vodka wars

["Ken Hanly" <khanly@xxxxxxxxxxxxxxx>]

>From Johnson's Russia list.
   Cheers, Ken Hanly

September 14, 2000
Vodka's killer reputation grows as rivals slug it out for control
RUSSIA by FRED WEIR in Moscow

The traditional belt of vodka is getting deadlier than ever for the average
Russian as warring distillers kill each other in more exotic ways and
bathtub
liquor floods one of the country's most lucrative markets.
"The Government is moving to take control of alcohol distribution, which has
led to pandemonium in the market," says Vladimir Nuzhny, a specialist at the
Institute of Narcology in Moscow.

"Vodka producers are being squeezed by the state and in response they are
turning on each other," he says. "It's becoming a bloody mess."

After centuries of state vodka monopoly, alcohol production and distribution
was freed after the collapse of the Soviet Union a decade ago. Overnight,
empires were created as legitimate distillers and swarms of bootleggers
flooded the market with all kinds of booze, some good, some
headache-inducing, some lethal.

A 1998 study found almost 50 per cent of liquor traded in Moscow was
substandard, with much of it synthesised or even made from deadly methyl
spirits.

The market is nearly bottomless. The independent Centre for Alcohol Policy
calculates that the average Russian man knocks back about 100 litres of
vodka
a year, one of the world's highest rates of consumption.

Conversely, statistics show that Russian women drink radically less than
their menfolk.

According to Russia's Health Ministry, more than 250,000 people have died
from drinking toxic liquor in the past decade.

But death rates are climbing as the vodka war escalates. In the first half
of
this year 21,000 people died, or 45 per cent more than the comparable period
last year.

"There is no doubt the situation is growing worse because the state is
muscling in," said Pavel Shapkin, chairman of the National Alcohol
Association, an industry group.

At the beginning of the year the Government raised excise duties on liquor
by
a whopping 40 per cent, leading to massive price rises. It also began
reasserting control over key distilleries and moving to clamp down on
illegal
distribution.

Mr Shapkin says higher prices and attempts at stricter regulation have only
boosted illegal production, which has led to the higher death rates. A
quality-inspected, all-duties-paid half-litre bottle of vodka costs about 60
roubles (HK$15.56). A bottle of bootleg booze - often sold in the same
kiosks
and shops - sells for as little as 20 roubles.

"The vodka monopoly was traditionally a huge source of income for both
tsarist and communist Russian governments," says Alexander Matveyev, an
analyst with the Russian Economic Barometer, an independent financial
consultancy. "Under President Vladimir Putin, the Kremlin has been moving to
reassert influence in many sectors of the economy, and the liquor industry
is
an obvious target."

But the re-entry of the state into the market appears to have triggered a
vicious battle among the vodka producers. Since March, half-a-dozen vodka
factory executives and liquor distributors have died in contract killings,
gunfights and suspicious accidents.

The famous Moscow Kristall factory, maker of Stolichnaya vodka, has been
besieged by two groups of armed gangs, representing rival directors. One
claimant, Alexander Romanov, says he is acting to "defend the interests of
the state", which owns 51 per cent of the firm's shares.

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