The market is valued at over 114 million liters annually and RON2 billion.
“The overall spirits market is suffering a dangerous decline for the industry. According to our data, the drop in volume for the first nine months amounts to 36% against the year-earlier period. The decline is exclusively due to the government’s wrong decision to abruptly hike the excise last September,” said Tudor Furir, managing director of Pernod Ricard Romania, a major importer of spirits.
The idea is shared by Florin Radulescu, president of Spirits Romania association, who says the market’s 36% decline triggered an investment freeze, company shutdowns, VAT losses and massive layoffs in the industry-therefore fewer salary taxes to the budget, plus unemployment/migration”.
Spirits Romania is made up of spirits producers and importers Alexandrion Grup Romania, Prodal ’94, Prodvinalco, Diageo, Pernod Ricard Romania, BDG Import and Cristalex, which hold 50% of the market.
“Romanian products, particularly low-price ones, were the hardest hit. Thus, it was the Romanian producers that suffered the most amid the move to increase the excise, the more so as fiscal evasion in the field soared to over 80% of the market according to our estimates,” said Radulescu.
Daniel Dobrita, sales manager of BDG Import, the largest spirits importer, says that the winter holidays traditionally bring above-average consumption, but that it will be very hard for sales posted in last year’s winter holidays to be repeated this year.
“Unfortunately, amid consumers’ low purchasing power and level of trust, the downward trend of sales will maintain”.
The manager estimates the market fell by 8-10% in the first 9 months of this year against the year-earlier period.
BDG Import ended 2013 with revenue of RON178 million (over EUR40 million).
Florin Radulescu also expects a weaker season for sales against the similar period of 2013 as Romanians’ Christmas basket is ever poorer.
On the other hand, Tudor Furir is upbeat and hopes the negative trend of sales posted in recent years during the winter holidays will be broken.
Spirits market players are shy of launching forecasts about next year’s consumption as everything depends on the level of the alcohol excise in 2015.
“We hope the government realizes the move to increase excises was a flawed one and reverts to the previous level. This way, we could see volumes rise by around 10-15% next year. Otherwise, the industry will keep sinking, spurring fiscal evasion,” considers Florin Radulescu.
Daniel Dobrita believes that beside the excise level, another major factor behind the trend of consumption is economic growth.
(English version by Catalina Apostoiu)