Development of the alcoholic beverages market in Ukraine

Abstract

Market of alcoholic beverages as one of the segments of commodity market food industry plays an important role in the development of the national economy. Having high enough capacity and consistently high demand for products, the sphere of production of alcohol beverages is an attractive object for investment. Activity of enterprises producers, although there is keen competition is highly profitable.
According to data analysis of the market of alcoholic beverages in Ukraine, is defined, that during 2008–2010 years annual volumes of legal production of these drinks in general tended to increase, but in 2011 signs of stagnation were recorded, which is particularly evident in the segments of vodka and wine. Shadow alcohol market in early April 2012 was over 40 % and had the prerequisites for further growth (particularly because of the Cabinet of Ministry of Ukraine plans to raise the minimum price for vodka and other alcoholic beverages). Import of alcoholic beverages in Ukraine after the fall of its turnover in 2009 compared to 2008 (both in physical and monetary units) over the next two years increased. The main suppliers of vodka in Ukraine in 2011 were Russia and Lithuania, liqueurs, sweet liqueurs and alcoholic tinctures – Czech Republic, Ireland, Germany, wine – Moldova, Georgia, France, Chile. In 2011 compared with 2010, export of Ukrainian vodka decreased by more than 18 %, of wine (excluding sparkling), including fortified wines – in 1.9 times, sparkling wine and beer – by 12.5 and 12.3 %, respectively. Russia is the main external market for export of Ukrainian alcoholic beverages.
The features of different drinks consumption in Ukraine have been defined: population consumes vodka and beer most of all, and least – whiskey, gin, rum, liqueurs; dry sparkling (Champagne) and fortified wines, cognac and brandy are popular; residents of Central Ukraine and cities millionaires spend much more on alcohol than residents of Western Ukraine and other types of settlements, the great number of Ukrainian consumers increasingly prefer cheap alcohol groups, while sales of medium and premium price segments where profitability is higher tend to decrease, and so on. It ahs been established that during the years 2008–2011 retail turnovers of alcoholic beverages in retail chains and restaurants of Ukraine economy tended to increase both in actual and comparable prices. As of early 2011, vodka segment sales leader in both physical and monetary amounts in Ukraine was an international brand Nemiroff. However, the first position in physical sales in the market segment of cognac (brandy) was occupied by TM Tavriya and Georgievskiy (together 19.7 %) and Shabo (11.7 %), number 1 brand among wines were TM Koblevo and Inkerman.
The main factors that cause changes in the market of alcoholic beverages in Ukraine, namely are: 1) legal (including not perfect government regulation, accepting changes in the laws of alcohol advertising and circulation of alcohol in Russia – significant outside market for Ukrainian alcohol, criminalization and redistribution of market of alcoholic beverages in favor of illegal and counterfeit products – it is expected that by 2014 the proportion of surrogates in the country will be 55–60 % against 30–35 % nowadays), 2) economic (including changes in taxation and increased minimum prices on alcoholic beverages will lead to a reduction in sales of legally produced drinks and therefore comes to reduction of incoming to budget, reducing the share of cash expenditures on alcoholic beverages in Ukrainian households – from 1.9 % in 2009 to 1.7 % in 2011), and 3) technology (especially associated with internal resourcing production). It was concluded that since the sphere of production of alcohol is important for Ukraine in terms of the formation of budget revenues, it’s necessary to monitor constantly the impact of these factors and develop measures to minimize losses and maximize profits from the development of domestic market alcohol.