May was a particularly difficult month for spirits companies, as in an unexpected decision, the government increased the Selective Tax on Consumption (ISC), the tax that regulates products with negative impacts on the country, such as sugary drinks, tobacco and alcoholic drinks, amongst others. This tax is also important for the country in terms of revenue collection.
Although it is difficult to estimate a figure, it is highly likely that the government’s measure to increase the ISC increased informal and smuggled products, in a country and a category in which where these products are the most important threat to growth. However, one spirit may benefit from this tax increase – pisco.
To protect the appellation of origin “Pisco”, the government has released a new normative that regulates some key aspects of its production and commercialisation. According to this new regulation, to be considered a pisco producer, companies will have to be owners of the vineyard, and to improve quality controls.
Bodegas y Viñedos Tabernero is a well-known player in wine and RTDs, and is also present in spirits, basically in pisco. However, in recent years, the company fuelled its growth through innovation, launching new varieties and flavours of its products.
Until recently, the Peruvian market was characterised by a trend towards premiumisation; however, the situation in the country in the review period made this trend take a new direction. Nowadays, there is polarisation in spirits, which has led to high growth for luxury brands, as well as first-price brands (mainstream).
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This industry report originates from Passport, our Alcoholic Drinks market research database.