Brewers in Romania, affected by the war

The beer market in Romania continued to decrease in 2023, reaching a volume of 15 million hectoliters, 5% lower compared to the previous year, against the background of the excise tax increase, which was reflected in prices, and the escalation of the conflict in Ukraine, which puts pressure on the supply of raw materials and higher costs on the production chain, said, on Tuesday, the director of the Association of Romanian Brewers, Julia Leferman.

“Last year, we observed a contraction of the beer sector by 5% compared to the previous year, reflected in a market volume of 15 million hectoliters, reduced from 15.8 million hectoliters in the previous year, being the second consecutive year of contraction that we reported at sector level. One of the aspects related to the challenges of a fiscal nature, but also to the impact on the volume of beer, is the level of the excise tax. As a sector, we have been exposed to repeated increases in this tax that we have routinely had at the beginning of each fiscal year. This, by the way, was the predictable mechanism that the industry supported in the dialogue with the Government and that we have had functionally for the last five years. However, the last two years have shown a difference in approach at the government level and as such, the industry also faced an excise duty hike that happened midway through the fiscal year, which created additional pressure on manufacturing activity. In particular, we are talking about the 6% increase compared to August 2022, which entered into force on January 1, 2023. Practically, the difference between 2022 and 2023 was an 11% increase in January 2023 compared to January 2022, from year to year. said Leferman, in a press conference.

Also, on January 1, 2024, a new excise duty increase of 10% entered into force, which means that in Romania the level of excise duty on beer is 18% higher than that practiced in Germany (0.929 euro/hectoliter/ degree Plato compared to 0.787 euro/hectoliter/degree Plato), in the conditions where the purchasing power of Romanians is three times lower than that of Germans.

“For this reason we say that the taxation system of the beer sector has reached a maximum threshold at this moment and this is all the more important since, starting this year, according to the legislative changes that were implemented last year by the Government, that annual indexing mechanism that over time represented an element of fiscal predictability for the industry was stopped. We are, of course, in dialogue with the Ministry of Finance – we initiated such a dialogue, in order to have a discussion to complete the legislative framework, which would ensure a level of predictability regarding the amount of excise duty in the following year as well, because precisely the situation that you see reflected here with that reference to August 2022 was, in our opinion, a disruptive element in the conditions in which it came with the modification of the excise tax within the fiscal year”, explained the general director of the Romanian Brewers Association.

According to her, in the beer sector, which is 100% taxed, there is no tax evasion, and contributions to the state budget exceeded 311 million euros in 2023, being almost 9% higher than in 2022. Of these, excise taxes represented 142 million euros, up 6% compared to the previous year.

Regarding investments, the member companies of the Romanian Brewers Association, which represent over 90% of the local market, directed over 117 million euros to investment projects such as technology and automation, innovation in the field of beer and sustainability initiatives.

“At the same time, we had a much higher level of investments. This 50% increase in the amount of investments is proof of the fact that, in a challenging, difficult economic context, the beer sector allocated an important weight to investments last year. These were directed towards modernization and automation activities, in the area of ​​innovation, in the activity of beer production and, of course, in the area of ​​sustainability. The largest share of these investments, in the total amount of 117 million euros, concerned the efforts to establish the Guarantee-Return System, an important sustainability project both for the industry and for Romania, as a society”, she claimed.

Julia Leferman emphasized that the Romanian beer market is an eminently local market, given that more than 97% of the beer consumed in Romania is produced locally, with local ingredients, with local labor.

“So it has an extremely strong local economic footprint. There is a small share of it that represents imports and, respectively, exports. At the level of imports, we see a downward trend, reaching 480,000 hl last year. It is actually the lowest level of imports we have seen in the last 5 years. Similarly, exports also decreased, up to 420,000 hl, compared to 520,000 hl a year earlier. There are also explanations that justify this trend. Mostly, when we talk about exports, one of the factors that determined this trend is related to the evolution of the regional economic context. The increase in costs with insurance, with the transportation of goods in terms of export activity – and this against the background of the war in Ukraine – has the biggest impact that we have seen in the region”, added Leferman.

At the level of beverage typology, Lager beer continued to dominate the market. Even though the share of consumption has slightly decreased compared to last year, Lager beer is still at a comfortable level of 93% of the total volume of beer consumed in Romania. On the other hand, the consumption of non-alcoholic beer increased by 5.4%, being a continuation of the trends from the previous year. Moreover, this trend is manifested at the portfolio level, being seen as a generalized one at the European level.

“It is a confirmation of the fact that alcohol-free beer, as an offer in the portfolio of beer producers, is becoming more and more attractive for the population, for consumers and, of course, it becomes the preferred option when the consumption of alcohol is not allowed. The beer market has a great variety in terms of the specialty beer component, but their share in the total volume of beer consumption remains at the level of 1 – 1.1% and is complemented by the segment of mixed beers with a share of 0 .4% compared to the total volume of beer”, Julia Leferman pointed out.

In terms of types of packaging, the “downward evolution” of PET type packaging is also noticeable this year, with a decrease of 8% compared to the previous year.

“It’s been a continuous trend for the last 9 years, with a small intermezzo during the Covid period, when home beer consumption increased for a short period of time, but then PET went back on a downward trend in terms of options of consumption and, in fact, has the biggest decrease in the last 9 years, of 30% in volume. At the opposite pole, there is the dose, which registers a continuous increase. In the last 9 years, the advance of this packaging category was 70%. We notice a slight increase this year also in terms of draft beer consumption. As brewers, we want this option to become more and more popular among Romanian consumers, and this of course also comes with an increase in the share of the HORECA channel in the total volume of beer consumed in Romania, a channel that still it has not recovered to pre-pandemic levels,” she added.

At the end of 2023, 91 beer-producing companies were registered, of which 8 large and medium-sized companies (of which four members of the Association are also part) and 85 microbreweries (including Berarium – Clinica de Bere, Scorilo, Ursus Cluj – Inotec microbrewery , BR members). Also, in 2023, nine new microbreweries opened and six closed.