Russia is set to double import tariffs on Scotch whisky and other spirits in a countermeasure to foreign sanctions, according to a report by The Times. The new tariffs will be 20% of the value of the spirits, with a minimum fee of EUR 3 (USD 3.25) per liter, a significant increase from the current EUR 1.4 (USD 1.52) to EUR 1.5 (USD 1.62) per liter.
This move aims to shift market demand from products originating in "unfriendly" countries to domestic production and international whiskies from nations like China and India. Despite the anticipated negative impact on Russian consumers who prefer Scotch whisky, The Scotch Whisky Association has downplayed the significance of the new tariffs. The organization noted that direct exports to Russia have decreased by 54% since the invasion of Ukraine, suggesting that the damage caused by these tariffs would be "limited."
In 2023, Scotland exported GBP 6.2 million (USD 7.93 million) worth of whisky to Russia, doubling the previous year's direct exports. While these new tariffs might encourage a shift to domestic whiskies, the impact on the Scotch whisky industry in Russia is expected to be minimal due to the already reduced export volumes.
A representative from the Russian government stated that these measures are part of a broader strategy to develop counter-sanction measures in response to anti-Russian policies. The aim is to stimulate domestic production while impacting foreign companies.
Beyond official tariffs, the grey market poses a more significant threat to Scotch whisky in Russia. Through parallel imports, Russia can access Scotch whisky brands without the consent of the producers. Latvia and Lithuania play crucial roles in this system, with Latvia exporting approximately USD 266 million in whisky to Russia in 2023. Western European countries ship major brands to Latvia, which are then re-exported to Russia. Despite severed business ties, brands like The Macallan and Jim Beam still appear on Russian shelves at higher prices due to this grey market.
Despite the increased tariffs and reliance on parallel imports, Russia's food and beverage industry has shown robust growth, expanding by as much as 15% in specific areas. This growth highlights the resilience of the Russian market amidst international tensions and shifting trade dynamics.
