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UPDATE 1-Russia mulls limits on beer sales, brewers drop

Published 09/29/2009, 12:41 PM
Updated 09/29/2009, 12:45 PM
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* Limits could affect 25 percent of Russian beer sales

* Proposal comes as part of Kremlin anti-alcohol campaign

* Carlsberg, SabMiller, Heineken shares down

(Combines share reaction, industry experts)

MOSCOW, Sept 29 (Reuters) - Russia's industries and trade ministry has proposed drastic limits on beer sales, a document obtained by Reuters showed on Tuesday, and industry experts said the proposal could affect over 25 percent of sales in Russia.

The proposals, which have yet to be reviewed and approved by the government and parliament, came only a month after President Dmitry Medvedev ordered tough measures to curb alcohol abuse, describing alcoholism as a "national disaster".

"It would be fatal (for the brewing industry)," said a source at a major Western brewer in Russia, who asked not to be named due to the sensivity of the issue.

The ministry said in its documents it was proposing changes to legislation that would ban sales of beer via kiosks and in markets without affecting big shops and supermarkets.

Shares in Danish brewer Carlsberg, which owns Russia's largest brewer, Baltika, fell as much as 4.6 percent to a four-week low of 359.75 crowns but pared losses to close down at 363 crowns. Shares of SabMiller fell 0.4 percent, and Heineken's were down 0.3 percent.

An executive at Russia's brewers union said he estimated sales of beer via kiosks and in markets at 50 percent of total sales if restaurants are excluded, and 25 percent with them.

The ministry has also asked to set strict hours on alcohol sales and introduce minimum wholesale and retail selling prices for all alcoholic beverages, including beer.

Russia has one of the world's highest per-capita rates of alcohol consumption, which is linked to low life expectancy. According to official figures, just 40 percent of this year's school leavers will reach the pension age of 55 for women and 60 for men.

Earlier attempts to introduce curbs on alcohol, including a major campaign by the last Soviet leader Mikhail Gorbachev launched in 1985, brought few practical results and undermined government popularity.

In August, Medvedev ordered new restrictions on advertising alcoholic drinks and proposed replacing fines with criminal punishment for those who sell spirits and beer to those under 18, who are banned from buying alcohol.

The proposals, which echo similar measures introduced during Gorbachev's campaign, will be unpopular in a country where easy access to alcohol and public drinking in parks and streets are seen as traditional rights.

Many officials have also called for the creation of a state vodka monopoly that would bring order to the market, which is about 30 to 50 percent illegal and untaxed. (Reporting by Maria Plis in Moscow and Henriette Jacobsen and Peter Levring in Copenhagen; writing by Dmitry Zhdannikov, editing by Will Waterman)

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