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By Alexei Bayer | Tuesday, May 30, 2006

Vodka has been an integral part of the Russian economy for centuries.
Yet, in its current form, it is only a bit more than one hundred years old. Intriguingly, much of Russia’s recent history can be seen through a glass of vodka — or, at least, through a bottle.
Many nations of the world are associated with their favorite poison.
The French are forever linked with red wine. The Germans are inconceivable without a mug of their favorite beer.
The Irish go hand-in-glove with whiskey.

Russia’s heart and soul

No prizes for guessing what alcoholic beverage the Russians are most fond of. It’s vodka, of course. The drink seems to be as old as Mother Russia herself.
And it appears as if every Russian imbibes it first with his — or her
— mother’s milk.
And that the inventor of modern vodka — who discovered in 1894 that the stuff
is best when it is exactly 40% alcohol (80 proof) — was the world-renowned chemist Dmitry Mendeleev.
Professor Mendeleev is otherwise known around the world for compiling the Periodic Table of Chemical Elements.

Drinking in Russia
Not that Russians did not drink vodka before Mendeleev. The first mention of vodka in Russian history dates back to 1386. It was brought there by the Italians.
True, when vodka assumed its modern 40-degree strength, it represented a major shift in the alcoholic content of the drink.

From peasant to camarade

But perhaps the most significant shift in vodka consumption occurred as
a result of the Bolshevik Revolution. Its grand design was to transfer to workers and peasants the means of production — which, in turn,
was supposed to remove exploitation.
According Lenin and his cohorts,
was the main cause of excess drinking in pre-revolutionary Russia.
Russians kept drinking even more under communism. Except that the business of distilling and selling vodka very quickly began to reflect the political and economic peculiarities of Soviet society.

Two choices
In the 1960s, there were only two varieties of vodka on store shelves
at any one time — one slightly cheaper and the other a bit more expensive.

Form follows content
The more expensive brand, known around the world as Stoli — Stolichnaya —
went for Rb3.12. Those two price tags were known by heart to every Soviet citizen — man, woman and child.
Both brands came mainly in half-liter bottles which, once opened, could
not be recapped. That, more than anything else, reflected prevailing
Soviet mores at the time.
In front of a food store where vodka was sold, you would likely see
disheveled men trying to put together a troika. Each would contribute
a ruble — and the half-liter bottle yielded exactly three glasses.

Rules and regulations
Since a bottle of vodka cost around three rubles, that number also became
the common price of all types of goods and services — from fixing a leaky
faucet to buying a truckload of stolen logs for your wood-burning stove.
Still, this being the Soviet Union, there were plenty of rules and regulations concerning the national drink. For example, vodka was sold only starting
at 11 am — and the last store closed no later than 11 pm.

Skirting the rules
There were numerous ways around all those rules. For example, taxi drivers
could sell you a bottle of vodka at any time of day or night — with a hefty
mark-up, of course.
Many people believe that it was U.S. President Ronald Reagan — and his uncompromising stance against the Evil Empire — that finally broke the back of communism. This is probably a mistaken view.
The collapse of communism was slow. The first signal appeared in the early
1970s — when the Soviet government suddenly raised the price of a bottle of vodka.

Milking the vodka habit
You see, the government — with its monopoly on trade in alcohol — always
made a lot of money on the sale of the stuff. At the same time, it also
fought a battle against drinking.

Hidden price hikes
The Soviet government realized that there
was nothing it could do about the supposedly enthusiastic “builders of communism” imbibing huge quantities of vodka.
Along with alcholism, communism was supposed to have eliminated numerous
other capitalist ills, such as inflation. So, the government could not just raise the price of a bottle of vodka.
Instead, it decided to remove the familiar brands — the Stoli and the Moskovskaya — and instead rolled out two new ones. The only problem was that
they cost Rb3.62 and Rb4.12, respectively — a price hike of around 25% to 30%.

New vodka, new price
This made it a lot more inconvenient to get together in groups of three —
each person now had to contribute a ruble and significant change,
instead of just a ruble bill, as had been the case in the past.
Moreover, the new brands were much worse in quality.

Slow-creeping inflation
The price of a vodka bottle had a significant multiplier effect throughout
the entire Soviet society and economy.
As a result, you now had to pay more for all those small services or stolen goods. As the price of vodka rose, so did all those other prices.

Caving in

When Mikhail Gorbachev — the last communist party boss — finally started
on his courageous program of economic reforms, the whole seemingly solid
edifice of the Soviet economy collapsed around his ears.
But it had already been undermined by decades of vodka-led inflation.
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Vodka and Russian history — inseparable?

Vodka Part II: Sobering Up the USSR
It seems that all major events in Russian history begin with the ban
on the sale of vodka. The government banned the sale of vodka at the start
of World War I, and the Bolsheviks promptly extended the prohibition.
Likewise, Mr. Gorbachev, the last Soviet president, declared a war on drunkenness the moment he came to power.
Soviet Union, there were always two contending schools of thought. On the one hand were Western Kremlinologists.
These scholars — like President George W. Bush’s National Security Advisor Condoleezza Rice — made a career out of studying political intrigues in the Kremlin.
On the other hand were true sages like Mikhail Gorbachev, the man under whose remarkable reign the Soviet Union dissolved itself.

Vodka versus Apple Juice
Mr. Gorbachev understood that vodka was the key to understanding the Soviet system.
Mr. Gorbachev unleashed a massive campaign to promote soft drinks and fruit juices — instead of vodka. His government also hiked the price of vodka and severely limited its sale.

Uprooting alcoholism
He also proposed truly heavy-handed,
Instead of just boozing up with each other, Russians now shared their misery about life in miserable, detoxed circumstances.
In the South of Russia, 100-year-old vineyards were systematically
eradicated. The result was predictable enough. There were huge lines in vodka stores, of course. And in those lines, arguments and fights broke out incessantly.
Prior to Mr. Gorbachev’s anti-vodka campaign, the drink was often consumed by a “troika.” Consuming vodka in groups of three made sense because a bottle
cost three rubles. In this way, each person contributed one ruble —
and in turn, each had one glass.

Removing the filter
People actually shared their misery about life in larger groups.
These people realized that in their miserable, detoxed circumstances,
waiting in line had never been harder. And it had never been more
politically explosive.

Gorbatschoff for Gorbachev
Worse, Russians began drinking all manner of chemicals — such as industrial lubricants and even shoe polish. Given higher prices for the real stuff,
anything that contained even a gram of alcohol — or could give you a buzz
Russians began drinking all manner of chemicals. They imbibed anything that contained even a gram of alcohol.
There was also plenty of bitter humor. For instance, the best present
you could bring to your Russian friends from abroad was a bottle of “Gorbatschoff” vodka from Germany — a respectable old brand that predated
the rise of Mr. Gorbachev to power.

Fall of the Soviet Union
Most people living outside Russia think it is because he is blamed for the fall of the Soviet Union — and Russia’s loss of its empire and superpower status.
Much closer to the truth is probably the fact that it was Mr. Gorbachev’s own sober way of life — and his attempt to impose it on his countrymen and women — that makes the Russians dislike him in retrospect.

Life, liberty and… vodka
When the Soviet Union finally disintegrated at the end of 1991,
Vodka rationing exposed the true misery of everyday Soviet life — without any alcoholic shock absorber.
Boris Yeltsin — the new Russian leader — decided not to repeat
Mr. Gorbachev’s error of restricting access to vodka.
That was to be expected not just on grounds of political smarts.
Mr. Yeltsin himself was far from a teetotaler.
Mr. Yeltsin might have appeared rather ridiculous. But to Russians, his drunkenness was a hopeful sign that their own love of vodka would never
be denied.
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Did vodka affect the restructuring of Russia's economy?

Communism
After Russia's economy was liberalized in 1992, one of the first imports
into Russia was vodka — which is, of course, Russia's national alcoholic
drink. In fact, up until the financial crisis in 1998, Russia was a major importer of foreign vodka. Fortunes were made — and lives were lost — in the endless turf wars between gangs of importers..
While Russia imposed heavy tariffs on the import of such things as medicines
and staples, it granted some “charitable” institutions — such as societies of the handicapped and sports clubs — the ability to import vodka without tariffs.
You can only imagine how many tattooed veterans of the Soviet penal system suddenly became athletes or invalids. Boris Berezovsky, by the way, became one of quite a few Russian oligarchs who made their original fortune taking advantage of those tariff-free vodka imports.

Market forces
During the Yeltsin era, all restrictions and regulations on private commerce — including the sale of alcoholic beverages — were suspended.

Just like Finland
Russia's situation was thus similar to what happened
The number of different vodkas in Russia skyrocketed — proving even to
the most convinced proletarian that the market economy does work.
Those who were determined to drink themselves to death promptly did so.
The rest learned to drink more moderately.
Along with Western imports, new Russian producers began to appear on the
Russian vodka markets. One of the early ones was a former KGB operative
named Pyotr Smirnov.

Smirnov legacy
The Smirnov family used to be the purveyors of high-quality vodka
to the court of his Imperial Majesty, the Autocrat of All-Russia,
Czar Nicholas II.
After the revolution they brought their trademark to the West.
Known as Smirnoff, it is currently owned by a major international drinks conglomerate, Diageo.

Trademark wars
The Smirnoff vodka, of course, is a registered trademark all over the world.
But in Russia, the quick-witted Mr.
Vodka gave prominent Russian oligarchs the cash flow to become players
during the privatization boom.
Smirnov — who may or may not be related to the illustrious distilling
family — registered his own trademark in Russia only a few days before
Smirnoff did.
No matter how much the Western company fought him in court, he continued to distill and sell his own vodka brand in Russia.
It became the most popular in the country for a while, far outselling
the brand spelled with a double-F. But Smirnov’s drink could never be sold anywhere outside the Russian borders.

Blessing in disguise
The vodka industry in emerging Russia was also directly connected
to momentous events on the global financial stage.
In particular, the Russian financial crisis and the devaluation
of the ruble on August 19, 1998 proved a blessing in disguise for Russia’s
vodka producers.

Boosting sales
It marked a new era in the history of Russia — as well as the history of the Russian vodka industry.
Imported vodka became unaffordable for domestic consumers in the Russian
market virtually overnight.
What happened? Well, the ruble went from around six rubles per dollar
to around 12 rubles — and is now worth around 27 rubles. Russia defaulted
on its debt — and became a four-letter word for foreign investors.
But Russia’s domestic producers prospered. Imported goods — including imported vodka — shot up in price so much that virtually overnight they became unaffordable for domestic consumers in the Russian market.

Vodka Renaissance
After some dramatic reorganizations of existing distilleries, and
the emergence of quite a few new ones, Russian vodka producers got down
to real business. They toughed it out in the real marketplace of pricing and marketing — not rigged distribution regimes.

Embarrassment of riches
In just a few years, the number of different vodkas on Russian store shelves skyrocketed — proving even to the most convinced proletarian who never even
Russian vodka producers toughed it out in the real marketplace of pricing and marketing — not rigged distribution regimes.
Now, literally dozens of vodkas — ranging in name from Kazak Special
to Christ’s Tear — compete for drinkers’ attention.

There is a mind-boggling variety of bottle shapes. Some vodkas come in bottles shaped like naked women or mythic heroes.
And they are sold in hip flasks — as well as in half-gallon jugs for family consumption. There are even 12-ounce aluminum cans and packaged plastic
glasses nicknamed “Russian yogurt”.

Listen to the connoisseurs
Never mind the gimmicks. Real connoisseurs in Russia always know which brand
is good — and which cannot be consumed without serious risk to life and limb.
If you’re in doubt, you can always ask the serious-looking men making their purchase at the same counter.

Good advice
You’ll get a lecture on the advantages
Western vodka producers must tremble thinking about the time that Russian distillers move to claim the world market for themselves.
The only problem is that the new Russian has become far too enterprising. If there is a brand that becomes too popular for its own good, there is always a risk of buying a fake or pirated knockoff.
As always in the Wild East, the motto in the trade is Caveat Emptor — buyer beware.

Caveat Emptor
So if you want to be really careful, you can still buy Absolut, Finlandia or Smirnoff — the familiar vodkas imported to Russia from the West.
However, even the best Russian varieties cost only the equivalent of two dollars. And the Western varieties? You pay five to ten times more.

Look out, world!
If I were a Western vodka producer, I’d start to tremble thinking about what will happen when Russian distillers finally move to claim the world market for themselves.