26 June 2006 - As explained previously in GAIN reports, the new spirits law (SRL) passed last year comes into final effect July 1, resulting in new excise stamps being required for all wines and spirits.
Importers only began receiving stamps in quantity a few weeks ago. Importers must get stamps from the Federal Customs Service; last month the Customs Service was moved from the control of the Ministry of Economic Trade and Development and made an independent agency reporting to the Prime Minister. Domestic producers get stamps from the Federal Tax Service, an agency of the Ministry of Finance. Imports had been at a full stop since April 1 until just a few weeks ago as new stamps began making their way to exporters to be placed on bottles. The July 1 deadline for product with old stamps to be removed is a second blow to the market.
In 2005, the U.S. exported $10 million is wine and spirits directly to Russia. Recently that figure had been growing quickly. ATO estimates another $12 million in U.S. wine and spirits is exported to Russia via transshipment through Europe.
Products are being imported with the new stamps. Importers report that they are printing stamps and sending them abroad, but it is going slowly. The software that must be used to print stamps is slow and has slowed down further under the strain of use by many companies on the network and most can make just 2000 a day. Retail contacts say that on average they are being told by suppliers that stocking imported wines and spirits in quantity and variety will not be possible until August/September.
One very large retailer reports that it usually has 2000 imported wine and spirit brands stocked but today has just 20. They have no imported products with new stamps. The retailer will move even those items in stock immediately back to warehouses, because it must be off the shelves by July 1 or is illegal and cannot be returned. Other retailers tell similar stories. Importers are paying wholesalers and in turn retailers for the unstamped products on retail shelves and the imported product is being returned to warehouses.
On Thursday, June 22, a government meeting resulted in the announcement of some small concessions on the implementation of the new spirits law. The changes extend the deadline to Dec. 29 for new stamps to be replaced on bottles. Those bottles bearing old stamps still must be removed from shelves.
Domestic spirits are not immune to the SRL's implementation mess. Large hypermarkets usually have 500 domestically produced products and today have 250 with new stamps. Domestic producers have had the equipment longer and have fewer product lines and so the process has moved more quickly for them. It is simpler to stamp a vodka line than a winery’s six or seven vintages. By the July 1st deadline it holds true across the marketplace that domestic producers will have in large part substituted products and will not bear the same losses as importers.
There continue to be rumors that the SRL implementation could be moved back six months and products bearing old stamps left on the shelves. This is unlikely to happen in upcoming days. Products are already coming back to importers. Shop owners, restaurants, and hotels, don’t want to take the risk of waiting for a last minute reprieve.
Ever enterprising, Russian entrepreneurs have begun to contact ATO office with requests for distilled products and wine materials in bulk. Importing in bulk and bottling in Russia avoids the excise stamp headache for imports and these products can get a domestic stamp.