Bulgaria: By how much did Alcohol Rise in Price due to inflation?Business | January 27, 2022, Thursday // 18:26| views
Manufacturers, importers and traders warn that alcohol prices are also rising after food prices have risen. This follows from the significant increase in the costs of transport, energy, raw materials, the difficulties of the establishments, the problems with the labor force abroad, etc.
The first blow from the rising costs for the industry consumers felt at the beginning of the year. Already in the first days of January, the prices on the shelves of the most popular wines and spirits went up by an average of 10%, according to a study by Nova TV. However, alcohol is expected to continue to rise due to rising costs of production, logistics and sales. According to the industry's accounts, the prices of basic raw materials, such as glass bottles, corks, labels, cardboard packaging, aluminum cans, as well as logistics and transport costs, have risen sharply in the last year.
In front of the television, a regular client - Zdravko Rachev, says that the middle-class red wine from last year went up in price: from about BGN 11 before, at the moment its price is over BGN 13, whiskey - from BGN 17 for 700 g, at the moment it is BGN 23-24 per bottle.
Traders report that from the beginning of 2022, shelf prices for alcohol are going up steadily, more - for wines, less for spirits.
The media finds that in the chain itself (from the vineyards - through the cellars - to the shelf in the store and to the bar in the pubs) everything depends on energy - starting from production, through bottling, then - logistics.
“Then you get to the shelf - to the store, and the restaurant has coolers that are still on electricity,” said Jordan Chorbadjiiski of the National Vine and Wine Chamber.
An example is a cellar in the village of Kapatovo in Petrich, where any increase in the prices of fuels, electricity and natural gas is quickly felt.
“We use a refrigeration plant to control the fermentation temperature and it runs at full capacity. We have a press for crushing grapes, we have pumps, machines for crushing, for grinding grapes - all this works at least 6-8 hours every day, and the refrigeration plant - 24/7 - then we mark peak electricity consumption,” said Kiril Ivanov, technologist in the wine cellar.
Thus, with each passing month, the electricity bill of the cellar grows. The industry estimates that energy costs for individual wine producers have increased between 3 and 4 times.
“For the production of wine, the digestion of the products itself uses a lot of energy. Separate bottling also uses electricity, so the whole process is related to energy. If a company has paid 30-36 thousand for electricity - currently the bill is 100-120 to 150 thousand levs for electricity,” added Chorbadjiiski.
The sharp jump in electricity costs is also commented around the massifs near the Thracian lowlands.
“Each winery at the end of January - beginning of February starts bottling white wines from previous harvests – i.e. we will now start bottling white wines and rosettes from the 2021 vintage we picked last summer and fall. This means that we need a large amount of current to drive our bottling line. However, huge pumps have to pump tens of thousands of liters from one container to another - these pumps run on electricity. Filtration, bottling of wine. All this works with electricity. There is no other way - electricity, electricity, electricity”, adds the manufacturer Zlati Zlatev.
Along with higher electricity bills, the prices of consumables used in production are also rising.
“Bottles have become more expensive, boxes have become more expensive, corks have become more expensive, labels have become more expensive - absolutely everything has become more expensive. It's all about energy. And there are producers of raw materials who are raising their prices from today to tomorrow. All consumables have risen in price by between 15 and 30%”, Yordan Chorbadjiiski commented again.
“Glass is a very energy-intensive material for production and with the increase in electricity prices, respectively, there are some increases. Another material we use is aluminum caps - our partners tell us that there is a shortage of aluminum worldwide. This imposed the new prices”, adds Kiril Ivanov.
Therefore, wine prices will continue to rise this year, producers predict.
“Such are the forecasts and the expected minimum of 20% growth compared to last year's prices. These are prices from the manufacturer's warehouse. What we will see this year is a slight increase in prices, which will happen in March-April-May at the latest, and I hope that after that we will keep the prices, the market to normalize, the prices of energy to stabilize,” added Chorbadjiiski.
And for importers of distilled beverages?
“The increase is about 3 times in our estimate. For example, one production of electricity bills of BGN 14-15 thousand per month took place in the last month about BGN 42-43 thousand. More than 3 times, which naturally has its impact”, commented Stamat Barantiev, producer and trader of alcohol.
That is why every stage in the production of brandy, vodka, or whiskey, for example, is becoming more expensive. The production of spirits is becoming more expensive due to the difficult supply. Which even leads to a shortage of certain types of hard alcohol.
“There is an extremely strong imbalance in the supply chain. The economies returned to a stronger operational regime, which led to a lack of vehicles, containers, and even a lack of production. We have delayed deliveries, more expensive deliveries during alcohol. Unfortunately, there is a possibility that someone will be left without alcohol”, warned the trader Ralitsa Skorcheva.
All this pushes the price of alcohol up.
“We are all reducing the percentage of profits. If so far we have earned 40 cents from a bottle, at the moment we earn 32 cents. We make savings from social campaigns, marketing initiatives”, she added.
From now on, the effect of the shock increase in costs will be felt by consumers, the industry is adamant. Some of the producers have even raised the prices of some of the most popular high-grade drinks.
“All consumers can see that alcohol is on the shelves in stores with a slight increase in prices. In percentages, this is between 5 and 15%. In 2022, we expect the process of raising the cost of alcohol to continue. A maximum of 15% will be the growth that we expect to increase the cost of alcoholic beverages for the end-user in stores. The alcohol industry cannot increase prices to consumers at the rate at which the cost of alcoholic beverages increases because this will lead to reduced consumption and a huge danger - the gray sector and unregulated products,” said Skorcheva.
Even more serious is expected to be the increase in the price at bars in discos and restaurants, where electricity bills are even higher.
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