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The government’s decision to increase the minimum price of vodka almost two-fold is seen as one of the major reasons for the steep fall in production.
Currently one litre costs 400 rubles ($13) and the price is set to rise again to 500 rubles ($16) by next year.
Market insiders say the increased price of vodka has led to a higher demand for illegal and counterfeit alcohol.
Vadim Drobiz, head of the Centre for the Study of Federal and Regional Alcohol Markets said the state has failed to prevent illegally produced vodka from being sold in stores.
“That translates into growth of the illegal market,” said Drobiz.
The production of illegal spirits according to unofficial data accounts for 30 per cent of the market.
Daria Chernyshova in Moscow, Russia for The BRICS POST, with inputs from Agencies