The volume of illegal beer production increased to 14%

In the first half of 2021, the volume of illegal beer production increased to 14% due to the opening of borders. This is stated in a study by the Higher School of Economics (HSE), the results of which were received by Izvestia on Tuesday, December 7.

This may lead to an increase in budget losses up to 30 billion rubles a year, including due to a shortage of payments on excise duty on beer – 26-27 billion rubles.

It is noted that in 2020 the share of illegal trade in the beer market decreased to 5.2%. The decline in sales of “gray beer” was due to the anti-epidemic restrictions in force for most of the year, which made it difficult both to manufacture and import illegal products.

“Direct losses from non-payment of taxes and excise taxes on beer by unscrupulous market participants in 2015–2019 amounted to 15–30 billion rubles a year,” the study notes.

According to the research, the “black sector” prevails in the structure of illegal turnover: manufacturers do not pay taxes and fees, do not submit statistical reports. The import of illegal products from neighboring EAEU member countries – Kazakhstan and Belarus – has “noticeably increased in recent years, reaching 18 million liters” in 2020.

In Russia, there are also producers that are in the legal field – submitting reports to Rosstat, but not paying excise taxes on beer and not submitting reports to the EGAIS system. In 2015–2020, the illegal import of beer from neighboring EAEU states quadrupled, reaching 0.18 billion liters. Belarus remains the main channel for illegal import – 97 million liters last year, but in 2016–2020 “supplies of illegal beer from Kazakhstan increased significantly” – 85 million liters in 2020. The annual losses of the Russian budget from the illegal import of this drink from the EAEU states amount to 3-4 billion rubles.

The share of illegal products remains the highest in the markets of large economically developed regions – St. Petersburg and the Leningrad Region, Krasnodar Territory; to a lesser extent, such products are available in the markets of Siberia and the Far East.

The study indicates that in order to counter the illegal trade in beer, five federal bodies and executive bodies of the constituent entities of Russia endowed 48 powers that cover all stages of the beer turnover. But this system has shortcomings in coordination and problems of interaction between the authorities.

It is emphasized that in order to improve this system, digital labeling of beer, beer-based drinks and certain types of low-alcohol drinks is required. The researchers also advise to clarify the competence of Rospotrebnadzor in order to exclude duplication of its functions with other departments, to reorient the police activity so that it prevents and suppresses acts that are criminal offenses, and also to establish differences in administrative responsibility for relevant offenses.

In August, the media, citing industry participants, wrote that the Federal Antimonopoly Service (FAS) of Russia had requested information on price formation from brewing companies and was going to study whether there were signs of dumping on the market. Industry participants reported that the department is collecting information to determine the introduction of the minimum retail price (MRP) for beer. Their conduct is lobbied by the Union of Russian Brewers (PSA), which unites more than 100 enterprises.

The PSA offered to install an MRC for beer in a can or bottle at 110 rubles per liter, PET packaging – 90 rubles per liter, draft beer – 85 rubles per liter. Sources said that while the FAS was skeptical about the initiative.

In April, the Public Consumer Initiative reported that over 53% of beer on Russian shelves did not meet mandatory consumer information requirements. More than 106 brands of brewing products were checked throughout Russia. The most common violation – 24% – is the lack of information on the labeling about state standards, the requirements of which must comply with alcoholic beverages.