As the hryvnia lost 50 percent of its value this year, domestically produced alcohol drinks gained popularity on Ukraine's shrinking Hr 24.2 billion ($1.5 billion) alcohol market. Jack Daniels whiskey as well as Finlandia vodka and other imported beverages became more expensive, pushing consumers towards local brands.
Prices of imported alcohol have risen some 50-80 percent, said Igor Dzyuba, marketing
director at Arda-Trading, an alcohol trader. Some of them, like Martini and
Baccardi, have their own distribution networks in Ukraine and have limited price hikes to 20 percent, sacrificing profits but keeping clients.
Overall, the prices for alcohol
and tobacco, both imported and domestically made, rose by 25 percent as of
October, year-on-year, according to the State Statistics Service.
Some importers are trying to keep their
business running through ordering more middle-price drinks and decreasing their
marketing and advertising expenses.
However, this didn’t stop liquor imports
from falling by as much as 30 percent during 10 months of this year, according
to Pavlo Glazov, head of Vinfort, an alcohol distributor. He thinks those
traders who bet on imported alcohol won’t be able to bring enough of it for the
Christmas holidays given restrictions on the purchase of foreign currency, Capital
business daily reports.
There is a huge decrease in the luxury segment
consumption, Dzyuba of Arda-Trading said. If a drinker of French wine, who used
to pay Hr 300-400 per bottle can’t handle the hiked price, he will likely switch
to a Chilean wine that one might purchase for Hr 60-100 a bottle. Moreover, those
who seek for an evening relief in a glass of wine or a can of beer changed
their shopping habits, moving from wine boutiques to online shops.
Ukraine-made vodka is enjoying the benefits of
expensive imports. Output started increasing in October. Moreover, the Cabinet raised
minimum vodka price from Hr 30 to Hr 40 per 0.5 liter bottle.
Viktor Gerus, a 49-year-old electrician at
Ukrzaliznytsya, a state-run railway operator, has always preferred vodka in the evenings. “Hlibny Dar
(vodka) has always satisfied me before the last … price increases. Now I just
get whatever is available at the store for Hr 40,” he said. Gerus admits
he doesn’t feel any difference between cheap vodkas.
Olimp, an alcohol maker, has increased the
production of its key vodka brands, including Prime, by three times this year
to occupy the bigger share of the market. Moreover, now it also leases the production
capacities to Crimean Vodka Company, whose Medoff is a major brand on the
market, as Crimea stopped being a business-friendly place after it was annexed
by Russia in March. Ukraine lost more than half of its vineyards due to Russian President Vladimir Putin’s aggression, which is why consumers bought 40 percent less wine
this year.
Ethyl alcohol production remains a highly
monopolistic sector dominated by state-owned Ukrspyrt that has to follow market
fluctuations in its pricing policy. Yet in May, the company decided to raise the
spirit price by 13 percent, up to Hr 18.8 per liter, though in October made it
Hr 17.8. It explained the last move with the increased output due to launching
seven new production spots that allow to reach the planned profits with lower
prices.
Verkhovna Rada, Ukraine’s parliament, made the life of the alcohol
market even harder after it introduced a 25-percent higher excise duty for
strong beverages in July, both to increase tax revenues and to discourage consumption in a hard-drinking nation.
A bartender at luxurious Hilton Kyiv Hotel, Oksana Tkachenko, 31, says her customers have not changed their
habits despite the crisis: young people go for beer, Ukrainian or Belgium’s Hoegaarden, while older people stick to vodka shots. Middlemen prefer whiskey.
The average price for 50 grams of Johnnie Walker Red Label or Ballantine’s in Kyiv
bars stands at Hr 50. “Those who used to order rum or whiskey still do so,
perhaps finding a less expensive brand,” says a bartender.
Kyiv Post staff writer Olena Gordiienko can be reached at [email protected].
