Higher Excise Tax on Vodka

Vodka Up?

Vodka Up?

The vodka market is facing a disaster. After 1 January, production fell sharply because distributor warehouses were full. Krzysztof Tryliński, president of Belvedere Group, the producer of Krupnik and Sobieski vodka, admitted that sales in January were 50% lower than at the same time last year. In turn, Akwawit-POLMOS, owner of the Krakus and Wratislavia brands sold ten times less vodka in January than the year before. There are a great many companies struggling with similar problems. The producers of spirits are having to tighten their belts by reducing work time and sending employees on outstanding leave. Stock Spirits Group, the owner of, amongst others, the Żołądkowa Gorzka brand, has already announced that it expects the increase in excise duty will result in a decrease in sales and EBITDA in 2014. The slump in January sales in the vodka market is partly due to a large increase in orders that came at the end of last year. When the government announced an increase in excise, orders for vodka rose sharply which led to full warehouses. Increased sales also resulted in an increase in revenue from excise. In the first 11 months of last year, alcohol producers paid almost PLN 6.03 billion in excise as compared to PLN 5.82 billion the previous year. “In the first quarter of 2014, revenue from excise on alcoholic beverages may be six or even seven times lower than in the previous year,” says Grzegorz Ślak, president of Akwawit.

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