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Growth in excise taxes for spirits to slow down after 2014F

 
16.04.2012

RBC-Daily reports that the Ministry of Finance has called for the growth in excise taxes for spirits and tobacco to slow down after 2014F. Having increased at almost 30% per year (as set out in the MinFin schedule for 2012-14F), from RUB 231/litre of ethanol to RUB 500, the expansion is then to moderate to 10-12%. This has reportedly been proposed in order to even out the prices for those within the customs union.

The accelerating growth in the spirits excise tax in 2012-14F would drive the effective minimum retail price for a half-litre bottle of vodka from RUB 115-120 at present to above RUB 200. We see that as a material risk to consumption and, therefore, to legal spirits producers. Based on research from CIFFRA, 87% of all vodka consumed in Russia in 2011 (by volume) was in the RUB 100-135 per bottle category. Thus, the risks could materialise even earlier than 2015, so moderating the excise tax would not boost consumption. 

Ivan Kushch, Maria Kolbina
VTB Capital analyst

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