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Challenge chases challenge. This is how one could, in short, soldierly words, characterise what is happening on the alcoholic beverages market in Poland. The market growth is only apparent. It is mainly driven by excise duty increases and inflation, while in volume terms the market is shrinking. It is being dragged down by the two largest categories, i.e. beer and vodka, which together account for over 70% of the market. The declines can be explained by changing consumer behaviour and price trends. Health-oriented tendencies are leading consumers to reduce their consumption of alcoholic beverages. The growing Non-Alcoholic and Low-Alcoholic categories clearly illustrate this. A clear premiumisation trend is also discernible, i.e. consumers moving to higher price segments while reducing volumes. Therefore, producers and distributors of gin, wine, champagne, whisky, tequila or rum have reason to rejoice. These categories are growing dynamically, although they still represent a relatively small percentage of the market compared to the 'flywheels' of the industry and their increases are not able to compensate for declines in beer and vodka.
Looking at the current economic situation, it can be expected that the alcoholic beverages market will be subjected to further strong pressure and declining volumes. A huge part of the market is extremely price-sensitive, so any price increase will result in a very quick consumer response. And there will be inevitable subsequent increases. Further consistent excise duty rises are planned for the coming years. In addition, availability and therefore the costs of raw and packaging materials are skyrocketing, with increases of up to 30% in some categories. It is enough to say that a huge part of the glass packaging volume was imported from Russia, Belarus or Ukraine for cost reasons, which for obvious reasons is impossible in the current situation. Rising logistics costs and wage pressures do not help either. Consumption levels in the HoReCa segment can also be expected to suffer, as consumers rationalise their non-core spending in light of soaring inflation.
It should also be noted that a fall in sales volumes in the alcohol industry will have negative consequences for the retail sector and in particular for smaller grocery shops, where alcohol is very often the target category. Indeed, small-format shops still account for more than 50% of the sales volume of alcoholic beverages. Consumer price sensitivity may shift some clients to modern trade and the private label offer, only exacerbating the decline of the independent retailers. Concerns are also being raised about some consumers turning to the shadow economy.
So the challenges facing the alcoholic beverages market are many and their consequences may also extend beyond the industry itself. And it is rather difficult to expect the scale of the problems to diminish in the near future.
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