Announcements, News, Activities - One

10/1/2018


Activities  

Press-conference of the Economic Chamber of Macedonia- EXPECTED POSITIVE EFFECTS FROM THE SURPASSING OF THE KEY REASONS FOR THE FALL OF THE BEER REDUCTION INDUSTRY


The production and sale of beer in the Republic of Macedonia in the past ten years have a continuous negative trend, contrary to the European tendencies where a growth of the beer consumption is registered, stated the acting executive director of the Economic Chamber of Macedonia, Biljana Peeva-Gjurikj, at the press conference of the Economic Chamber of Macedonia (1.10.2018). Explaining the reasons for this situation, she stated that according to the analysis of the domestic beer industry, the main factors influencing the reduction of the beer consumption on the domestic market for a decade are as follows:

1. The introduction of the legal limitations for the sale of alcohol in the trade- prohibition of selling any alcoholic beverages after 7/9 p.m.;

2. The introduction of licenses for selling alcohol that entered into force in the second half of 2008 and

3.  The increase of the beer excise for 33% in July, 2013 (from 3 to 4 denars per liter, per level of alcohol). 

Unlike the trend of constant increase of the beer consumption in Europe by 1% to 2% at an annual level, in Macedonia, in the past decade, the consumption has drastically decreased, from over 33 liters per capita in 2008, to about 28 liters per capita in 2017 and 2018. Macedonia has the lowest beer consumption per capita in whole Europe and beyond. For example, Bulgaria and Romania consume over 75 liters per capita at an annual level, the beer consumption in Austria and Germany is greater than 95 liters per capita, in Poland is over 98 liters, while the Czech Republic is on the top on the list of beer consumers in Europe, with about 140 liters per capita.

mchamber pres

According to the data, in 2008, the total beer consumption in the country surpassed 680.000 hl. The most optimistic estimations of the companies from the domestic beer industry is that this year the total beer consumption in the country will not surpass an amount of 570.000 hl, which is more or less the same consumption level of the last 4 years. These data clearly show that in the past decade, the scope of the domestic beer market reduced to about 110.000 hl, which is a reduction of over 16% compared to 2008.

Paying attention tot he main reason for the fall of the beer industry, Biljana Peeva-Gjurikj, emphasized the request of the Economic Chamber of Macedonia, via the Association of agriculture and food industry and via the Trade Association to abolish the prohibition of the sale of all alcoholic beverages after 7/9 p.m., accepted with the changes of the Trade Law at the end of June, this year.

Furthermore, as stated by Peeva-Gjurikj, the business sector points out that in combination with the already adopted changes to the Trade Law, that abolished the time limitation for selling alcoholic beverages, the request of the Group for alcoholic beverages and soft drinks and waters of the Trade Association within the Economic Chamber of Macedonia to intervene in the Trade Law in the field of the obligation to possess licenses for selling alcohol by retailers should be take into consideration.

The constant regime for possessing licenses for selling alcoholic beverages is not only a limiting factor for the beer industry in the country, but it also has a negative influence on the work of the companies that work in the field of retail.

According to the data, with the introduction of the licenses for selling alcohol in 2008, over 5.500 smaller shops in the country, from a total number of about 13.000 shops that sold these products before 2008, renounced from selling alcohol, after which the total turnover in the retail drastically decreased. Losing the turnover of such small shops is a huge problem because 60% of the turnover in these shops was gained from selling alcoholic beverages, and it was also a loss to the state because of the reduced inflow of VAT that is charged for the sale of alcoholic beverages.

Pursuant to the Trade Law, in order for the license to be extended, the merchant is obliged to pay a sum of 5.000 denars for each shop, if he/she has up to three shops and a sum of 15.000 denars for each shop if the merchant has more than three shops, as well as 0.05% of the total turnover gained in the previous year. This means that if one wants to extend the license to sell alcoholic beverages, than 0.05% of the total turnover of the shop should be paid, and it is clear that the sale of alcoholic beverages is just a part of the total turnover, that to a larger scale is made by the sale of the remaining large assortment of products offered in the shop. 

mchamber pres

A lot of European countries do not even impose an obligation for possessing special licenses for selling alcoholic beverages (for example: Austria, Germany, Croatia, Slovenia, the Czech Republic...). On the contrary, these measures are characteristic for countries with high consumption of alcohol per capita. In accordance with the data of the World Health Organization, in 2015 the alcohol consumption per capita was 11,9 liters in Finland, 12 liters in the United Kingdom, 8,7 liters in Sweden, while in the Republic of Macedonia is 5,7 liters, which is significantly lower than the European average of about 10 liters per capita.

- Apart from the highest beer consumption per capita, Macedonia has a higher excise rate of the beer compared to the other countries in Southeast Europe, as well as in a large number of member states in the EU that have several times higher beer consumption compared to our country- stated Peeva-Gjurikj, talking about the third key reason for the reduction of the beer consumption. Unlike Macedonia, where the excise of beer with 5 degrees of alcohol is 32,5 euros/hl, in Romania it is only 8,63 euros/hl, in Bulgaria it is 9,2 euros/hl, in Germany 9,44 euros/hl, the Czech Republic 14,69 euros/hl, Austria 24 euros/hl and Croatia 25,89 euros/hl.

At the same time, the price of the beer in Macedonia is much higher compared to the prescribed minimum threshold of the excise that is to be respected by the member states of the EU set by the Directive 92/84 EEC, that is 1,87 euros/hl, per degree of alcohol, compared to the excise in Macedonia of 6,5 euros/hl (per degree of alcohol) which is three times higher than the minimum threshold that is to be respected by the EU member states. This comparison is made from the point of view of the fact that Macedonia is going far beyond the prescribed the minimum threshold of the excise related to the average consumption in the EU member states.

The calculations show that, if the legal limitations in the sale of alcohol in the trade had not been introduced and if the excise of the beer had not been increased, the domestic beer market would have maintained the consumption growth rate between 1,5% and 1,8% per year, which, in the period of 2009 to 2014 would have brought the state 23 to 30 million euros of additional income on behalf of excise and VAT from the sale of beer, which is a lost opportunity for the state.

At the same time, the analysis of the World Health Organization should be taken into consideration since they point out that the high excise of alcoholic beverages, among which the beer, influence on the increase of the unregistered production and trade of alcohol, which is detrimental to the states and of the societies as a whole.

Therefore, the Group of producers of alcoholic, non-alcoholic beverages and waters within the Association of agriculture and food industry within the Economic Chamber of Macedonia delivered a proposal for the reduction of the beer excise from 4 to 3 denars per liter, per degree of alcohol, which would actually mean that the excise is reinstated to its previous level, before its price was increased in July, 2013.

Talking about the positive effects for the state, Biljana Peeva-Gjurikj, stated that the reduction, i.e. the restoration of the excise of the beer on the previous level before the last increase in 2013 (combined with the already adopted changes to the Trade Law) will bring several benefits:

1. Increased fiscal incomes- the analyses clearly show that the lower excise the price of the beer will be widely affordable and the beer consumption per capita will increase. In this way, it would be realistic to expect in the next three to five years the domestic beer market to be restored to the level of consumption of before 2008, i.e. a market scope of about 680 000 hl at an annual level. This increase of the consumption will lead to an increase of the incomes from the excise of about 2,5 million euros compared to the current level.
If the incomes of the VAT are added, increased due to the increased beer consumption, then it would be understandable to expect that the total fiscal incomes, only on these bases, of the domestic breweries will surpass an annual sum of 30 million euros.

2.  From social and economic point of view, the beer industry is significant for providing jobs to several thousand suppliers. By reducing the beer consumption, the production is becoming slower, which has direct destimulating consequences on the industrial activity and indirectly on other 15 vital sectors from the domestic economy (agriculture, retail and wholesale, catering and tourism, transport). Additionally, each job in this industry contributes to the stability of another 4 jobs in the country.

Ljupka Ilievska- Samardziska











Brilliant Patron Member

Premium patron Members

Standard patron Members

Silver patron Members

Partners

State Institutions

International Institutions

© 2008 Economic chamber of Macedonia, all rights reseved