Russia Decides Beer is Alcohol, not Food

It's official.  Russian President Dmitry Medvedev signed a bill into law that legally classifies beer as alcoholic.

Until now, anything containing less than 10% alcohol in Russia was considered foodstuff.  The new move, signed into law on Wednesday, allows ministers to control the sale of beer the same way that spirits are controlled.

Though vodka remains the staple drink in Russia, beer has soared in popularity in recent years, marketed as a healthier alternative to spirits.  In the last decade, as Russians' incomes have risen, brewers have earned remarkable profits.

Beer sales in Russia have risen more than 40% over the past decade while vodka sales have fallen by nearly 30%.  Part of this is due to the fact that the sales of beer are relatively unregulated.  It's common to see people swigging beer in the streets and parks as if they are drinking a soda.  Furthermore, beer sales are not restricted to certain stores and beer is sold around the clock.

The government first took notice last year, hitting the Russian beer industry with a 200% tax hike on its products in an attempt to bring consumption under control.  The new measures will go into effect in 2013 and stop alcohol from being sold in unlicensed kiosks, ban its sale from stores between 11 p.m. to 8 a.m., and restrict its advertising.

The new law, brings some order into the sale of beer, Vadim Drobiz, director of the Centre for Federal and Regional Alcohol Market Studies, told Bloomberg.

The new law could particularly harm the Carlsberg Group of Denmark, the leading beer seller in Russia with about 40 percent of the market. It sells Tuborg, Carlsberg and some local brands.

Despite the recent trend, Russians still drink slightly more vodka than beer.  The average Russian drank about 12.5 liters of alcohol last year - about four liters of beer and five liters of vodka!

That said, it may be no surprise to hear that alcohol consumption in Russia is twice the critical level set by the World Health Organization.