Saturday, August 05, 2006

Sober Russians to Stink

In the land of bureaucracy you can't buy a drink nor, soon, deodorant:

[Moscow] On July 1, the government rolled out an elaborate [Federal Security Bureau]-designed computer system intended to eliminate the danger of tainted alcohol and to improve transparency and accountability in the wine and spirits market.

One month later, the malfunctioning database at its heart has brought the alcohol industry to its knees. Millions of bottles of alcoholic beverages are stuck in customs warehouses awaiting new excise stamps. The selection of wines and spirits at restaurants, bars and liquor shops has been decimated.

...."No one realized that there would be this volume," said Alexei Khlebnikov, a manager for Atlas, the state-owned firm under the jurisdiction of the Federal Security Service, or FSB, that is running the Unified State Automated Information System, or EGAIS. "There were no statistics for all the wine."

....Retailers and distributors were required to send all bottles with the old excise labels to customs warehouses for relabeling.

....Wine World, one of the country's largest importers, with a total volume of some 60 million bottles per year, was forced to cease operations almost entirely in the first three weeks of July, general director Peter Kanygin said.

"The company's activities were paralyzed. We imported nothing and there was no distribution," Kanygin said. "Every one of the big players is losing hundreds of millions of rubles."

The company will now have to put new excise labels on most of the roughly 4 million bottles of wine sitting in the Selyatino customs station, said Wine World's dedicated EGAIS manager, Dmitry Ionkin. Many will have to be relabeled by hand, a task that would take a single employee more than six years, according to Ionkin's estimates.

And wine isn't the only product that contains alcohol: regulations intended to tighten government control of alcoholic beverages are threatening to cripple the country's $7 billion cosmetics industry.

Personal care products that contain at least 1.5 percent alcohol, including perfumes, hair sprays and deodorants, could soon begin to disappear from store shelves, industry insiders warned this week.

....The new regulations, which came into effect July 1, require all manufacturers and distributors of products containing alcohol -- including ethyl alcohol -- to enter information about their products in the Unified State Automated Information System, or EGAIS.

....Cosmetics companies must first create a database containing detailed information about all of their products, including the name, a list of ingredients, alcohol content and volume. Industry experts say, however, that Atlas, the state-owned company in charge of EGAIS, has never provided comprehensive guidelines for how this information should be entered into the central government data bank, or even what information is required.

Next, companies must report individual shipments of cosmetic products to an Atlas employee, who manually enters the information about each shipment into EGAIS. The shipments, rather than individual items, are tracked by the system.

....Under the new regulations, cosmetics companies are also required to obtain a license covering the production and distribution of all products that contain alcohol.

....The Perfumery and Cosmetics Association of Russia projects that if the State Duma does not exempt the cosmetics industry from the new alcohol regulations, production and turnover, which have already begun to decline, will plummet by nearly 60 percent.

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