Ukrainians to New year buying imported alcohol

In 2016 in Ukraine significantly increased the price of alcoholic beverages. However, people are actively buying alcohol for new year’s table. Only now increasingly prefer imported goods, writes UBR.

As the Director of the Ukrainian Association of trade networks suppliers Oleksiy Doroshenko, now the Ukrainian companies at the expense of increase of excises and the minimum retail price of alcoholic beverages, lose their share of the official market of alcohol.

“According to our calculations, approximately 85% of the market of strong alcohol, primarily vodka, in the shadows,” — said the expert.

While imports too have increased in price. According to Doroshenko, the new year period, merchants can donate a part of their margins to stimulate sales.

According to the head of the Association “Ukrvodka” Vladimir Ostapyuk, shadow of the vodka market in 2017 could rise to 65% compared to 50% in 2016. According to him, the Association is disappointed with the decision of the Parliament to raise the excise tax on spirits by 20%, because initially, the Parliament discussed the growth of only 12% (rate of inflation).

Recall that Rada raised the excise tax in 2017 for beer by 12% — to 2.78 UAH/liter, alcoholic beverages — by 20% to 126,96 UAH/liter of 100% alcohol. The excise rate on wine remains at the level of 0.01 UAH/l, and fortified wines and vermouths increased 12% to 8.02 UAH/liter, sparkling wine — also 12 percent, to 11.65 UAH/liter.

In addition, in December increased minimum prices for alcohol products. So a legal half-liter bottle of vodka now costs a minimum of 69,8 UAH. A bottle of dry wine 0.7 l — 33 UAH, champagne — 69,9 UAH/booth. Brandy has increased in price by 24-27%, while whisky, rum and gin at 37-63%, and wine rose by 22.2-55.6 per cent.

For two years the sales of vodka decreased by more than 40%.

The regular increase in prices led to a decline in consumption and domestic production of the product. According to the state statistics service, production of vodka in 10 months of 2016 was decreased compared to the same period in 2015, to 11.4% (12.9 million decalitres), and the production of cognac and brandy by 10% (to 2 million decaliters).

As noted in the company Pro-Consulting, for the period from 2013 to 2015 vodka sales in retail chains in natural terms decreased by more than 40%: from 17.65 million given to 10.4 million decaliters.

The volume of production of liqueurs and other alcoholic beverages in Ukraine in January-October decreased by 38.5% compared to the same period last year and amounted to 4.3 million decaliters.

“During the year the margin on the imported alcohol is about 200-300%, so the company can give a 30% discount of the final price under the Christmas holidays and to significantly increase sales. Because alcohol Ukrainians still actively drinking,” — said Alexey Doroshenko.

According to chief sommelier, PR Manager of the company “vinfort” Igor Terekhin, leader of sales in the company is Jim Beam whiskey.

“Promotional reduction in wholesale prices by 30% (from 395 to 265 UAH UAH 0.7 l) in our shops gave a significant increase in sales. If during the year the implementation of a product rose by 10-15%, then the new year due to the stock we increase sales in dozens of times,” he said.

Buyers are willing to pay 100 UAH and buy on the shares of imported rum, whiskey or brandy instead of the domestic product.

“When the total profitability of trade in 30-40% alcohol can be sold with margins of 200-400%. So they settle for 250% and can offer a price lower than the market average, and significantly increasing sales. Therefore, the Ukrainian alcohol will continue to lose market share, since until 2024, we have to raise their excise taxes to a European level”, — concluded the expert.

Brut is sweet

In the shadows is part of the domestic wine, as a license to trade for small wineries have been cancelled recently.

However, experts note that Ukrainians are gradually switching from sweet wines to dry, which by definition higher quality. According to Alexey Doroshenko, this is not least due to the fact that the Ukrainian tourists and guest workers, traveling the world, accustomed to good wine.

All the winemakers state that the demand for dry still wines and Brut (sparkling) is increasing. So they are constantly expanding their range of dry wines. And even official statistics show that of all alcoholic beverages only wine keep sales volumes on the background of the General decline.

“Vinfort” indicate that consumers are slowly but steadily increasing the volume of purchases. The increase in the price of alcohol (including minimum retail prices) lined the market. In particular, the Ukrainians began to buy more high-quality champagne, as different cheaper versions of the drink such as “Soviet” approached him at a price.

If before the consumer took the product at 49,90 UAH. when indicative price 69,90 UAH for a bottle, he makes a choice in favour of higher quality, more premium beverage. Branded sparkling wine is worth 200-250 UAH per bottle, too sold well. But the wine that is officially called champagne, can afford only very wealthy people, because its price is much higher than the domestic product.

“The New year is implemented about 80-90% of all the champagne in Ukraine. The second active sales period — summer season. But in the summer sales volumes are disproportionately small in comparison with the winter holidays,” — says Igor Terekhin.

According to him, in recent years has significantly changed consumer preferences champagne. 5-6 years ago up to 90% of sales came from the semi-sweet and sweet champagne, and the proportion of the Brut does not exceed 5%. Now it has reached 15%, while sales of semi-sweet beverage decreased to 45-50%.

The quiet wines are also growing sales of imported goods, which became cost competitive with domestic product. The same trends the experts predict for the next year.