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Russian Commission Approves Setting Minimum Price For Vodka

The bill could raise the price of vodka by 50 percent.
MOSCOW (Reuters) - A Russian government commission has approved plans to set a minimum price for vodka, the latest step in a campaign led by President Dmitry Medvedev to crack down on alcohol abuse, local news agencies reported.

The draft bill could raise the price of the cheapest vodka by more than 50 percent, and further hurt Russia's alcohol industry, which is already fretting about planned beer tax increases.

The draft decree sets a minimum price for a half-liter bottle of vodka at 89 rubles ($3.10) and is now being registered with the Justice Ministry, Interfax reported, quoting the head of the alcohol regulatory agency, Igor Chuyan.

The legislation could come into force from January 1, 2010.

In August, Medvedev ordered tough measures to curb alcohol abuse, saying he was shocked by official data showing the average Russian drank 18 liters of pure alcohol each year.

Since then, Russia is on track to triple the excise duty on beer and is considering drastic limits on where and when beer can be sold. There are also plans to raise duties for vodka, but not from next year.

The government said in a statement that the commission had approved a range of measures aimed to "increase the effectiveness of regulating the production and turnover of alcohol." They were designed, among other things, "to reduce the level of alcohol dependency of the population." It did not refer specifically to vodka prices.

Half-liter bottles account for 60 percent of vodka sold in Russia, according to Interfax. Utkonos, a Moscow-based online supermarket chain, currently offers bottles from 50.80 rubles.

The average monthly salary of 18,702 rubles ($651) would thus currently stretch to 368 bottles of the cheapest vodka at Utkonos, but only 210 bottles if the price floor is implemented.