Russia to Cut Vodka Prices to Fight Consumer Switch to Bootleg

Russia will make vodka cheaper next year after a campaign to fight alcoholism through higher prices drove some consumers to switch to bootleg spirits.

The minimum retail price will drop 16 percent to 185 rubles ($3.24) per half-liter bottle starting in February, the Russian alcohol-market regulator said on its website.

President Vladimir Putin said last week overly high alcohol prices lead consumers to switch to contraband, frustrating the government’s plan to combat alcoholism, according to the Kremlin’s website. That was the same reasoning that led the government earlier this year to scrap a planned alcohol tax increase.

Official vodka production fell 17 percent in January through November this year, according to Federal Service of State Statistics.

“This is clearly a populist measure as Russia is entering an economic crisis that may be several years long,” said Vadim Drobiz, head of Ciffra, an alcoholic-beverage market researcher. “Russian vodka prices are already the world’s highest relative to people’s incomes, and real incomes are declining.”

Consumers in Russia are getting pinched due to sanctions from the U.S. and Europe over Putin’s annexation of Crimea from Ukraine. That has led the ruble to collapse to a record low and the economy to contract.

Russian inflation has exceeded 10 percent for the first time in more than five years.