Industry group: Covid crisis causing up to 40 percent fall in spirits sales

Photo: archive of Radio Prague International

Sales of spirits in the Czech Republic are set to fall by between 35 and 40 percent this year, the national Spirits Producers and Importers Union has said. Its members stand to lose around CZK 2 billion in revenues this year.

The union said on Tuesday that it understood the government’s efforts to contain the spread of Covid-19. However, it said, closures of restaurants has hit its industry hard.

Whereas around 30 percent of the beer produced in the Czech Republic is sold in hotels, bars and pubs, that figure rises to 50 percent in the case of spirts.

On top of the government’s coronavirus measures themselves, the projected shortfall has been caused by a marked reduction in the number of tourists visiting the Czech Republic and an increase in taxation that took force at the start of the year.

The Spirits Producers and Importers Union has called on the state to implement steps to save a sector with a long history in this part of the world.

It said spirits generated CZK 8 billion for the state coffers in VAT every year and that the industry provided employment to 2,500 people directly and 20,000 indirectly.

According to the union’s calculations, sales of all alcoholic drinks in the Czech Republic will fall by at least 30 percent this year compared to 2019. This will mean a roughly CZK 4 billion reduction in taxes.

Vladimír Darebník, who is executive director of the Spirits Producers and Importers Union, said the state’s actions in the crisis had been understandable. However, the future and recovery of sectors going through difficult times should also be considered, he said.

In other European countries, such as Germany and Austria, they have significantly reduced VAT on all products sold in the hospitality industry on a temporary basis, as well as introducing reliefs with regard to taxation and social security payments, Mr. Darebník said.

In the case of spirts, 10 to 15 percent of sales have moved from the HORECA sector (hotels, restaurants, catering and cafés) to the retail segment due to the coronavirus situation.

With other categories of alcoholic beverages the share of sales via retail is higher, meaning their losses stemming from the closure of bars and restaurants are lower, the union said.

No less than a quarter of all alcoholic beverages consumed in the Czech Republic are drunk by tourists or foreign workers based in the country, according to the industry group.

Restaurants, bars and clubs have been ordered to close from Wednesday until November 3, under new Covid-19 measures.