Russia takes first step to curb strong beer sales

MOSCOW Tue Feb 22, 2011 3:24pm EST

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MOSCOW (Reuters) - Russia has passed an early reading of a bill aimed at restricting sales of strong beer in a move that could hit brewers for a second time following a hike in excise duties last year.

The country's state Duma said it had passed an initial draft of the bill that could limit sales of beer stronger than 5 percent as part of the state's drive to cut down on alcohol abuse.

It must pass two more readings and win Kremlin approval to become law.

If passed, the bill would ban the sale of strong beer altogether from outdoor kiosks, airports and train stations. Shops would have to stop selling it between 11pm and 8am.

The move is likely to erode brewers' Russian sales growth, which has slowed since Russia raised excise duties by 200 percent in January last year.

Danish brewer Carlsberg, owner of Russia's best selling beer brand Baltika, this week warned of modest growth and squeezed margins in Russia.

SABMiller told Reuters last year that 2010 would be its third straight year of falling Russia sales.

"Beer stronger than 5 percent is not a very large share of the market, so the consequences of these restrictions will not be catastrophic," a Baltika spokesman told Reuters, although he added that it made up about a third of the company's portfolio.

Russia has been seen as a high-growth emerging market for global brewers seeking to expand out of increasingly health conscious developed countries.

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