Where the Glass is Full; Beer consumption rises with wealth, but only up to a point, which is why big brewers are running to emerging markets.

Byline: William Underhill (With Anna Kuchment in Moscow, John Sparks in New York and Stefan Theil in Berlin)

Vodka. It's as Russian as the Kremlin or the boundless steppes. Except to market watchers who track the fickle movements of public taste. These days Russians are swilling more Stella than Stoli. Beer consumption has doubled since 1998--and it shows. In Moscow billboards for the Golden Barrel brand surround the Parliament building. Fixed-price "biznesslunch" comes with a free mug of the stuff. Smart young drinkers swill exotic beer cocktails. (Watch out for the Churchill--Campari and unfiltered white beer.) Teenagers litter park benches with discarded bottles. Vodka has tradition on its side; beer has youth appeal. In a recent poll, 47 percent named beer as their preferred drink--14 points ahead of the national hooch. Conclusive proof of its popularity: earlier this month the government banned prime-time beer ads on television in an attempt to curb excessive drinking.

Why the switch? Explanations start with a quirk of Russian law that rates beer as nonalcoholic, a drink that even children can buy at street kiosks. Quality, too, is hugely improved from that of the Soviet era, when choice was limited to a few watery domestic brands. Better still, it's cheap--a bottle of a Russian brew can cost less than $1--and drinkers are spared the hammer-blow impact of serious vodka. Says Kirill Bulgakov, a 31-year-old management consultant drinking with friends at the Beer Mine, an underground Moscow pub: "When you are 25, you can drink six liters of beer and feel just fine."

But trend watchers see other inexorable forces at work. With rising wealth comes extra cash for small luxuries like a beer high. "Affluence and drinking always go together," says Robin Room of the Centre for Social Research on Alcohol and Drugs at Stockholm University. And history also teaches that the new rich won't share their parents' barroom --preferences. They want novelty and maybe a splash of chic, and Europe's top beer brands are rushing in to provide it--and to make up for falling sales in richer Western markets like the United States, Germany and Britain. This role reversal makes sense: tastes evolve as economies do, and the classically lower middlebrow brew is gaining favor in a Russia aspiring to middle-class wealth, while the rich move on. Says Room, "In the right circumstances, any beverage can be a sign of sophistication."

That's great news for Europe's giant brewers, responsible for 25 percent of world beer production, which have been eagerly tapping the Russian market. "The charts show a very clear link between the consumption of beer and GDP," enthuses Jeremy Blood of British brewer Scottish & Newcastle, which jointly controls Russia's top-selling Baltika brands, with Carlsberg of Denmark. "Beer is a democratic product that appeals to Everyman: it's just a matter of how much cash Everyman has in his pocket." And there's still plenty of room for expansion. At 51 liters a head per year, Russia's beer consumption still trails some way behind the European average of 62. Small wonder investors continue to pile in. Only last month Heineken added two more Russian breweries to its portfolio, and Belgium's InBev, the world's largest brewer, took full control of its Russian joint-venture partner, SUN Brewing, to become the market's second largest producer.

The problem is that the connection between rising wealth and beer consumption is clear only up to a certain point. Then it gets weak, and starts to wobble. According to Euromonitor, out of the world's 20 richest nations, beer consumption is ...