Russia is preparing to impose steep tariff hikes on imported spirits, including Scotch whisky, from countries it deems “unfriendly” in response to ongoing Western sanctions. According to The Times, the Kremlin may double import taxes on spirits as early as August—potentially dealing a blow to the UK’s whisky exports, which have continued to flow into the country despite the war in Ukraine.

While the move has yet to be officially confirmed by the Russian government, reports suggest import duties could rise to 20% of the declared value of spirits, with a minimum rate of €3 per litre. A Russian official quoted in state media claimed the measure aims to “counter foreign sanctions” and stimulate domestic alcohol production.

UK whisky exports in the crosshairs

Despite Western sanctions and the collapse of direct trade relationships, Scotch whisky has continued to reach Russia through alternative supply routes—most notably via Latvia and Lithuania. In 2023, nearly £100 million worth of Scotch was exported to Russia, often through these Baltic intermediaries.

Latvia, with a population of just two million, has emerged as one of the biggest suppliers of whisky into Russia. But if Moscow proceeds with the planned tariff hike, the price of imported whisky—already elevated by the use of indirect routes—could rise significantly, potentially curbing demand further.

A spokesperson for the Scotch Whisky Association responded to the news, stating: “Since the conflict began, direct exports to Russia have decreased by 54 per cent, and shipments to indirect routes to market have also decreased significantly. The industry fully complies with UK sanctions on Russia, so the impact of any Russian action through tariffs is limited.”

Wine tariffs could spike even higher

The proposed whisky tax follows recent reports that Russia is also considering a 200% duty on wine imports from NATO member states. In July 2023, duties on wine from “unfriendly” countries were raised from 12.5% to 20%, a move that aimed to support Russia’s nascent domestic wine industry.

However, local winemakers and officials now argue that the increase was insufficient. Russia’s domestic wine production remains relatively small, and most Russian wines are significantly more expensive due to limited economies of scale. Analysts expect that a 200% import duty on foreign wines could inflate the prices of Russian-made alternatives by up to 30%, due to reduced competition and supply chain constraints.

Nationalisation and the reshaping of Russia’s drinks sector

Russia's state-led campaign to bolster domestic food and drink production has also seen the nationalisation of major private firms. In April, the government took control of Kuban Vino, one of the country’s largest wine producers, citing its ties to billionaire Yury Antipov—accused of undermining national interests by transferring assets abroad.

Kuban Vino produced more than 95 million bottles of wine in 2023 and was one of four food and drink companies seized from the agricultural conglomerate Ariant. The move signals a broader shift in state policy toward tighter control over the drinks sector, particularly in response to geopolitical tensions and economic isolation.

Sanctions reshape the global alcohol trade

Before the onset of the Russia–Ukraine war in February 2022, the country’s drinks sector was one of the fastest-growing in the wider food and beverage industry, with annual growth rates reaching 15% in some categories.

However, that trajectory has reversed sharply. Western sanctions—particularly the EU’s fifth package—have severely limited Russian alcohol exports, especially to markets like the UK, US, and EU. Many Russian producers who had ramped up international distribution are now grappling with suspended contracts and supply chain disruptions.

As Russia looks inward to stimulate domestic alcohol production and plug budget shortfalls, international brands—especially Scotch whisky producers—may face yet another barrier in an already fractured global marketplace. For now, trade continues, but escalating tariffs and political pressure could soon make that increasingly difficult, if not unsustainable.