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Article: Russian soft drinks industry asks for aid to maintain production
06 August 2020
The country's main industry representative has asked for an
import duty reset for some raw materials and ingredients necessary
to manufacture soft drinks.
Specifically, the Russian Union of Soft Drinks Producers (SPBN)
has requested that the government reset import duties on frozen
ingredients, mixtures of vegetable fats, sugars and fruit
purées.
The Union asked the revision to last for a period of one and a
half to two years to prevent domestic price increases, to maintain
domestic production and protect workforces.
"According to the experience of the crises of 2008 and 2014,
this is precisely the period required to adapt the industry,
population and business to new currency exchanges and economic
realities," the Union said.
The SPBN said that, in connection with the spread of Covid19,
changes in exchange rates and other factors seen in the beginning
of 2020, manufacturers and importers predict significant changes in
the economic situation. In previous crises (2008-09 and 2014-15),
the number of soft drinks manufacturers decreased by 431 companies
(15%) - all classified as small and medium businesses.
According to a letter from the SPBN (comprising 70% of all
juice, water and non-alcoholic beverages producers inRussia), the
list of products consists of 145 items. It includes: strawberry and
cherry purées, which now has an import duty of 10%, blackcurrant
purée (6%), frozen strawberries (10%), frozen peaches, pineapples,
pears, kiwi (8%), zucchini purée (10%), canned beans (10%), as well
as vitamin and mineral additions for baby food.
"Today, the share of small and medium-sized businesses in the
industry is more than 85% of the total. If the depth of the crisis
is similar to previous years, the general staff reductions
associated with the liquidation of production might reach 20-25%,"
the SPBN said.
In addition, market participants are also asking to ensure
unimpeded entry into the country and domestic movement of finished
products, raw materials, ingredients and packaging, especially
raisins, dried apricots, starch, cocoa, fruit purée and
concentrated juices.
The industry has also called for the introduction of a
moratorium on legislative changes that impede business, and a delay
to the entry into force of certain regulatory documents for the
period of coronavirus (Covid-19) infection disruptions.
At the time of writing of this article, IHS Markit has not heard
of any escalation of the proposed import duty reset measures. The
industry seems to be preoccupied with tackling counterfeit products
with a product tracing and labelling system, which has been running
on a trial basis for bottled water (including natural or artificial
mineral, sparkling, without the addition of sugar or other
sweetening or flavouring substances) since April 1, 2020.
Although the participation in the experiment is voluntary,
Russia's Federation Council Committee on Agricultural Food Policy
and Environmental Management has called on Coca-Cola and PepsiCo to
join in the experiment.
The committee's chairman Aleksey Mayorov said the companies were
urged to participate as they are major suppliers of carbonated
drinks and their participation would make the trials "more complete
and valuable".