Licensing of beer production, circulation and retail sales – what for? (2014-02-18)

One of the major debating beer topics is introduction of licensing.

We shall consider in detail the meaning of licensing of beer production, circulation and retail sales and its necessity. We’ll also try to estimate all possible effects after enacting the beer licensing law.

Photo

Licensing in the brewing industry is one of the measures for licensee’s (government) regulation directed to protection of citizens’ legal rights, interests and health and is necessary for forming moral and social public life.

In whole, licensing contains a large complex of activities connected not only with necessity to obtain a license but also to perform monitoring functions of the market regulator towards licensee and to form requirements for operations under licenses including mechanisms for license revocation, suspension and renewal.

In layperson’s terms licensing is a form of the business regulated by the government.

For introduction of licensing it is necessary to observe the following conditions:

1. Appointing a licensee and also defining threshold socioeconomic indexes for licensing; in our case a licensee is the brewing industry, high level of beer and alcohol consumption in the country, undeveloped consumption culture, increasing of illegal beer market etc.

2. Market regulator’s scarce opportunities or its absence for executing direct obligations without licensing: in our case – how can the market regulator influence on a careless brewer today? To bring to account for doubtful declaring – penalty 40.000 rub. and also for defective production (violation of requirements of the technical regulations), maximal sum of penalty in case of health harm – 1.000.000 rub.

It is not enough.

3. Legislative recognition of the licensable activity and smooth transition to the new format of carrying on business. In this case initiator can be both the market regulator and any power structures (according to the article 104 of the Constitution of the RF – the President, Legislative Assemblies, deputies etc.); in our case – a draft bill has already been introduced (for further information please refer to http://barley-malt.ru/?p=7515&lang=en).

4. Forming and fixing the uniform procedure of licensing;

In our case – in the context of the brewing industry it is possible to divide the industry into subgroups, forming a different approach to the licensing and comfort transition period for the companies that differ in production volumes.

5. Defining the complete list of demands for licensable activities; in our case- drawing public attention to the development of these demands.

6. Providing access to the information about licensing procedure; in our case – maximal openness of the licensee’s activities towards licensor.

In case of introduction of the licensing system the presence of the powerful social organization providing with transparency licensee’s actions towards licensor will be very important.

Many people believe that a problem of the licensing of the brewing industry and administrative pressure have occurred not long ago. But this question lies deep (more detailed: http://barley-malt.ru/?p=6355&lang=en). We performed an analysis of the legislative regulation towards the brewing industry and as a result observed a very interesting fact –

in the mid 2000’s when the powerful lobbyist Taymuraz Kazbekovich Bolloev, an owner and the President of OJSC “Baltika” left the industry, business of brewers becoming victims of the temporary employees – often changed managers from the Union of Russian Brewers (Anton Artemyev, Daniil Brimann, Vyacheslav Mamontov, Isaak Sheps, James Wilson, Victor Pytko, Anna Meleshina, Alic Tuygunov etc.), representing interests of the brewers and industry in public authorities and like rats leaving a sinking ship, dropped to an all-time low:

In September 21, 1998 deputies of the State Duma passed amendments of the Act “Concerning the State Regulation of the Alcohol Production and Circulation” according to which beer became an alcohol product. Amendments were rejected by the Federation Council;

– In July 14, 2001 Primorye Region Duma introduced new version of law according to which beer containing over 8% of alcohol was considered to be an alcohol product. It was also rejected;

– In December 15, 2000 the Chief State Medical Officer Gennady Onishchenko signed an Order “On Strengthening of Gossanepidnadzor for the Brewing Production” according to which beer containing over 6% of alcohol was counted as an alcohol product. It was also rejected;

– In September,5 2004 law amendments “Concerning Advertisements” according to which beer advertising in TV and radio programs from 7:00 a.m. to 22:00 p.m. was prohibited, came into force;

– In January 1, 2005 it was prohibited to advertise people and animals in promotional materials dedicated to beer;

– In 2009 the Federal Service for Alcohol Market Regulation asked brewers not to use off-screen dialogues, close-up pictures of moving cars and clanging glasses in ad videos;

– In April 9, 2005 an Act “Concerning Limiting of Retail Sales and Beer Consumption” came into force. According to this law it was prohibited to sell and drink beer containing over 0,5% of alcohol in the sport constructions and in public transport. The ban was imposed on sale and beer consumption by juniors;

– In December 5, 2005 penalties for drinking beer in public places and involving of the young people in alcohol were fixed;

– In July 18, 2011 Dmitry Medvedev endorsed the law according to which beer was counted as alcohol product with all necessary limits including advertisement prohibition. It was prohibited to sell beer from 23:00 p.m. till 8:00 a.m.;

– From 2013 the ban on beer sale in kiosks became operative.

What comes next?

We’ll try to study this problem complex in more detail:

Any market regulator goes by the basic documents and he must execute them, e.g. in the Ministry of Agriculture it is the State Program of Agricultural Development for 2013 – 2020, Food Safety Doctrine etc.

What documents shall the Federal Service for Alcohol Market Regulation follow?

Decree of the President of the Russian Federation № 1883 dd. 31.12.2008 “On Forming the Federal Service for Alcohol Market Regulation” (ru);

Government Resolution № 154 dd. 24.02.2009 “On Federal Service for Alcohol Market Regulation” (ru);

Regulations of the Federal Service for Alcohol Market Regulation (ru);

Anti-alcohol Concept of the Government of the RF 2010-2020 (en).

Frankly speaking, improper performance of the regulatory documents by the Ministries will lead to the resignation and any leader will do his best to perform professional duties and reach all key figures pointed in the regulation documents, in our case – reduction of the production volumes and alcohol consumption level.

That’s why it is necessary to form a new face and image of the industry by realizing “3K” Rule of our Union: “Consumption culture – product quality – government control”; to amend the Concept and approaches to the various types of alcohol products; to strive for productive cooperation with the regulator and legislative bodies in order to minimize consequences of the Concept implementation for the industry (comfort transitional periods and legislative regulations differing in severity etc.).

So, we believe that licensing of beer production, circulation and retail sales is an inevitable final of some processes that occurred as a result of brewers’ carelessness. Being an owner it is impossible to switch to economic development questions giving complete control over political part of the brewing topics to the hired highly paid management.

In our case licensing as a market regulator’s leverage is unavoidable but there is no alternative but to be fantasts like Russian Brewers’ Union offering to remove the brewing industry from the category of alcohol production and to form a separate legislation etc. But our life differs from fantasy even scientific.

There are many questions and we’ll try to salve any difficulties but for this purpose we need Russian brewers’ help. We invite you to join our Union. All information is available in our website http://barley-malt.ru/?lang=en.

Share news:

No comments