Alcoholic drinks in Estonia experienced difficulties due to a rapid increase in alcohol excise rates in 2017 and 2018, creating a challenging environment for producers and retailers. The largest drop in volume sales was record by spirits, while wine was the least affected.
Despite the popularity of craft products amongst certain alcoholic drinks such as beer and cider in addition to the rapid development of the craft market, they remain a niche in Estonia. This has been noted by producers which are now concerned about market regression, as prior to the price hikes Estonians were becoming increasingly knowledgeable about quality alcohol and were making sophisticated purchasing decisions.
Local players lead most alcoholic drinks categories in Estonia but are now struggling as sales are rapidly dropping. Most smaller companies are limited in the measures they can take to boost sales relating to new product development, while large marketing campaigns are not expected to significantly ease the difficulties of the volatile state of the market.
Significant changes also appeared in the dynamics of alcohol sales on ferry boats. In 2017, Tallink, an Estonian shipping company operating Baltic Sea cruise ferries, introduced a direct Helsinki-Riga route that attracted Finnish consumers, resulting in further losses for Estonian alcoholic drinks.
No major improvement is predicted for alcoholic drinks in volume terms over the forecast period as further excise tax increases are being discussed in parliament. Domestic producers remain rather pessimistic with persistent cross-border trade, although this is predicted to slow down as Latvia introduced higher excise taxes in 2019 and has plans to continue narrowing the gap with neighbouring country excise tax levels, which should somewhat mitigate the adverse effects of cross-border trade.
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This industry report originates from Passport, our Alcoholic Drinks market research database.