This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful.
News
Ukraine drinks industry bounces back
The demand for drinks and their consumption in Ukraine is steadily growing despite the ongoing war with Russia and the tough economic situation in the country. Eugene Gerden reports.
According to a recent study, which was jointly conducted by the Association of Retailers of Ukraine (RAU) and the Ukranian analyst company Num8erz, in 2023 Ukranians switched from lighter alcohol to stronger alcoholic drinks.
That led to decrease of the consumption of wine and sparkling wines by 10%, compared to 2022, with simultaneous growth of demand for tequila, vodka, and rum by the same 10%.
Gin
According to a spokesman of RAU, the biggest growth of demand was observed in the case of gin. This year, the growth of the market is ongoing, despite the existing strict rules on the sales of alcohol in Ukraine (and the ban on sales to military and Ukranian troops). One of the most important market trends is also a significant share of domestic brands, especially those with strong patriotic profile.
Despite the fact that Ukraine has long suffered from a high share of illegal and counterfeit alcoholic drinks, in recent years the situation has changed. At present, the Ukranian market is undergoing a gradual transformation, which involves increase of the share of quality drinks and gradual withdrawal from the market of low-quality and counterfeit alcohol — although this process may take years.
Wine
Such a trend is mainly observed in the wine segment of the market, thanks to the grapes and viticulture products bill, which was adopted by the Ukranian Parliament (Verkjovnaya Rada) on August, 9 2023, as a basis for the development of the Ukranian winemaking sector — and which tightened requirements and strengthen state control over wine production in Ukraine.
According to experts of the Ukranian Focus business paper, the introduction of the bill and the overall tightening state of state requirements in the drinks sector of the country will contribute to the growth of prices for most of local range.
At the same time, the growth of prices will be also triggered by the ever-growing production costs in Ukraine, primarily for energy resources and the plans of the Ukranian government to increase excise duties for alcoholic drinks up to EU standards already in the coming months.
Minimum pricing
Finally, the government has also plans to increase minimum retail prices for some categories of drinks, that may lead to the decline of sales — primarily of drinks from high and middle-priced segment of the market.
As the current economic situation in Ukraine remains tough, analysts expect a switch of local customers to low-cost alcohol during the period of 2024-2025.
Still, despite the ever growing state pressure, most local analysts predict generally bright prospects for the market this year, with strong drinks, such as vodka, being the most promising segment of the market.
Vodka and beer
In 2022, vodka production in Ukraine declined by only 13%, but since that time the segment has completely restored its position. Currently, it will probably exceed the figures of 2021 for the entire 2024. This was also due to the expansion of ranges of local producers by the beginning of production of so-called ‘patriotic’ drinks, which enjoy a high demand among local consumers and remain among the major drivers of their sales at present.
An interesting dynamic is also observed in the beer market of Ukraine. According to the earlier study of RAU and NielsenIQ, breweries of small and medium-sized even managed to increase their sales during the war —by up to 9% annually — while the growth was also observed in case of craft breweries.
At the same time large players, especially multinationals, suffered more from the current war with Russia as many their production facilities were closed for certain period of time.
Exports
Particular hopes are also put on the increase of exports of drinks from Ukraine.
In 2022, export of drinks from Ukraine fell by more than a third, compared to 2021, but large companies such as Global Spirits and Bayadera increased, and opened new markets for their business.
The official export results for 2023 have not yet been published, but according to representatives of local producers and analysts, the export market has almost completely recovered up to pre-war period and shows growth.
Support
According to Evgeniy Chernyak, the founder of Global Spirits, one of Ukraine’s leading players, the growth of popularity and the ever increasing support of Ukraine throughout the world led to the growth of its drinks’ exports.
As he also added, in the case of Global Spirits, only in the US market, the growth of exports was equivalent to +21%. Almost the same situation is observed in the case of Bayadera, Ukraine’s second largest vodka and wine exporters and producer. In 2022-2023, its total export revenue from wine and vodka supplies increased by 1.4%, with the annual sales being estimated at about UAH 200 million (US$4,92 million).
In case of vodka, currently the share of Bayadera in the Ukranian drinks’ export market is 23%. Both Bayadera and Global Spirits have opened new distributor offices in many countries of the EU and the North America after the Russian invasion on February 24 2022, including Poland, Germany, Iceland, Sweden, Italy and Canada and significantly strengthened their foreign presence.
Drop
In general, the Ukranian drinks’ market faced with a sharp drop shortly after the beginning of Russia’s invasion. According to major local producers, in 2022 their sales declined by 35-40%.
The wine category suffered the most (by 53%), while vodka sales fell by 28%. This was mainly due to the fact that many women – traditional wine consumers – left Ukraine during the war.
Still the situation in 2023-2024 has generally stabilized due to resume of production and increase of the demand, while currently the market almost reached pre-war period.
Related news
UK Christmas lights could buy 14 million mulled wines