Russia Seeks to Halt Flow of Liquor Imports

New laws in Russia have cleared many shop shelves of imported alcohol. Since oil money began pumping up portions of the Russian economy, cocktail tastes have expanded beyond vodka.

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SCOTT SIMON, host:

There's an alcohol shortage in Russia, and (unintelligible) that includes vodka. A new regulation has left store shelves almost bare. The government says it's protecting consumers from substandard imports of wine and liquor. But industry insiders say the shortages in Moscow and elsewhere are the result of turf battles between competing government agencies.

NPR's Gregory Feifer reports from Moscow.

GREGORY FEIFER reporting:

Russia's oil economy is booming. Many Russians are getting richer and they're developing a taste for imported alcohol.

(Soundbite of clanging bottles)

FEIFER: But last month, stores were forced to clear their shelves of French wine, Scotch whiskey and Mexican tequila. Gaps were filled with local boxed wine, soft drinks, even candy. Panic buying resulted. Restaurants' wine lists were decimated. Even domestic vodka became hard to find, and retailers say the shortage may continue for months. Pyotr Kanygin is director of Wine World, one of the country's largest importers.

Mr. PYOTR KANYGIN (Director, Wine World) (Through Translator) The entire industry is in chaos, importing, wholesale, and retail. The result is empty shelves and billions of rubles in lost taxes. We don't know what to do. The situation is simply catastrophic.

FEIFER: The shortages began as a new law took effect requiring importer to put special government labels on bottles. Products with old stamps were recalled for re-labeling, but not enough new stamps were printed, leaving tens of millions of bottles locked up in warehouses.

Member of Parliament Valerii Dragonov helped write the new legislation. He said it was needed to tackle counterfeit production and make the shady market more transparent.

Mr. VALERII DRAGONOV (Member of Parliament, Russia) (Through Translator) We passed the law to address very serious problems in the market. It's chaotic, undeveloped, and it is also one of the country's most criminalized markets.

FEIFER: Dragonov says more than 60,000 people die each year from drinking tainted alcohol and that the public has clamored for new regulations. He blames the government for failing to carry them out properly. But some believe the shortages have really been brought about less by simple inefficiency than the federal government's attempts to take control of the lucrative alcohol market away from local authorities.

Moscow city official Vlajimir Shlepoch(ph) says there's no reason to believe federal authorities can do a better job.

Mr. VLAJIMIR SHLEPOCH (Moscow City Official) (Through Translator) We've stopped 90 million substandard bottles from going on the market since 1998. The new system not only has the destroyed our efforts but also created an unending crisis.

FEIFER: Industry insiders say far from cracking down on illegal production, the new law has encouraged it by crippling legitimate distributors. Analysts say the situation is slowly improving, but the crisis could cost the alcohol industry over $100 million and force up to 80% of retailers out of business.

Gregory Feifer, NPR News, Moscow.

SIMON: This is NPR News.

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