Vodka market development trends, forecasts of indicators
The global vodka market is characterized by a positive trend – vodka consumption on the global market is increasing on average by 2-3% per year. The share of vodka sales among strong alcoholic beverages is about 20%, which is twice the share of whiskey sales and four times the share of cognac and brandy sales.
Contrary to global market growth trends, a slowdown in development rates and a general decline in market indicators is forecast for Ukraine, Russia and Poland – by 1-2% per year. The main trend of the Ukrainian market for the last two years is a decrease in the share of legal products and growth of the shadow segment.
According to the State Statistics Committee, in 2011 there was a 21.5% reduction in vodka production, which gave the lowest figure for the last 7 years. The share of the shadow market is constantly growing, 40% of vodka products produced in Ukraine fall into the shadow segment of the market.
The main feature of vodka production in Ukraine is the state monopoly on alcohol production. However, the situation should change soon, In June 2012, the Draft Law No. 10607 dd. 13.06.2012 “On Amendments to Certain Laws of Ukraine” (concerning the alcohol sector) was registered. The main purpose of the draft law is to regulate the possibility of privatization of alcohol production enterprises.
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Export and import of Ukrainian vodka
Ukraine is a rather large exporter of vodka at the level of the world market. Ukrainian vodka is sold in more than 80 countries of the world. The main share of Ukrainian vodka exports falls on the Russian Federation. In 2012. According to the State Statistics Committee, Ukraine exported 193 thousand hl of vodka, worth more than 100 million USD.
Due to the abolition of duties on the import of alcoholic beverages to the territory of Ukraine there is also an increase in the volume of vodka imports: in 2011, 64.5 thousand hectoliters of vodka were imported. – 64.5 thousand hectoliters of vodka were imported, in 2012. – 76.5 thousand hl of vodka worth USD 45.4 mln. US DOLLARS. According to experts, imported vodka products on the Ukrainian market account for 10% of the total market volume.
Government regulatory policies have a huge impact on the industry: alcohol prices, excise duties, new excise stamps, and the fight against counterfeit products. For example, since 2013 in Ukraine came into force excise duty on ethyl alcohol in the amount of 49.49 UAH per 1 liter of 100% alcohol. The cost of the newly introduced excise stamps increased almost 3 times. In March 2013, the minimum retail price for vodka was introduced in the amount of UAH 30.5 per bottle.
Vodka consumption in Ukraine
Despite the fact that vodka production indicators are declining and prices for the product are rising, vodka consumption in Ukraine is at a fairly high level. According to the research conducted by Research & Branding Group (March 2013) , Ukrainian consumers buy vodka:
- 1-2 times a month (82% of consumers);
- 1 every 2 weeks (10.4% of consumers).
In addition, it was noted that in the context of declining purchasing power, demand for vodka brands from the lower and middle price segments is increasing.
Ukrainian vodka market structure
80% of vodka is produced in Ukraine by 5 major leading companies:
“National Vodka Company.
2. Global Spirits Holding.
3. UVK Nemiroff.
4. Crimean Vodka Company.
5. UAC Olympus.
It is important to note that the number of vodka brands in Ukraine, as estimated by the market operator, significantly exceeds the number of brands in the dairy and juice industries. However, only a limited number of brands have reliable and stable positions in the vodka market.
The most frequently purchased vodka TMs in Ukraine are as follows (Research & Branding Group, March 2013):
Knowledge and purchase of vodka brands
According to experts’ forecasts, the level of competition in the segment of strong alcoholic beverages is expected to increase in the near future. As the volume of the domestic market will continue to decline in the future (within 10-12%), and vodka companies will direct their activities towards strengthening export activities. The cost of vodka products will increase as a result of increased excise duties, higher alcohol prices, higher distribution costs, trade marketing and a number of other factors.
Revival in the vodka market of Ukraine is expected only in 2-3 years, and in the near future it is predicted that production volumes will decrease by more than 10% by the end of 2013, as well as a decrease in the share of legal production.
Vodka production in Ukraine, mln. dal
Vodka producers in Ukraine
“National Vodka Company.”
National Vodka Company LLC (NVC) is a major producer of liqueur and vodka products under 9 brands: Khlibnyi Dar, Celsius, Kozatska Rada, Perepelka, Persha Gildiya, Rada, Baika, La Femme and fruit and berry tincture Moya.
As of today, 7 automated bottling lines are operating at NVC, the total capacity is 54 thousand bottles per hour. “NVC” together with PJSC “Koblevo” – production facilities of LLC “ALCOGOL TRADITIONS”. LLC “AT” – the leader of the alcoholic market of Ukraine in the production of liqueur and wine products of the highest quality – has 16 independent brands.
Global Spirits Holding:
Global Sp irits Holding is an international alcoholic beverage holding company. Global Spirits is a major owner of enterprises producing alcoholic and low-alcoholic beverages – vodka, wines, champagne wines, cognac, brandy, tinctures, vermouth. Among these enterprises can be distinguished: Khortytsya Distillery, Odessa Brandy Factory, Crimean Wine House DP, Russky Sever Distillery.
The brand portfolio of Global Spirits Holding includes: Khortytsya, MOROSHA, Russky Severn , Medovukha , Blagoff , Khortytskaya , Crimean Marochnoye , Oreanda , San Marino , Mikado , Shustov , Chaika , “Desna”, “Arcadia “, “Chernomorsky “, “Wins “, “Vologodskaya “.
UVK Nemiroff:
UVK Nemiroff is a vodka company, a prominent player in the global market of strong alcoholic beverages. The company sells its products in 80 countries. UVK Nemiroff’s production capacity is alcohol production and 2 distilleries. The company’s product portfolio includes 28 assortment positions: Nemiroff Original, Nemiroff Premium, Ukrainian Honey with Pepper, Ukrainian Birch Special, Nemiroff LEX, Nemiroff LEX Ultra and others.
Crimean Vodka Company:
Crimean Vodka Company LLC is a major Ukrainian producer and exporter of alcoholic beverages. The company’s brand portfolio includes: TM “Medoff”, “Natural Collection”, “Nasha Marka “, “Myrnaya “, “Khutorok“, cognac and wine “Koktebel“, low-alcohol beverages on a natural basis “LONGmixER”. The company has a full cycle production base.
UAC Olympus:
UAK Olimp is a leader in the alcoholic beverage industry of Ukraine. The brand portfolio includes: TM Prime, “Istinna”, “5 drops”, “Privatna kollektsiya “, “Bilenka “, “Vdala “, cognac TM “Lionel “, “Marseille “, “Bakhchisaray”, wines “Bakhchisaray “. The company’s production facilities are PRIME distillery and Crimean wine and cognac factory “Bakhchisaray”.
Consumer analysis of the Ukrainian vodka market
Ukrainians drink vodka mainly when visiting, in the company of friends or in case of solemn events. As for the price, the Ukrainian consumer prefers vodka in the middle price segment. The most purchased volume of vodka products is the volume of 0.5 liters. The most popular places to buy vodka products are supermarkets and self-service stores.
As for the division of alcoholic beverages into domestic and foreign, in this market preference is still given to domestic producers. The main criteria for choosing vodka for our consumers are the following: taste properties and quality of vodka, and then the price and popularity of the brand.
Summary
The consumption of vodka is steadily increasing globally, however, as for Ukraine, the production figures are constantly decreasing and experts’ forecasts are disappointing. And the point is not that the level of consumption of the product in the country is decreasing, but in the ruthless policy of regulation by the state – increase of excise duties, introduction of new excise stamps, monopoly on alcohol production and many other things. In addition, an important problem of the market remains – the growing share of shadow production of vodka products. The following companies remain the market leaders and its main players: National Vodka Company, Global Spirits Holding, UVK Nemiroff, Crimean Vodka Company and UAC Olimp.
This market situation forces manufacturers to take active measures in the policy of promoting their brands, in particular, in launching new TMs and expanding the assortment range, rebranding.
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