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. Last Updated: 07/27/2016

Alcohol Imports Increase Despite Threat of Quotas

In spite of threatening noises from the Russian government warning of a crackdown on foreign liquor, the import of alcoholic beverages rose in the first five months of the year, with cheap alcohol from the former Soviet republics and Western beer accounting for most of the increase.

But for Western exporters of premium liquors, the picture was gloomy, with imports down almost one-third from last year.

According to figures from the State Statistics Committee, $400 million worth of alcohol was imported from the Commonwealth of Independent States, while imports from other countries amounted to a mere $94.9 million, or 19 percent of total imports, Interfax reported.

Imports from outside the CIS were down 31 percent on last year, and some importers of Western liquor said they were feeling the pinch, as the Russian government has been cutting back on the tax exemptions it had earlier granted to many Russian distributors of spirits.

"Prices have gone up and we have become less competitive," said a representative of a large Western exporter of brand-name liquor.

But with a significant percentage of alcohol imports brought in through shadowy channels to avoid customs duties, the official statistics offer a rough portrait at best. The Russian government has threatened to fix quotas for the import of foreign liquor and earlier this year, amid protests from the European Union, introduced minimum prices for imports of Western liquor twice as high as the minimum for liquor from CIS countries.

Both liquor exporters and freight forwarders said they had expected the introduction of tighter rules, but that little had changed so far.

"We have been waiting for things to happen, but there really have been no major incidents," said a source at a European shipping company.

"We have not felt any change in the attitude of the customs authorities," said Aleksej Leppanen, deputy manager for business development in Russia at the Primalco exporter in Helsinki. "They are following their own internal instructions" that are not immediately affected by general political statements, he said.

The largest increase in imports was on the beer market, where they grew by 150 percent compared to last year; Western companies expect this trend to continue.

"The Russian beer market is clearly on the increase," said a Western industry source pointing to increased consumption of "imported premium products."

The import boom is taking place despite of an overall drop in beer consumption.

, as domestic producers grapple with a severe crisis, the source said.