Russian brewers struggling with ad ban

The new rules, which came into force in September, provide interesting insight into the fast developing Russian beer market. In a country where vodka and other hard liquors are the drink of choice for most people, beer has frequently been viewed as something akin to a soft drink, and the advertising regulations have been relatively lax as a result.

But as beer becomes increasingly popular, the Russian authorities have understood the need for regulations in line with those in the west, which ensure that alcoholic beverage adverts are targeted at adult consumers only. As a result, beer advertising on TV has now banned between 7:00 to 22:00, and claims linking beer consumption to better health or sexual prowess have been stopped.

In some cases, the restrictions have gone further than those in some countries in western Europe - for example, brewers are forbidden from using both people and animals in their adverts, which is likely to make TV spots somewhat dull by comparison to those elsewhere in Europe.

The results of the ban have been felt immediately. The number of TV ads for beer brands has dropped by more than two-and-a-half times, with the result that TV channels' advertising revenues have plummeted by an average of $3million every week.

Furthermore, brewers have been forced to stop their sponsorship of televised sporting events and have removed advertising hoardings from football stadiums, instead focusing their marketing budgets on direct-to-consumer advertising and on billboards.

The irony is that the Russian brewers appear to have brought the restrictions on themselves. Back in April, the Union of Russian Brewers proposed a voluntary ban sales of beer to customers under 18 years of age, an initiative given the thumbs up by the legislators who duly responded by changing the advertising regulations.

But Russian MPs decided that they did not want to stop there, and will this week debate another proposal which would ban the consumption of beer in public places, restricting the drinking of beer to bars, cafes and restaurants. According to the draft legislation, the consumption of beer and beverages containing it will be illegal in the street, in stadiums, in parks, on public transport and in any other public place.

Theses restrictions go far further than the Union of Russian Brewers had originally proposed - it had suggested a system of fines for those found guilty of selling beer to consumers under 18, or for those under 18 found drinking beer in public, and had never envisaged a blanket ban on advertising or sponsorship - and while beer makers will save some $50 million as a result of the ban on sponsorship, they stand to lose as much as $1.65 billion if the rules on drinking in public are passed.

According to the Union of Russian Brewers, the Russian beer market is worth some $5.5 billion, with around 30 per cent of sales coming from kiosks and shops selling beer for consumption at home or in the street. These outlets have traditionally been much cheaper than bars or restaurants, and so have flourished as beer vendors, but this could also be about to stop.

"Once the consumption of beer is restricted, retailers will start increasing their prices to compensate for lower volumes,"​ suggested Vladimir Antonov, director general of the Ochakovo brewery.

Other alcoholic beverages are also facing similar restrictions. According to Valery Draganov, chairman of the economic policy committee of the State Duma, MPs are also preparing legislation to restrict the sales and marketing of alcopops and pre-mixed drinks, even if their alcohol content is relatively low. This, he said, was being done in order "not to give anybody advantage over the brewers"​.

But the brewers still have a small glimmer of hope. Russia's Federation Council will this week debate amendments to the new regulations restricting beer retail and others which could allow sporting events currently sponsored by brewers to be broadcast at a later time.