Russian Standard on the rocks as Moscow tightens grip

Russia’s Ministry of Finance has taken decisive action in its ongoing efforts to consolidate control over key economic entities, with its latest move affecting Russian Standard Group, one of the country’s leading vodka producers. As reported by Reuters, a Moscow court on Thursday (27 February) suspended the corporate rights of the foreign holding companies that own the group, in a ruling that will concern international business owners operating in Russia. The ministry had only recently added Russian Standard Group to its list of “economically significant organisations”. The arbitration case targeted two holding companies — Pasalba Ltd in Cyprus and Roust Corporation in the United States — citing Western sanctions as an impediment to the smooth operation of Russian Standard Vodka and its sister company, Roust Russia. The vodka maker has yet to comment, but with similar action taken against retail giant X5 and private lender Alfa Bank, the trend is clear: Moscow is working to curb foreign influence over what it sees as vital assets.

Raising the bar — and the price

If the corporate restructuring wasn’t enough to unsettle the spirits industry, Russia’s vodka producers have also had to contend with a government-mandated price hike. As of 1 January, the Ministry of Finance increased the minimum price of a 0.5-litre bottle of vodka by 17%, from 299 rubles (£2.20) to 349 rubles (£2.57). This follows a similar jump back in June 2024, meaning prices are now 24% higher than they were six months ago. Brandy and cigarettes have also seen significant price rises, though the latter will do little to soothe drinkers turning to tobacco in frustration. The move comes as Russia grapples with persistent inflation — hovering around 9.5% at the end of 2024 — and a key interest rate stubbornly stuck at 21%. With economic pressures mounting, alcohol consumption surged last year, with nearly two billion litres of alcohol sold in retail across the first ten months of 2024, the highest level since 2017.

Bottoms up or bottoming out?

While inflation and price hikes are unwelcome news for consumers, vodka producers have been pushing for an increase to match the wartime economy’s rising costs. Despite the turbulence, Russia’s love affair with vodka remains as passionate as ever. In a move that speaks volumes about the spirit’s cultural significance, one enterprising business recently trademarked a vodka brand honouring incoming US President Donald Trump, while a major Russian popstar sought to register “Ya Russky” as a trademark for drinks, household goods, and, for reasons known only to them, sex toys. the drinks business has reached out to Russian Standard for comment.