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Spirits to benefit from Lithuania’s tax increase
By Amy HopkinsLithuania’s rise in excise taxes for alcoholic drinks could boost the spirits sector but also result in a rise in illicit alcohol sales, experts claim.
Experts have predicted that tax increases in Lithuania could boost spirits salesThe Eastern European country has introduced a series of duty increases this financial year, which will see taxes on wine rise by 14%, beer by 10% and spirits by just 1%.
According to Roberta Kniuipyte, senior research analyst at Euromonitor, these changes will make spirits more affordable for consumers, meaning the category is set to see a significant increase in sales over the next year.
“The new excise tax in Lithuania will positively impact on the strong alcohol market,” she said. “It will encourage consumers to switch from low abv alcoholic drinks, to spirits.”
According to Euromonitor data, spirits is currently the third most popular alcoholic drinks category in Lithuania, which was ranked the sixth country in terms of per capita spirits consumption in Eastern Europe in 2013.
The agency claims that the average Lithuanian consumed almost 10 litres of spirits last year.
However, Kniuipyte added that the new excise tax system is also likely to have a “huge impact” on the development of illicit trade.
“Experts predict that moving alcohol sales away from the illegal market to the legal one will be one of the biggest challenges over the next five years.
“But this will not be an easy target to achieve as the government has discussed further excise tax increases from 2015.”
Industry representatives estimate that currently around 30% of alcohol sales in Lithuania originate from the illegal market.