Polmoses point to excise tax as source of woes
By : Justyna Wrobel
Dire vodka sales for 2000 have once again highlighted problems for the liquor-producing Polmos companies, which are blaming the government for the industry's decline during the past few years.
Jozef Kapela, president of Polmos Bielsko-Biala and head of the National Spirit Industry Council (KRPS), estimated that the 18 state-owned Polmoses sold about 65-70 million liters of pure spirits in 2000. Kapela said the sales would be about 10% less than the 80 million liters produced in 1999.
While this year's sales figures aren't expected to improve and as several companies come up for privatization this year, the Polmoses said the government should take much of the blame for the industry's woes.
Since 1994, excise taxes on Polmoses' products have increased by 150%. On Feb. 1, the government slapped another 4.3% tax hike on the troubled liquor producers, bringing the total tax to zl. 62.78 per liter of pure spirits. (One liter of pure spirits produces two and a half liters of vodka.) According to Kapela, rather than realizing the government's goal of funding the budget with hefty excise tax revenue from liquor sales, the state is actually reducing the demand for Polmos vodka and encouraging the sale of cheaper, black-market alcohol.
Polmos Bialystok, the nation's No. 1 liquor producer and owner of the Zubrowka and Absolwent brands, reported revenue of zl. 1.212 billion ($275 million) last year, 1.4% less than 1999's figure of zl. 1.230 billion ($315 million). Bialystok's production of pure spirits at 16.7 million liters was 7% less than the previous year.
Nevertheless, Henryk Wnorowski, the commercial director of Polmos Bialystok, said the company was doing better than the market as a whole. "The drop of the entire liquor market was more rapid (than ours) last year," he said. Kapela said the market dropped by about 10%, while Wnorowski estimated the decline at 12%.
Although Wnorowski wasn't willing to make any predictions for 2001, he said the year had started poorly for the sector, but that Bialystok had already sold more than 2 million liters of pure spirits.
"To say anything about this year's market situation now would be like reading tea leaves," Wnorowski said.
"First, the market has to recover the tax increases and secondly, the problem of the black market should be solved."
He said he doesn't believe that alcohol consumption had dropped, pointing to the black market as evidence. Wnorowski estimated that 30% of the liquor sold is smuggled into the country. He compared that figure to Polmos Bialystok's 25% market share.
The government's assurances that this month's excise tax hike will be the only one this year isn't likely to have much effect on the demand for black-market liquor, Wnorowski said. "After all, the excise tax is still 10% higher than in Germany, and more than twice that in the Czech Republic and Slovakia," he said.
