The dramatic fall in Russia’s currency this year has squelched the country’s thirst for beer and is expected to send Russians back to their traditional tipple of vodka. The shift is already hurting foreign brewers like Carlsberg; analysts expect the currency swing to cost the company a third of its annual profits (paywall).
Foreign and domestic brewers alike have been cutting back on their Russian operations, as beer consumption has dropped by an estimated 30% in the last four years. That’s partly due to higher government taxes—until 2011, beer was classified as food, not alcohol. Seven Russian breweries have closed since 2011, including several run by Heineken, Anheiser InBev, and Carlsberg’s Baltika subsidiary.
“In the beginning of 2000s, consumption of vodka was falling every year, replaced by the consumption of beer. The alcohol-abuse-related death rate was also down at the time,” Heineken Russia spokesman Kirill Bolmatov told the Moscow Times.
The shift back toward vodka is also being fueled by new government policies: now that Russia’s economy is struggling more than ever, Vladimir Putin’s government is doing its best to keep citizens from getting too irate. As inflation surged, Russia announced earlier this month that it would not raise the government-mandated minimum price for a bottle of vodka, which currently stands at 220 rubles ($3.88). Illegal, unlicensed vodka, which makes up the majority of the market, is even cheaper.
Last week, Russians raced to the store to buy goods before prices could rise yet again—including some unconventional “investments” in the country’s favorite spirit.
“Good that my husband invested in vodka,” tweeted one user, as translated by Mashable. “We’ll get drunk out of sorrow when our 20 bucks is gone,” tweeted one user.
As for those outside Russia, the currency crisis unfortunately won’t result in cheaper vodka abroad. All of the major “Russian” vodka brands, from Stolichnaya to Smirnoff, are bottled outside of Russia by international spirits companies.