidenced that Russian Alcohol brand, Zelenaya Marka (Green Mark), has another become once again the most popular one at Russia’s vodka market (the brand bears the name since 2005). Regardless of the fact that it lost 1,3 percentage points in this year, its competitors failed to use it as advantage. Share of the next rival, Five Lakes vodka, equals to  4,6%. Belenkaya gained 4,3% of market share.

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