News - PET is in the sidelines

27.02.2015

The increase in taxes and excise duties as well as the imposition of prohibitive measures on the market for alcoholic beverages will result in a further decline in the legal production, while triggering growth of the infringing production. In the meantime, the expected ban on PET bottles for alcohol beverages will not prevent alcoholization of the nation. This issue was touched upon by the participants of the recently held 10th Russian Conference on Problems of the Market for Alcoholic Drinks - AlcoCongress.

For example, Vladislav Spirin, Deputy Head of the Federal Service for Alcohol Market Regulation, said that since last December the government had been discussing the action plan aimed at stabilization of the situation and encouragement of competition on the market for alcoholic beverages.

In his turn, Viktor Zvangelsky, Head of the industry-related sub-committee of the State Duma, pointed out that at present “every fifth vodka-selling store was operating outside the legal framework”. He thinks that the Federal Service for Alcohol Market Regulation “operates efficiently, though only in the sector of legally sold alcohol beverages”, which account for not more than 40% of the market. According to the deputy, the measures taken by the government in order to reduce the quantity of infringing products should include a decrease in excise duties and minimum retail prices. Zvangelsky also thinks that Federal Law No. 171 – “On the State Regulation of Production and Sales of Ethyl Alcohol, Alcoholic and Alcohol-Containing Products and on Limiting Consumption (Drinking) of Alcohol Products” – is outdated; he informed about the plans the government commission regarding improvement of the competitiveness and regulation of the market for alcoholic beverages, which is intended to be “fundamentally” changed.

In the meantime, although the law has already a lot of drawbacks, it is intended to remain in effect through a number of questionable amendments addressing restrictions on using of PET-packaging for beer. The draft law adopted by the State Duma in the first reading last June implied the ban on selling beer over 6% ABV in PET-bottles, if their volume exceeded 2 liters; the ban was scheduled for January 1, 2015, while the ban on selling beer over 4% ABV in plastic bottles of larger than 0.5 liter was to take effect on January 1, 2016. The main argument brought forward by the project originators is that beer sold in larger PET-bottles is more affordable to consumers; therefore, it contributes to increasing alcoholization of society. Furthermore, the deputies are not confident about safety of plastic packaging, thinking that, if stored improperly, the beverage is exposed to harmful substances, which PET-packaging contains.

However, safety of plastic packaging has been repeatedly proven and can be backed up by the fact that PET-products are extremely popular in the food industry, for example, as bottles for non-alcoholic beverages. The proposed prohibitive measures are targeted only at the beer market, suggesting discrediting a certain product or a certain category of packaging materials. The representatives of the Consumer Rights Protection Society (CRPS) talk about the “vodka lobby” and have no doubt that the law has not been adopted yet due to “Duma experts and environmentalists who confirmed safety of PET-packaging and the fact that the production of plastic containers is more environmentally compatible as compared with the production of glass containers”.

CRPS also supported the decision adopted by the Government Commission of Alcohol Market Regulation in December 2014 regarding non-application of the ban to PET-packaging for low-alcohol beverages coming in 1.5-liter and smaller bottles. Therefore, it is not clear what can cause concern of one of the authors of the PET ban draft law – deputy Raisa Karmazina, who at the beginning of February addressed Prime Minister Dmitry Medvedev and Deputy Prime Minister Olga Golodets, requesting prompt attention to the amendments for their further approval. In the meantime, at the beginning of 2014, brewers decided not to wait for the ban enactment and adopted a number of self-restrictions, having discontinued producing beer having alcohol contents higher than 6% in 2.5 and 2-liter PET-bottles. They explained that they respect the government’s efforts focused on the fight against alcoholization of the population and take an active part in forming and promotion of beer drinking culture.

On the other hand, the fact that the growing alcohol abuse depends on the beer sales and bottle sizes has not been proven so far. Furthermore, the latest statistics data show that the prohibitive measures have not had the expected effect yet. On the contrary, for example, over the first 10 months of the previous year in the Saratov Region alcohol poisoning caused death of 420 people, thus exceeding the alcohol-caused death rate by 12% as compared to 2013. In 76% of the cases, the affected people used ethyl alcohol, while the consumption of substitute products caused death in 15% of the cases.

Experts state that the imposed prohibitive measures trigger the growth of the shadow market for alcoholic beverages, though they were intended to change the consumption structure in favor of low-alcohol beverages. Therefore, if adopted, the law on PET ban is unlikely to improve the situation; secondly, it will have serious economic implications, at least, for two sectors of economy — the PET-packaging production and the brewery industry, which is one of the major tax-payers in many regions.