May 11, 2006

Russia Halts All Alcohol Imports

Russia’s Federal Customs Service has temporarily halted all imports of beverage alcohol as of April 1. Changes must be made to the Russian Law on Production and Turnover of Alcohol or State Regulation Law (SRL). Failure to amend the law shuts down $1.2 billion market for imported wines and spirits. No matter what changes the new law brings, all wine and spirit imports from Moldova and Georgia prohibited due to Ministry of Health claims regarding contaminated products from those nations.

The new spirits law creating a new domestic and import regulation regime for wines and spirits was passed by the Duma in July 2005 and signed into law by President Putin on January 2, 2006. The law’s implementation was almost immediately delayed to April 1.

The law provides for new excise tax and customs stamps (with bar-coded data), changes in the regulation of import licenses, and changes to labels. The new excise and customs stamps are to be purchased from the Federal Customs Service based on ad valorem prices reported on import invoices for payment of customs duties and VAT charges. Proprietary software is to be used to produce a unique bar code on the stamp. The scheme, if used properly, would all but eliminate the ability to falsify or counterfeit stamps. The new regime would also raise customs and VAT revenue appreciably.

However, the system for these new stamps is not working and as a result all wine and spirit imports are not allowed to clear customs. If you would like to read additional information about this issue, please read the report from USDA/FAS.

WineScience.com will be sure to post updates on this developing issue. Please contact Jim Clawson, Chief Executive Officer at 202.463.8493 if you have additional questions.