Brewers seek clarity on Russian ad ban
the country's parliament later this year after complaints from the
industry, but a new ban on outdoor drinking still looms in 2005,
reports Chris Mercer.
Russian civil servants have reportedly been working on a new draft of the advert ban which is likely to be discussed by the country's parliament - the State Duma - in its spring session, according to Pavel Shapkin, chairman of Russian industry lobby group, the National Alcohol Association.
Shapkin said he believed the reform proposals would include "softer requirements" for brewers and that the block on using people or animals in beer adverts could be removed.
The current ban, introduced last summer as an extension of the law on State Regulation of Production and Distribution of Alcoholic Products, prohibits televised beer adverts between 17:00 and 22:00 and only allows strictly regulated ones between 07:00 and 17:00. As well as no people or animals, regulations state that adverts must not imply that beer is beneficial for consumers' health, appearance or mental state or that it can enhance consumers' careers.
The Russian government was keen to crack down on beer adverts to try and control a rapidly increasing consumption rate across the population which has seen Russia become the world's fifth largest beer market. But the ban has been beset with problems of interpretation.
"We are certainly keen to see clarification on a number of issues," said Nigel Fairbrass, head of corporate communications at brewing giant SABMiller. He said that the rule on animals had caused confusion over Miller's premium Genuine Draft brand which uses an eagle emblem.
"Also, what happens if a company does not observe the rules. We do not know what kind of penalties there are," said Fairbrass, adding that much of the beer industry was confused about the ban's boundaries.
Many of the world's other big players, including Sun Interbrew (InBev), and Heineken, are also present in Russia and see the country as a vital emerging market. It was the fastest-growing beer market in Europe between 1996 and 2003 with an estimated further 7 per cent growth in 2004. In this climate, brewers have naturally seen government interference as a threat to market expansion.
Even so, Miller recently announced that its Genuine Draft brand recorded an 80 per cent sales increase for the first half of 2004, and Fairbrass maintained that "it is still quite difficult to know what potential the advert ban might have" for damaging sales. Fairbrass also said that Miller may escape more lightly than other brewers because it advertises more in clubs and pubs than on TV.
NAA chair Shapkin was more positive about the ban's effect on the industry as a whole. He said the advertising ban had caused no major problems for brewers as yet and that beer production in Russia grew by 12 per cent in 2004.
However, another problem looming is a possible ban on outdoor drinking. This poses a more direct threat to companies' profits and the Union of Russian Brewers has warned that the industry may lose $1.65 billion of its $5.5 billion market as a result.
An initial bill which would have banned outdoor drinking in Russia was rejected by the country's upper house - the Federation Council - last October, despite a ban being approved by the Duma. A revised version of the bill will be discussed again by both bodies later this year.
