Spirits in Eastern Europe

June 2021

Eastern Europe is still leading in spirits per capita consumption globally. Despite vodka continuing to dominate spirits, consumer taste preferences shift towards flavour sophistication. This drives other spirits, whiskies and brandy. Mid- and high-income consumers prefer premium and higher price vodkas, considering them less harmful to health and inducing lighter hangovers. Food/drink/tobacco specialists is the best performing channel in 2015-2020, driven by two major players in Russia.

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Key findings

Westernisation drives spirits volume growth over 2015-2025

Whiskies, gin and rum have gained popularity in Eastern Europe. The spirits category posted a 5% volume CAGR over the review period 2015-2020. The same growth is expected to continue throughout the forecast period 2021-2025. Developing cocktail culture, low maturity level, increasing availability and consumer awareness support the growth of whiskies, gin and rum in Eastern Europe.

Premiumisation slows down. Polarisation may follow

Consumers look for the best value for money and prefer quality over quantity. This was supported by intensified promotional offers and declining disposable incomes in 2020. Prestige spirits showed stable low single-digit growth, while economy spirits showed growth during the pandemic in 2020 after accelerating decline over 2017-2019. Sales of vodka in Poland and Ukraine, as well as locally-produced gin in Russia, drove the growth of economy spirits in 2020. Locally-produced economy and standard spirits can potentially become an option for low-income consumers, particularly if disposable incomes continue to decline.

Regional players continue to dominate the market

The top 10 spirits producers in Eastern Europe include only two international companies - Pernod Ricard and Diageo - which have a presence in multiple key markets. The remaining are local origin companies, which are focused on the leading markets, where their performance is supported by consumers’ loyalty. Local currency devaluation in Belarus, Croatia, Czech Republic, Georgia, Hungary, Poland, Romania, Russia and Ukraine additionally reduced the competitiveness of imported spirits.

Growth is expected to continue over 2021-2025

Post-pandemic optimism will result in on-trade, feasts, weddings, festivals and travel recovery. These will be the main short-term drivers of spirits consumption growth. The increasing popularity of healthy lifestyle, mindful drinking and preferences of millennials and Gen Z consumers towards alcohol as well as the declining population will be limiting factors for the growth of spirits over the long-term period.

Introduction

Scope
Key findings

Regional Overview

Eastern Europe: Westernisation drives spirits
Post-pandemic recovery will have a short-term effect
White spirits maintain leadership
Flavour sophistication drives other spirits, whiskies and brandy
Mixology is on the rise
Economy and standard vodka lost 100 million litres in last five years
Taste preferences and mindful consumption shape spirits
Modern grocery is still far from saturation in Eastern Europe
Modern formats take share from independent small grocers

Leading Companies and Brands

Consolidation continues: Market leaders strengthen positions
The top nine players are strongly present in vodka
Top 10 companies have strong presence in Russia, Poland and Ukraine
Vodka continues to lead the top 10 brands in Eastern Europe

Forecast Projections

Spirits stagnate despite per capita consumption growth
Post-pandemic recovery brings opportunities for growth

Country Snapshots

Belarus: Market context
Belarus: Competitive and retail landscape
Bosnia and Herzegovina: Market context
Bosnia and Herzegovina: Competitive and retail landscape
Bulgaria: Market context
Bulgaria: Competitive and retail landscape
Croatia: Market context
Croatia: Competitive and retail landscape
Czech Republic: Market context
Czech Republic: Competitive and retail landscape
Estonia: Market context
Estonia: Competitive and retail landscape
Georgia: Market context
Georgia: Competitive and retail landscape
Hungary: Market context
Hungary: Competitive and retail landscape
Latvia: Market context
Latvia: Competitive and retail landscape
Lithuania: Market context
Lithuania: Competitive and retail landscape
North Macedonia: Market context
North Macedonia: Competitive and retail landscape
Poland: Market context
Poland: Competitive and retail landscape
Romania: Market context
Romania: Competitive and retail landscape
Russia: Market context
Russia: Competitive and retail landscape
Serbia: Market context
Serbia: Competitive and retail landscape
Slovakia: Market context
Slovakia: Competitive and retail landscape
Slovenia: Market context
Slovenia: Competitive and retail landscape
Ukraine: Market context
Ukraine: Competitive and retail landscape
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