Ukrpyvo: Ukrainian breweries cut domestic beer sales by 2%

Ukrainian breweries in January-July 2012 sold 172.8 million decaliters (dal) of beer inside the country, which is 2% down on the same period of 2011.

According to the Ukrpyvo industry organization, the main reasons for the continued decline on the market are fiscal pressure on the industry and a forced increase in beer prices due to the rise in the cost of raw materials, energy and fuel.

According to the organization, the average retail price of beer (including the HoReCa segment) in the period increased by 16.7%, to Hr 14.7 per liter.

At the same time, beer imports to Ukraine in January-June 2012 totaled 2.4 million dal, worth $23.3 million, which is 50% up from 2011 in natural terms and 52.3% up in monetary terms.

The largest beer importers to Ukraine are Russia, Belgium, the Netherlands and the Czech Republic, said Ukrpyvo.

"The situation in the brewing industry continues to deteriorate. Despite Euro 2012, as well as a very favorable season for sales, the industry failed to stop the decline on the market, which has continued for the fifth year in a row. In this situation, the industry needs a balanced position from the government, transparent rules of market regulation, and a long-term and predictable state policy," Ukrpyvo Director General Halyna Korenkova said.

According to the report, Ukrainian brewers expressed concern regarding the legislative initiatives of some MPs to increase excise duties by more than 11% from January 1, 2013.

"The Tax Code foresees the indexation of excise duties according to inflation, i.e. to Hr 0.87 per liter of beer. But the increase in excise duties, exceeding this figure, directly violates existing laws. The explanations that revenues to the national budget will increase due to this do not hold water," she said.

As reported, the Verkhovna Rada on July 3 registered a bill, whose author, the chairman of the parliamentary committee on the financial, banking, tax and customs policy, Vitaliy Khomutynnyk (the Regions Party), proposed to increase excise duties on beer, spirit and alcoholic drinks by 11%.

In particular, the document foresees an increase in excise duty on beer from the current Hr 0.81 per liter to Hr 0.90 per liter, wine - from Hr 2.33 per liter to Hr 2.59 per liter, sparkling wine – from Hr 3.38 per liter to Hr 3.76 per liter, cider - from Hr 0.46 per liter to Hr 0.51 per liter, and spirit – from Hr 45.87 per liter to Hr 51.01 per liter.

According to the State Statistics Service, Ukraine in January-July 2012 produced 190 million dal of beer, which is 0.7% up from the same period last year. In July, beer production in Ukraine decreased by 0.6%, to 36 million dal.