A taxing tipple

WSE-listed Grupa Żywiec's revenue from sales amounted to zł.1.442 billion in H1 of this year, a seven-percent increase in relation to the corresponding period of 2005. "Our sales dynamics are higher than the sector average," the company's president, Hans van Zon, said.

However, the growing sales did not have a direct impact on the firm's profits, which at zł.138.4 million were three percent lower than in H1 of 2005. Van Zon explained that this was due to significant investments directed at streamlining the brand portfolio and developing distribution and marketing support for the brands.

Van Zon has reason for optimism. The rebranded Warka beer noted an increase in sales of 23 percent during the first six months of the year. Królewskie's sales grew by 10 percent in the same period and the beer is already the second-best selling brand in Warsaw. The company got a huge boost when Żywiec was named as the first Polish brand and one of few non-British brands in the British edition of Superbrands in the category "Brands to watch."

However, a recent government proposal might soon be giving Żywiec's board sleepless nights. In the new budget proposals there is talk of increasing excise tax on beer by not less than 10 percent. The Żywiec president explained that this would mean increasing the excise by around five groszy, to around 50 groszy per bottle, not to mention VAT, which would also increase accordingly.

"The excise in Poland is already twice as high as in Czech Republic or Germany," van Zon said. He predicts that the increase in beer prices will lead to a slump in sales and a fall - not an increase - in state revenue.

"Also, this could lead to increased consumption of spirits and an increase in the unfavorable ratio of consumption of strong alcohols," van Zon concluded.