Despite the ban on online sales, the volume of the online alcohol market in 2024 will exceed 100 billion rubles, AKIT Chairman Artem Sokolov told socialbites.ca. Despite the fact that in 2022 the Ministry of Finance NIFI estimates the volume of this market at about 30 billion rubles.
“These are huge volumes of the shadow sector and shortfalls in Russian budget revenues. We can already clearly say that this is a market where only shadow players operate and are controlled by only shadow players,” Sokolov said. The problem began to worsen as 70 million Russians gained the status of regular customers of the Internet and, in particular, began to order alcohol more often. “Taking advantage of this situation and the increasing demand for delivery services, the niche of online alcohol sales was occupied by people who no one understands. And these people do not accept any responsibility for the content they offer, because this is initially a crime – it is impossible to file a claim against such a seller. Of course, here we need to use clear mechanisms to replace the illegal market with the legal one.”
“It’s no secret that in Russia there are thousands of websites that illegally sell counterfeit alcohol products. In every major metropolis there are illegal offices that will deliver any alcoholic beverage at any time of the day or night to any point in Moscow, St. Petersburg or any other city with a population of one million within an hour,” adds Maxim, general director of the non-profit partnership “Club of Alcohol Market Professionals” Chernigovsky.
At the same time, the implementation of the online alcohol sales plan will require at least another six months to a year after the state decides:
“However, even if we assume that tomorrow a decision will be made to create a completely state-controlled environment with a modern scheme and technology for online trading of alcoholic beverages, companies will have to restructure their business processes and integrate with several third-party systems. Implementing all this in your software shell is not an easy process. “It will take at least six months or a year to meet all the high requirements that apply to products in this category,” said Artem Sokolov.
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Today, it is proposed to regulate the market through various state systems such as EBS, EGAIS and “Honest Signal”. So you can check the age of the recipients through the Unified Biometric System (UBS). To use the service, you must register with the Unified Biometric System and consent to data processing as part of the age verification service. When purchasing online, biometrics will allow the buyer to verify their age on the store’s website or app, and will also eliminate the need to present their passport to the courier (Center for Biometric Technologies) when picking up the order. (TCMB) said.
“The Central Bank positively evaluates proposals to implement an online sales service for products 18+ using biometrics. In this user scenario, biometrics will reliably verify the buyer’s age and at the same time prevent minors from purchasing products with age restrictions online. We believe that the service will be in demand among those who are used to ordering food at home, the Central Bank told socialbites.ca.
Product quality issues are resolved through a traceability system. In the alcohol trade, this is EGAIS. According to AKIT, EGAIS will be more than enough in terms of technology itself for control and traceability of legal products from the producer to the final buyer. However, Artem Sokolov adds that it is not yet fully applicable for online sales and needs to be improved to include all online trading transactions. For example, products can be held for the duration of delivery (this is the name of the freezing of money on a card for deferred payment) – so that the money can be withdrawn only after the recipient’s age is confirmed, that is, after the delivery is completed.
“When the ban on remote sales of alcoholic beverages was introduced in Russia 17 years ago, it was a justified measure, both because of the lack of technologies that would allow us to control the process of selling these goods, and because of the underdevelopment of online trading in the market in general. But since then, our market has grown 300 times. We expect that by the end of this year the volume of online trading will exceed 9 trillion rubles. Of this, 1.5 trillion rubles will be the delivery of food products, including ready-made food. Today, such deliveries are made by 76% of companies present in this segment on the market. And today we have all the technologies that will allow us to sell alcohol in accordance with all legal requirements,” Artem Sokolov is sure.
Current risks
The longer the decision to start state-controlled online alcohol sales is delayed, the longer the current risks inherent in the current situation will persist. Therefore, experts point out that most Russians have no idea that selling alcohol on the Internet is prohibited.
“When a person sees that alcohol is sold in a regular store, there are no restrictions on its purchase, except for age and time, and at the same time it is surrounded by various delivery services, he does not even understand that it is sold over the Internet, where alcohol is prohibited by law. According to a survey conducted by VTsIOM, 79% of Russians do not consider it illegal to buy alcohol over the Internet,” emphasizes Artem Sokolov.
“People often do not know that online sales of alcoholic beverages are prohibited in Russia, and they buy them online. They sincerely believe that they are buying legal alcohol,” said Maxim Chernigovsky.
The biggest danger of the current online alcohol market is, of course, the high probability of encountering fake products and causing serious and sometimes irreparable harm to health.
Foreign experience
Maxim Chernigovsky stressed that in almost all countries where there is free retail circulation of legal alcohol products, their online sale is legalized.
“This is a completely normal practice. Moreover, if we consider the countries of the Customs Union, it is not only in Belarus and Russia. I still do not fully understand why there is a corresponding ban in Russia, given that we can buy almost everything online, including medicines,” he notes.
There are more than a hundred countries in the world where there is no ban on alcohol sales, where these bans have either never been established or have been lifted. Artem Sokolov notes that many countries, in particular, have lifted such restrictions during the Covid period. However, he emphasizes that in none of these cases has there been an increase in alcohol consumption. The AKIT President also added that in no country in the world where remote alcohol sales are allowed, the Internet has become the main sales channel. According to global statistics, on average, about 4.4% of wine products, 2.6% of spirits and 1.9% of beer products are sold via the Internet; this is the same share of online sales compared to traditional retail sales. In other words, in general, it does not exceed 10%.
Thus, in Kyrgyzstan, Armenia and Kazakhstan, as well as in all BRICS countries, the entire European part and Japan, alcohol sales via the Internet are allowed. Therefore, Russia can rely on foreign experience in this direction.
“In terms of technology, I think we can use the experience of China, where biometrics are used to check the age of buyers. The courier comes to you, takes your photo, the system recognizes your face and instantly answers whether you are an adult or not. And depending on this, alcohol is either transferred to you or not. If the buyer is a minor, the courier takes the alcohol back to the store,” Artem Sokolov gave an example.
Therefore, experts believe that it is necessary to remove online alcohol sales from the shadow sector in Russia. Especially in the context of the rapid development of online commerce and the resulting growth of the illegal market for selling alcohol on the Internet. Lifting the current ban will not only reduce the consumption of illegal products, but also, according to Maxim Chernigovsky, improve the drinking culture in Russia.
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Source: Gazeta
Ben Stock is a business analyst and writer for “Social Bites”. He offers insightful articles on the latest business news and developments, providing readers with a comprehensive understanding of the business world.