It was recently hailed as one of Russia's safest investments by the European Bank for Reconstruction and Development and the beer industry has certainly enjoyed enviable levels of foreign investment as well as profits by the gallon over the last two years. But trouble has been brewing beneath the surface, and now the State Duma looks set to blow some of the froth off the industry's success.
A row has broken out over advertising, which many lawmakers claim has too often targeted teenage drinkers. Before the lower house of parliament breaks up for the New Year recess on Dec. 25, deputies are expected to pass legislation that will strike a balance between calls for stricter regulation and demands that beer advertising be banned completely.
One thing is certain, insiders say the law will force the beer companies to ditch images of partying youngsters and come up with more creative ways of promoting their products on TV, on billboards and in the media in general.
The legislation was in part prompted by reaction to the Klinskoye brewery's expulsion from the Russian Brewers' Union earlier this month, which came after the firm refused to drop a long-running youth-oriented advertising campaign. Klinskoye owner Sun Interbrew also came up against Chief Federal Sanitary Inspector Gennady Onishchenko, who took up the union's cause in what some observers claim was not an entirely disinterested move.
"The state has its own interest in weakening the brewing industry as a whole," said Alexei Krivoshapko, food industry analyst with UFG brokerage in Moscow, who added that the government's stranglehold on production of domestic crude spirit means that it as well as the country's numerous and powerful vodka producers has a direct interest in weakening the burgeoning beer industry.
"No doubt vodka producers would rather see Russians buying more vodka than beer," Krivoshapko added.
Whatever the case, the government, in the person of Deputy Prime Minister and Agriculture Minister Alexander Gordeyev, has voiced support for a blanket ban on beer advertising, which was proposed by the Omsk Oblast administration and was due to go before the Duma. The activists are unlikely to get their way, however, as a group of Duma deputies has come up with amendments that observers say are likely to be voted through before the parliamentary session ends on Dec. 25 as part of a package of watered-down legislation.
"I do not think that such a radical measure as banning beer advertising could get through because of the long list of influential figures in the brewing and advertising industries, Krivoshapko said. "But at the same time, the Duma is being forced to adopt amendments to the law [on advertising] that will toughen conditions for advertising companies."
Viktor Semyonov, leader of the group of deputies responsible for the amendments to the proposed legislation, said banning advertising completely would be an irreparable blow for many advertising companies and brewers, according to Izvestia.
"Our amendments will just introduce new rules for advertisers, which will exclude from advertisements certain ploys that otherwise might present beer as being as soft a drink as, say, lemonade," he told the paper.
Semyonov's limitations include a ban on including actors under the age of 18 in beer commercials; a ban on using prominent personalities in advertisements; and a ban on slogans and images that directly encourage consumption or imply any benefit to be gained from drinking a particular beer.
Konstantin Zlobin, head of advertising at Moscow's Badayevskoye brewery, said that most Russian breweries would have to change the tone of their commercials in order to avoid being fined by the Media Ministry.
"[Semyonov's] amendments will most probably be adopted, and prior to the beginning of the new beer season [spring and summer], all breweries will have to make their new commercials in compliance with the new rules," he said.
Zlobin said the new legislation would force Badayevskoye to drop advertising campaigns that it has been developing over the last three years. He said the brewery had used the youth theme in the past as well as featuring Spartak soccer player Vladimir Beschastnikh in a popular TV commercial.
"It's sad, because we are one of the few Russian breweries that has successfully gone for the beer and soccer niche," Zlobin said. "We will definitely have to find something new by the spring."
Breweries now say the legislation is inevitable, and they are merely waiting to see how strictly it will be implemented. Some have built their image around a particular image or slogan, and these brands, such as St. Petersburg-based Vena's Bochkaryov beer with its "pravilnoye pivo" catchphrase, may have to drop their advertising strategies and start from scratch.
"We are getting ready for a situation where we might have to change the tone of our commercials and even our catchphrase," said Sergei Sanne of Vena's legal department.
"It that is the case, it will be much cheaper for us to change some elements of our advertising campaign rather than try to step up opposition to the Duma."
Sanne added that Duma deputies have the support of many sections of Russian society in pushing for reform, and few breweries will dare to disobey the legislation if it is passed.
Badayevskoye's Zlobin said probably no Russian beer commercial except the Baltika brand ads, which focus on the company logo, would survive the new demands.
"All the other companies are going to have to change their commercials," he said.