Until recently, beer has not been considered an alcoholic beverage in need of strict regulation, allowing it to gain market share across Russia, with sales supplanting bottled water and juice. The dynamic Russian beer market consequently attracted many large beer producers to Russia. However, recent amendments to the law have reclassified beer as an alcoholic beverage, which may significantly affect the market.

Federal Law No. 218-FZ of July 18, 2011 "On the Amendments to the Federal Law on the State Regulation of Production and Circulation of Ethyl Alcohol, Alcoholic and Alcohol-Containing Products and Individual Legislative Acts of the Russian Federation and Invalidation of the Federal Law on Restrictions of Retail Sale and Consumption (Drinking) of Beer and Drinks Made on Its Basis" (the "Alcohol Amendment Law") came into effect on July 22, 2011, except for several provisions that will gradually come into effect on January 1, 2012, July 1, 2012 and January 1, 2013. The Law was prepared as part of the state's policy to curb alcohol abuse and prevent alcoholism.

Under the provisions of the Alcohol Amendment Law, beer and beverages produced on the basis of beer (the "Malt Beverages") are now classified in the same category as alcoholic beverages and fall within the scope of Federal Law No. 171-FZ, dated November 22, 1995 "On State Regulation of Production and Circulation of Ethyl Alcohol, Alcoholic and Alcohol-Containing Products" (the "Alcohol Law").

In accordance with the Alcohol Amendment Law, the sale of alcoholic beverages is prohibited at petrol stations; wholesale and retail markets; all public transportation stations, which includes railway stations and airports (except for duty-free shops); and other public places determined by the Russian government, including areas surrounding these locations.

Based on the Alcohol Amendment Law, in order to obtain a license for the retail sale of alcoholic beverages, the applicant must submit documents confirming title, the full right of use, the operational right, or a leasehold right (based on a lease agreement for the term of one year or more) of a stationary trading space and warehouse with the licensing authority.

According to the Alcohol Amendment Law, it is prohibited to consume alcoholic beverages in and/or near and around:

  • children's, educational, medical and sports facilities, including the surrounding area;
  • mobile retail outlets; and
  • other public places, including courtyards, parks, squares, beaches, etc., except for catered public events.

Consumption (drinking) of alcoholic beverages by minors (under 18 years old) is also prohibited.

Once the Alcohol Amendment Law comes into force it is expected to stabilize alcohol production, sale and consumption in Russia. The focus of the Alcohol Amendment Law is to increase the oversight over the economic interests of consumers; control production and sale (wholesale and retail sale) of alcoholic products in Russia; increase the quality of the alcohol products produced, including beer and related (malted) drinks; decrease the sale of counterfeit alcohol; and decrease alcohol consumption, which is currently approximately 11.7 liters per head (for liquor) and 71.2 liters per head for beer.1

Footnote

1. U.S.-Russia Business Council Daily Update, August 19, 2011

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