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Major Estonian beverage producer to scale down investments in wake of excise duty hike

A production line at A. le Coq's Tartu Brewery. 2013.
A production line at A. le Coq's Tartu Brewery. 2013. Source: (Margus Ansu/Postimees/Scanpix)

Estonian beverage group A. le Coq has effectively frozen its investments this year as a result of the increase in alcohol excise duties in Estonia, daily Postimees said.

A. le Coq CEO Tarmo Noop said that while they usually invest from €3-7 million annually, this year investments would total just €1 million and the money would be spent to make essential investments in quality. As a result of the difficult situation, A. le Coq has also forgone the usuall wage hike this year.

The excise duty rate on alcohol in Estonia rose as of February, with further increases scheduled for July 2017 and February 2018. The hike, effective from the beginning of this month, was from 8.30 cents to 9.13 cents per percent alcohol by volume (ABV) for beer; in July of this year, the rate will increase further to 15.52 cents. For wine and fermented beverages with an alcohol content of up to 6 percent ABV, the duty rose from 48.55 cents to 53.41 cents per liter this month, and will climb further to 77.44 cents in July.

Listed Finnish beverage group Olvi, owner of A. le Coq, announced on Tuesday that it had called off a planned investment of €2 million in Lithuanian subsidiary Volfas Engelman as an increase in the alcohol excise duty was set ot slash 20-30 percent off of alcohol sales in Lithuania as a result of prices rising by 15-40 percent.

Editor: Editor: Aili Vahtla

Source: BNS

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