June 27 (Bloomberg) -- Until this month, visitors to Alexey Vasilchuk’s Moscow teahouses could get their nicotine fix with a drag on a hookah, a long-stemmed water pipe. Now all they can inhale from them is flavored steam.
Following Russia’s ban on tobacco smoking in restaurants and hotels that started June 1, Vasilchuk’s Chaikona No.1 outlets no longer offer tobacco-based versions of the devices, also known as shisha, narghile or hubbly bubbly. Visitors can instead puff on steam cocktails stuffed with nicotine-free fruit mixes.
The change is threatening the $600 million a year in sales that Russia’s bar owners get from hookahs. That amount may drop by a third, according to researcher RestConsult, which estimates that the pipes are offered at 40 percent of Moscow cafes. Tobacco addicts are now turning to a minority of restaurants that are disregarding the law -- or simply staying at home.
“Those who were nicotine-addicted are fleeing to other places that don’t comply with the law and keep tobacco hookahs illegally,” Vasilchuk said by telephone. About 10 percent of Moscow restaurants aren’t obeying the regulation, he said.
Hookahs are single or multi-stemmed water pipes that originated in Asia more than five centuries ago. A long, flexible tube allows users to inhale smoke or steam produced by heating tobacco or stones infused with aroma fluid. The water pipes came to Moscow via Uzbek cafes at the turn of the century and became more popular as incomes rose and consumers wanted to try new things.
Until this month, Russian restaurants served about 30 million hookahs a year priced at $20 or more, according to Point-Art, the country’s largest importer of ingredients for hookahs. Another 20 million are smoked at home.
Many kinds of restaurants have been adding shisha to their menus to boost revenue and encourage people to spend more time there, according to Sergey Mironov, head of RestConsult. “It has been extremely profitable: customers are charged, say, $25 to smoke a hookah, while it costs just $1.2 to make it.”
The June 1 ban has led to a slide in demand, according to Campbell Bethwaite, a co-owner of the Garage Club cafe in the Russian capital and a shisha smoker himself.
“The tobacco ban is reversing the trend as nicotine-free mixes reduce the quality of experience,” Bethwaite said.
Some Moscow cafes have rebranded hookahs as “steam cocktails,” nicotine-free drags flavored with fruits including apples, peaches and grapes. Chaikona No.1 offers several dozen varieties on the menu costing from $33 to $116. The more exotic include hookahs contained in a watermelon base, or those where champagne rather than water is used in the bowl.
Restaurants have also stuffed shishas with German-made “steam stones” as an alternative to tobacco, said Evgeny Fedotov, head of marketing at Point-Art. The pea-sized porous stones evaporate and give off a flavored cloud when heated.
Not all customers are convinced by the changes.
“This is just an imitation of hookah,” Sergey Suverov, a 43-year-old financier, said after trying a steam cocktail in a Moscow bar earlier this month. “It looks like a hookah, it tastes like a hookah, but it doesn’t give you a buzz.”
Many Moscow cafes stopped offering hookahs this month, according to Point-Art’s Fedotov. Those that made a large chunk of revenue form hookahs are trying to adapt, he said.
As the ban relates to public places where food is served, some chains have converted themselves into closed clubs for smoking only, he said.
Others may turn away from Russia altogether, according to Anton Viner, the stepson of billionaire Alisher Usmanov and co-owner of the Uryuk-Cafe chain of Uzbek-style teahouses.
“Moscow used to be a trendsetter in the hookah business in Europe and beyond,” Viner said. “Now some restaurateurs will try to set up hookah cafes abroad where it’s still allowed.”
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