Russia: Ministry plans to trace beer via RFID technology

Russia starts next year a project to mark and trace beer and beer mixes with an RFID-based solution aimed to fight counterfeit and illegal goods. If successful, the system will be applied to other alcoholic products and also other product categories.

"Taking into account the preparation time and the decision-making process, I think the pilot project can start in spring," said Minister Denis Manturov, Minister of Trade and Industry of the Russian Federation. “We think it's important to start labeling in the alcohol segment to protect consumers. This is important as this area is particularly susceptible to illegal goods and counterfeiting."

The ministry estimates that the volume of the illegal beer market in Russia is between 5 and 12 percent. Given the size of the Russian market for beer of 70 million hl or RUB 650 billion (USD 8.3 billion) and for beer mixes of 8.5 million hl or RUB 75 billion (USD 960 million) in 2019, the state budget loses revenue of about RUB 22 billion (USD 281million) annually. But it is not only the state that loses money. Also breweries which legally sell their beer suffer from counterfeit products. The ministry estimates that labeling the beer will increase the profits of legal producers by RUB 2.5 billion to 3 billion (USD 32-38 million) annually.

However, leading brewing groups in Russia like Baltika (Carlsberg Group), AB InBev Efes, and Heineken contradict the ministry, saying that there is practically no problem with counterfeit products on the beer market. The companies argue that a full tracing of the goods from the brewery to the store is already possible with the existing EGAIS tax system.

In addition, investments in equipment and personnel would have to be made for the labeling equipment and the speed of existing filling lines would have to be reduced, both leading to increased costs and thus higher retail prices.

"The cost of installing the needed marking equipment on a production line is about USD 1 million, and a large facility has at least ten such lines. Given the low margin brewing business, this is a significant cost," Oraz Durdyev, Director of Legal and Corporate Relations at AB InBev Efes, told Because there are more than a thousand breweries in the country with at least multiple bottling lines installed, the cost of the industry can run into hundreds of millions of dollars, Andrey Gubka, Chairman of the Union of Russian Producers of Beer and Nonalcoholic Products elaborated.

"The introduction of labeling will inevitably lead to a rise in prices on the shelf and become the second consumption tax for the industry," said Durdyev.

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