August 4, 2006

Russia’s drinkers fret in face of alcohol crisis

By Guy Faulconbridge

MOSCOW -- Russian drinkers are facing their worst 'dry' spell in years after a mix-up blamed on government meddling stripped stores of imported liquor and wines.

Supermarket shelves, usually packed with an array of Chilean wine, Armenian brandy and Scotch whisky, have been almost empty for over a month after the government tried to enforce a law aimed at cutting chronic alcohol bootlegging.

Furious wine merchants say it is the latest example of how the government of Prime Minister Mikhail Fradkov, flush with cash from oil and gas exports, is making muddled decisions.

"It is chaos. We have found ourselves hostages to a situation upon which we have no influence," said Pyotr Kanygin, chairman of Vinny Mir, a top alcohol importer.

The crisis will cost his company millions of dollars and the whole industry as much as $1 billion, he said. The shortages could last for months.

Rules introduced from July 1 mean each bottle of imported alcohol must carry a bar code registered in a vast database.

But importers say they did not get enough labels and that the system -- developed by a state company -- was plagued by faulty scanning, poor programming and server break downs.

Locally-made beer and vodka, Russia's favorite tipple, are still on the shelves.

But since the fall of the Soviet Union, many affluent Russians have switched from vodka to cognac, wine and even cocktails such as mojitos.


"It is madness. You can hardly find wine or whisky here at the moment," said Mikhail, a Moscow advertising executive.

A wine waiter at one Moscow restaurant said he could only supply one choice -- an Italian chianti -- from the normally extensive range of wines on offer.

President Vladimir Putin has been forced to get involved and Fradkov has ordered ministers to get to grips with the problem.

Russia's rulers, rarely temperate, have had a love-hate view of alcohol for decades: happy with the vast tax revenues it brings but concerned at the health and social problems it leaves behind.

Russians drink an average of about 16 liters of vodka a year. Health officials say alcohol abuse is the cause of much domestic violence.

Soviet leader Mikhail Gorbachev restricted alcohol sales in 1985, earning him the derision of a generation of tipplers, some of whom resorted to perfume, brake fluid or shoe polish.

The abstemious Putin has called for new rules to cut sales of bootleg alcohol, which kills 40,000 people a year.

"The market is paralyzed, business is paralyzed, we are suffering colossal losses because they are simply not doing anything," Kanygin said.

But if frantic drinkers were thinking of turning to less traditional tipples, industry watchers warned perfume could be next to disappear from the shops as it too is based on alcohol and thus supposed to fall under the new rules.