On the rocks

Leszek Wiwała, president of the Polish Spirits Industry (PPS), said the decrease had caught the industry by surprise. "Such a big drop surprised producers, who did not believe that problems with selling strong alcohol would be so serious," he told WBJ.

Breweries also experienced lower demand, as sales during Q1 2009 were almost 10 percent lower y/y.

"The industry noted a clear slowdown on sales in 2008," Melania Popiel, a Carlsberg Poland representative, admitted to Rzeczpospolita. "Throughout the year sales increased by only 1.7 percent." She said demand for beer in 2009 could fall as much as five percent lower than in 2008. Some spirit industry chiefs are blaming a recent excise tax hike for evaporating demand. Maciej Meyer, a representative of Belvedere, told Rzeczpospolita that tax hikes usually caused a momentary drop in demand, particularly in the first months after its introduction. But, he added, "In time, consumers will get used to the new prices and adapt to the situation."

The excise tax on spirits went up by nine percent on January 1, while tax on beer was increased by 13.6 percent as recently as March 1.

Magda Winiarska, editor-in-chief of industry monthly Rynki Alkoholowe, believes that the summer will be pivotal for the beer industry. "The situation may improve in the summer, as a sunny season is favorable for the consumption of beer," she told WBJ. "It could prove to be the savior of the year-end results."

But the drop in alcohol sales may not have come about only because of the tax hike. Wiwała suspects that other forces may be at work. "We are investigating why the decrease happened, in co-operation with the police, and we want to determine if there are large quantities of illegal spirits being introduced into the market."

Robert Szmigielski