Over 63% of respondents of the Market and Opinion Research Agency SW Research believe that the announced increase in the excise duty rates on beer is too high. At the same time, only 13 per cent of those surveyed are convinced that the excise tax increase is solely for health reasons. The beer industry is also against the planned excise duty hike, as it estimates that among the alcohol sectors it is the one most affected by the pandemic.
The Sejm has decided that as of January 1, 2022, the excise duty on alcohol products – including beer – will increase by 10 per cent. In addition, further “rolling” excise tax increases of 5 per cent per year will be implemented from 2023 to 2027.
Meanwhile, a survey conducted by SW Research in October 2021 for the Association of Brewing Industry Employers – Polish Breweries (ZPPP Browary Polskie) shows that for 58 per cent of respondents, the price of beer is already high. 32 per cent of respondents believe that taxes should not be raised in the face of high inflation, while 39 per cent believe that taxes should rather be lowered.
“The excise rate increase envisaged in the draft exceeds 40 per cent in total. Within a few years, we are facing increases greater than in the last 20 years,” says Bartłomiej Morzycki, Chairman of the Polish Breweries Association.
According to him, rising taxes “accumulated with a drastic increase in production costs will lead to strong upward pressure on the average price of beer, which has already grown by several per cent since 2019.”
Bartłomiej Morzycki believes that further price rises will not only adversely affect the beer market, but will also have negative consequences for all the industries connected with brewing which include sectors most affected by the pandemic: gastronomy, hotel industry, tourism or mass events.
“It will take at least three years to rebuild the foodservice sector alone, for which beer is the second source of revenue (right after food). Therefore, one of the postulates of our branch is to postpone the decision on excise duty increases, when the situation related to the pandemic will be stabilized and it will be possible to conduct a reliable analysis of the impact of the increases on the market and the structure of consumption” – emphasizes the Chairman of ZPPP – Browary Polskie.
The representatives of the brewing industry indicate that the excise tax increase comes at a very difficult time for the industry. Data of the State Agency for Solving Alcohol Problems (PARPA) show that in 2020, beer consumption in Poland dropped to 93.6 litres per capita and this has been the lowest value for the last 10 years.
“Over the past 3 years, the beer market has been shrinking by about 3.5 million hectoliters per year – that’s almost double the total annual production of all regional and craft breweries in Poland. In addition, we are facing an unprecedented growth of all production costs, which translates into average beer prices and demand,” Bartłomiej Morzycki points out.
In the opinion of the Chairman of the Browary Polskie Association, the introduction of higher excise duty on beer is also connected with a real risk of further reduction in beer consumption in favour of stronger beverages, especially spirits. Their consumption is on an upward trend: between 2019 and 2021, whisky and brandy sales grew by 25%, gin, rum and tequila by 49%, and wine by 13%. Only vodka sales remained at similar levels as before the pandemic.
The position of ZPPP – Browary Polskie (The Polish Brewers) of 14 October 2021 states that one of the reasons for the increase in consumption of stronger spirits is changes in shopping preferences of the Poles who – in the situation of uncertainty related to the pandemic and because of introduced restrictions – started to shop less frequently and use discount chains more often. For this reason, they more often decided to buy spirits and wine, which are easier to pack and transport, and are often offered at discounters at more attractive prices than in traditional trade.
According to the representatives of ZPPP – Polish Breweries, the projected series of excise tax increases will widen the disproportion between the excise tax charged on beer in Poland and the excise tax applicable in European countries. Currently, excise duty in Poland is already 2.5 times higher than in Germany and several dozen per cent higher than in the Czech Republic and Slovakia. After the increase of the excise duty on beer in Poland, it will be over 3 times higher than in Germany.
The representatives of the brewing industry indicate that a significant increase in the excise duty rate may lead to the phenomenon of mass, private import of beer from the neighbouring countries, so far unknown in Poland, especially that we neighbour countries with a well-established brewing tradition and a strong brewing industry. And these are the countries, which – as it is written in the position of ZPPP Polish Breweries – “are famous for reasonably priced beer”.