Legal regulation
There are three main types of legal regulations specifically relevant for fast-moving consumer goods in Russia:
1. Federal Laws of Russian Federation
The Federal Laws of Russian Federation are developed and adopted by the Russian Parliament and regulate broad areas of business and public life. The three laws most important for FMCG business are listed below:
•Federal Law N 29 – “Quality and safety of food products”
•Federal Law N 38 – “Advertisement and promotion”
•Federal Law N 273 – “Regulation of trade and commerce”
2. Technical Regulations of EEU
Russian Federation, along with Kazakhstan, Belarus, Armenia and Kirgizstan, is a member of the Eurasian Economic Union. In order to harmonize regulations of the member countries, the Union regularly develops multiple EEU technical Regulations, which, once adopted, supercede the regulations of the member countries. Some of the regulations most relevant for FMCG business are listed below:
•Technical Regulation N 22 – “Consumer information for food products”
•Technical Regulation N 34 – “Safety of meat and meat products”
•Technical Regulation N 47 – “Safety of alcohol products” etc.
3. Government standards (GOSTs)
The Russian Standartization Comittee has produced and continue producing a large number of so called “Government Standards”, or GOSTs which describe rules and standards for specific products and activities. For some product categories, like alcohol, GOST compliance is mandatory, while for other categories (like meat products) it is voluntary. Consumer trust towards products produced in accordance with GOST is normally higher, so if a manufacturer follows GOST, he usually proudly says about it on the products packaging. Some examples of product GOSTs are listed below:
•National standard N 12712 – “Vodkas and special vodkas”
•National standard N 52196 – “Cooked meat sausage products”
•National standard N 58233 – “White bread” etc.
Digital controlling systems
In order to increase control over retail turnover and prevent production and distribution of counterfeited products, Russian government recently introduced a number of digital tracking and control systems.
At the very basic level there is a system of mandatory online cash registers. That is, every sale at every point of purchase is automatically recorded and data is electronically transferred to so called Operators of Fiscal Data (OFDs), which in turn deliver the data to Tax authorities data servers.
On top of that, there is a more advanced digital tracking system called “Chestny Znak”, which controls all product-related transactions and movements from the moment particular item comes out from the production line and until it is sold to a final consumer. To facilitate this, each individual product item needs a unique ID code (purchased from the Chestny Znak operator) which is then printed on the product packaging in 2-D Datamatrix format and then tracked electronically throughout the distribution system until a cashier at the point-of-purchase scans the 2-D code and the online cash register sends data to Chestny Znak servers. This system is already mandatory for some product categories (like dairy and tobacco products) and will be rolled-out to all consumer goods in near future.
Very similar to Chestny Znak is EGAIS system, which was designed specifically for controlling alcohol products (including beer). The difference is that alcohol producers have to buy not only unique digital codes, but also their physical carriers – protected paper excise marks which need to be sticked to every bottle produced at the plant. Another part of the EGAIS system are volume-measuring devices installed at the alcohol producing plants with electronic data delivery directly to EGAIS system.
The last notable system is Mercury, which was developed by the Russian Agriculture Ministry to keep close track of the veterinary certificates issued for all animal-related products like meat, fish and dairy. Manufactures are obliged to receive a veterinary certificate for every batch of products produced and register it electronically in the Mercury system. Then the certificated are electronically tracked along the whole distribution chain until finally redeemed in a retail store.