Alcoholic drinks are about to go up in price again

Strong alcoholic drinks will become more expensive in Ukraine. Yesterday, the Cabinet of Ministers supported the initiative of the Ministry of Finance, which proposed to ban the sale of vodka at retail below 28.5 UAH per 0.5 liter bottle. Ukrainians expect another price increase in the spring of next year - from March 1, the cost of vodka will increase to 30.1 UAH. Representatives of vodka companies believe that the rise in price will not interfere with maintaining or even increasing sales volumes.

Yesterday, the government supported the initiative of the Ministry of Finance to increase the minimum wholesale and retail prices for alcohol, said Minister of Agrarian Policy and Food Nikolai Prisyazhnyuk after a meeting of the Cabinet of Ministers. According to him, the price increase will take place in two stages: the first - 15 days after the publication of the relevant changes to government decree N957 of October 30, 2008, the second - from March 1, 2013.

First, the minimum retail prices for vodka and alcoholic beverages will increase by 8.4% (to 142.5 UAH per liter of 100 percent alcohol), as a result of which the minimum cost of a 0.5 liter bottle of vodka will increase to 28.5 UAH (currently 26.1 UAH), and cognac (brandy) - up to 38.9-49.4 UAH depending on the stars (now 33.1-41.1 UAH). In the spring of 2013, the minimum retail prices for vodka and alcoholic beverages will rise by another 5.3% (to 150.5 UAH per liter of 100 percent alcohol), which will lead to an increase in the minimum cost of a 0.5 liter bottle of vodka at retail to 30 ,1 UAH

Raising the minimum cost traditionally does not cause resistance from the market. “But we believe that it is precisely the gradual rise in price of vodka that will make it possible to accustom consumers to its higher cost and prevent a drop in sales,” a top manager of one of the largest vodka companies in Ukraine, who requested anonymity, told Kommersant. “In our opinion, increasing the minimum retail prices is a generally positive step for the industry, which will lead to the legalization of the market. According to our calculations, the real level of minimum retail prices is 32-33 UAH,” says the CEO of Global Spirits (TM " Khortytsia") Sergey Velichko. “The smaller the gap between the possible minimum cost of producing vodka by a legal manufacturer and the minimum retail price, the less incentive for the production of “gray” vodka,” says Alexander Glus, chairman of the board of directors of Nemiroff. “In this case, illegal producers will not have a competitive advantage over legal ones for dumping account, which is possible only if all taxes are not paid."

However, the general director of the Crimean Vodka Company (KVK; TM Medoff) Jonathan Weil believes that the market should be free. “It is not within the competence of the state to guarantee a minimum level of profit for a 0.5 liter bottle of vodka for the private sector at the expense of end consumers. This is the role of the market,” he said. “There is no point in either raising the minimum price or using this mechanism in general to achieve anything.” guarantee to private business." And independent expert Vyacheslav Sokerchak (former president of the association "Union of Wholesalers and Manufacturers of Alcohol and Tobacco") says that today about 90% of vodka sales in Ukraine are in the lower price segment. At the same time, there are companies that account for 20-30% of sales in this segment, and there are those that account for 70-80%. It is the latter that are the main competitors of producers of “gray” vodka. “Increasing the minimum prices for them could lead to an outflow of consumers towards “gray” vodka,” he noted.

Alexander Chernovalov

The strong one will get it