Russian rectified-ethanol output falls 21% as producers cut inventories

Output contraction accelerates in August

Russian production of rectified ethyl alcohol fell 21% year on year to 26.13 million decalitres in January-August 2026, according to Rosalkogoltabakkontrol data reported by Kommersant. The contraction became substantially sharper in August, when output dropped 61.17% from the same month of 2025 to 1.85 million decalitres.

Rectified ethanol is a principal raw material for spirits, making the decline relevant to distillers and other downstream buyers. Total ethyl-alcohol production in Russia also decreased, although less rapidly: output was down 17.12% year on year at 40.24 million decalitres over the eight-month period. In August, total production fell by almost 57% to 3.04 million decalitres.

Alcohol demand and production plans weaken

Владислав Резник, chairman of Soyuzkonyak and a State Duma deputy, linked the decline in ethanol output to a contraction in alcoholic-beverage production that has continued for about two years. Russian alcohol production overall fell 7.2% year on year in January-August 2026, according to Kommersant. Lower consumer demand was among the factors reducing bottling activity.

Алевтина Хасанова, vice-president of D.I.S.T. Spirits, which owns the Nerpa, «Побеda» and «Байкал» brands, said the steeper fall in ethanol production reflected lower purchasing volumes and revisions to manufacturers’ production plans. Higher ethanol excise duties and minimum retail prices have added pressure, alongside expensive financing and companies’ reluctance to tie up working capital in inventories.

Prepayment limits raw-material purchases

Alcohol-market expert Сергей Гладыщук also attributed the fall to rising financial costs. Alcohol companies now generally purchase raw materials on a prepayment basis, he said, limiting their ability to buy large volumes. High interest rates make advance production and long-term storage less attractive, encouraging manufacturers to reduce raw-material orders and maintain smaller warehouse stocks.

This inventory adjustment helps explain why ethanol output is falling faster than finished-alcohol production. Producers can continue bottling from previously accumulated stocks even while ordering less new ethanol. Supply schedules may be agreed in advance, but companies have fewer incentives to build substantial reserves when financing inventory is costly.

Earlier stockbuilding cushions the market

The current comparison is also affected by inventory decisions made in 2025. Increases in excise duties and minimum retail prices prompted distributors and retailers to accumulate stocks before the New Year. As those inventories were sold, manufacturers gradually increased bottling, creating a gap between current ethanol production and finished-product output.

For downstream users, the August decline therefore does not automatically indicate an immediate shortage of feedstock. Kommersant reported an expert assessment that a temporary fall in ethanol production did not create serious supply-disruption risks for alcohol manufacturers. The main near-term issue is inventory discipline: distillers are matching purchases more closely to weaker demand while minimizing financing costs. If consumer demand remains subdued, rectified-ethanol producers will face continued pressure from smaller orders even without physical supply constraints.