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The Economics of Beer$
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Johan F.M. Swinnen

Print publication date: 2011

Print ISBN-13: 9780199693801

Published to Oxford Scholarship Online: January 2012

DOI: 10.1093/acprof:oso/9780199693801.001.0001

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From Vodka to Baltika: A Perfect Storm in the Russian Beer Market

From Vodka to Baltika: A Perfect Storm in the Russian Beer Market

(p.287) 16 From Vodka to Baltika: A Perfect Storm in the Russian Beer Market
The Economics of Beer

Koen Deconinck

Johan F. M. Swinnen

Oxford University Press

This chapter documents the spectacular increase of beer consumption in Russia. Over the course of only a few years, beer has become the dominant drink in Russia, with consumption levels now close to European averages. This major shift is explained as the result of improvements in quality (due to FDI), advertising regulations and price changes, all of which combined into a ‘perfect storm’ that made beer a more attractive drink to Russian consumers. It is argued that consumers' choice of beverage is heavily influenced by their peers' behaviour. Once a critical mass of consumers adopted beer, these network effects led to more and more people drinking beer in subsequent years.

Keywords:   beer, Russia, perfect storm, network effect, advertising, quality, FDI

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