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. Last Updated: 07/27/2016

Alcohol Drought Hits Retailers' Sales

ReutersEmpty shelves at a Moscow wine store Friday. Stocks are not expected to return to normal for another 60 to 90 days.
The late delivery of new excise labels for imported wines and spirits, due July 1, is denting grocery chains' sales and leaving drinkers with a narrow choice of local vodka and beer.

"This really makes our life hard. Shelves are empty, and as customers won't spend money on alcohol, revenues are down," said Roman Uvarov, marketing director at discount retailer Dixi. "Suppliers give us contradictory information, and we don't know when [foreign] alcohol will stage a comeback."

Pyatyorochka has warned that the delay will hurt its sales and it does not expect a full return of imported spirits to its stores for another 60 to 90 days. Sedmoi Kontinent said it might lose between 3 percent and 7 percent of revenue in the third quarter, adding it hoped to partly recover by year's end.

According to Deutsche UFG, alcohol accounts for 15 percent of Perekryostok's and Sedmoi Kontinent's revenue, 11 percent at Pyatyorochka and 10 percent at Magnit. Imports make up 50 percent of sales value.

Whitehall, a leading alcohol importer, had to close its Kauffman chain of stores from July 1. A Kauffman store manager said he would reopen Friday but only had labels for Veuve Clicquot champagne and Hennessy cognac.

Deutsche UFG estimated losses at the largest grocery chains at more than $100 million -- enough to lop 1.3 percent to 1.9 percent off annual sales.

"Clearly, consumers will be forced to substitute imported wine and spirits for domestic premium vodka and beer, although we nevertheless believe that the shops will see some loss in sales," Deutsche UFG said.

Natalya Milchakova, head of research at Otrkytiye, said discount stores would suffer less than upmarket chains.