Ale-ing market: high taxes stifle beer consumption and hospitality industry, warn brewers

Romanians drank 8 percent less beer in the first eight months of 2013, marking the lowest volume during this period since 2008, said Constantin Bratu, general director of the Brewers of Romania Association, during a Mediafax event last week.

The drop comes after the authorities hiked the excise tax on beer by 10 percent (in euro) at the beginning of the year, despite the lower purchasing power, said Bratu, who warned that the drop in beer sales is creating ripple effects in other industries as well.

For every job in the beer industry, six are generated in the hospitality trade and 12 in the entire economy, according to Brewers of Romania data. Moreover, some 28 percent of sold volumes go into HoReCa.

Even without tax hikes, the local hospitality industry is under strain from consumer belt-tightening – despite the fact that the industry still has room for growth. In Romania there is one hospitality unit for 1,050 people, compared to 375 people in Italy, said Bratu.

Economic growth should come from improving the tax collection and fighting tax evasion, recommended Bratu. According to him, the beer sector already contributes 60 percent of all the excise tax revenues collected by the state for alcohol products, twice the European average. The authorities now need to focus on combating tax evasion in other industries instead of hiking taxes, he urged.

With 98 percent of the beer drunk in Romania being produced locally, the industry is an important player in the local economy, according to the association. Since 2007, it has generated EUR 4 billion for the state budget. In 2012 alone, it contributed EUR 283 million in the form of VAT, excises, social security and other taxes.

This was EUR 11 million above the 2011 level. Should consumption pick up, also helped by an advantageous tax regime, the sector could generate even more and not only in the form of budget revenues, says the association.

Brewers of Romania Association members employ over 4,250 people in the 12 breweries they operate.

The association’s main five members – Bergenbier, Heineken Romania, Romaqua Group, United Romanian Breweries and Ursus Breweries – account for over 90 percent of the beer sold in the country.