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Russian government proposed to add cider and medovukha to list of agricultural products

23 January 2015

CiderYesterday the Russian newspaper Kommersant reported that the government in Russia proposed to add cider and medovukha - a traditional honey-based alcoholic drink - to the list of agricultural products such as meat, fish and dairy. This means that cider and medovukha, which has an ABV between 5% and 16%, will be classified as non-alcoholic drinks.

If the proposed change in law is approved, manufacturers of these beverages will get a number of opportunities, including tax relief benefits and the possibility to advertise on TV. Currently, the list of agricultural products already includes domestically-produced grape, champagne and sparkling wines, a step taken by the government in summer 2013 to promote local grape farms.

The cider and medovukha industry had a difficult year in Russia in 2012, when both beverages were classified as wines, meaning their production required licensing, reducing the number of cider producers from 30 to no more than 10. According to a Canadean report, the following year, after the licensing was cancelled, consumption of cider increased more than threefold, driven in part by the rapid expansion of imports from distant countries and Belarus. However, both drinks are still niche products in Russia, and the permission to advertise would mean that brands can approach the audience of other alcoholic drinks, such as beer and wine.

The new law will not only provide opportunities for the Russian beverage industry, but also for apple and honey manufacturers. The National Union of Beer and Beverages Manufactures estimated the category’s market volume at 10 million litres – 4 million litres of cider & perry and 6 million of medovukha – and the market’s value at 1.5 billion RUB (0.02 billion USD). Local producers of cider and perry hold approximately half of the market in their segment, but hope to increase the share to 90% by 2020. To promote the beverages, manufacturers should take inspiration from countries such as the UK, where, fuelled by premiumisation, the cider industry was worth 5.77 billion USD in 2013, according to Canadean estimates. Thus, cider brands in Russia should upscale their products by positioning them as craft beverages, while medovukha manufacturers should highlight heritage and history.


By Veronika Zhupanova

Veronika Zhupanova PortraitVeronika joined Canadean in 2014 and is responsible for researching and analysing emerging trends, as well as innovation in CPG, particularly in Eastern European markets. She has authored a number of reports, providing insight for FMCG companies into consumer behaviour and its future evolution. In her previous role as a researcher with Datamonitor she attended numerous international trade shows, interviewing manufacturers and marketers about their views on FMCG markets and gathering key players’ ideas of how trends will evolve in the future.