Alcohol, Estonia, Latvia, Markets and Companies, Retail

While in the first six months of 2017, altogether 7.12 mln liters of beer was sold on the Latvian border, then this year the indicator stood already at 12.6 mln liters, which means growth was nearly twofold. Producers are forecasting for 2018 that altogether 30-32 mln liters of beer and 4.5 mln liters of other low-alcohol beverages will be sold on the southern border. Sales of other low-alcohol beverages on the southern border in the first six month of the year have increased 3.4-fold on year. While altogether 630,000 liters of other low-alcohol beverages were sold in the first six months of 2017, altogether 2.1 mln liters was sold in the same period this year, the association said.

"The sales figures of the first six months of this year clearly indicate that regardless of the expectations of the Ministry of Finance, the growth ceiling in cross-border trade is still far from being achieved. As of right now, already over one third of all beer consumed in Estonia is bought from the southern border," Peeter Vork, head of the Estonian Breweries Association, said. "No other European Union country has this kind of share of border trade to show and all this has developed essentially within one year," he said.

Vork said that the continued growth of cross-border trade is also having an ever increasing negative impact on excise duty payment. In the first half of 2018 compared with the same period last year, the sale within Estonia of low-alcohol beverages, from which excise duty is paid into the Estonian state budget, has dropped over 40 %. Based on the given sales figures, alcohol producers are forecasting that due to Latvia cross-border trade, altogether 100 mln euros along with value added tax will be left unpaid into the state budget.

"We are gifting more than 100 mln euros in tax money a year to the Latvian state and at that, authoritative studies confirm that the alcohol consumption of Estonian people by contrast has turned upward. In order to avoid additional significant decrease in tax revenue, we are calling for the government to not only abandon further excise duty hikes but reduce the excise duty rates to a competitive level so that cross-border trade with Latvia would disappear," Vork said.

The Estonian Breweries Association is an umbrella organization of alcohol producers that represents Estonia's largest producers of beer and low-alcohol beverages. The association is a member of the Estonian Food Industry Association and cooperates with ministries and organizations involved in promoting health. Sales statistics have been collected from member organizations.