19:01 23.11.2023

Association of Craft Distillers: De-shadowing craft spirits industry to help Ukraine's recovery

4 min read

KYIV. Nov 23 (Interfax-Ukraine) – Recognition of craft distillate producers at the legislative level will make it possible to double the number of legal producers by 2030, attract EUR 7 million in investment in the industry, and create about a thousand jobs, chairperson of the Association of Craft Distillers Kateryna Kamysheva said at a press conference at Interfax-Ukraine on Thursday.

According to her, on November 23, the law on amendments to the Tax Code of Ukraine and some laws of Ukraine on simplifying the conditions for production of distillates by small businesses came into force in Ukraine, which will become fundamental in the formation of a legal market for craft alcoholic beverages.

"Among other things, production of strong distillates for Ukraine is a good prospect for Ukrainian farmers in the face of difficulties with the export of agricultural products. We are opening a new page in the history of Ukrainian strong craft," the head of the association emphasized.

Kamysheva said that when developing legislation, its initiators were guided by data according to which one craft distillation employs from two to ten people. One manufacturer can bottle products into 250 0.5 liter bottles monthly, which will allow him to sell 3,000 bottles annually. With the cost of 1 bottle of craft distillate being UAH 300, the annual revenue of the manufacturer can reach UAH 450 million.

According to the expert, currently the shadow market for production of craft alcohol distillate includes about 500 entities, whose annual production volumes reach 1.5 million bottles, as a result of which the state budget annually receives a shortfall of UAH 75 million in VAT, UAH 39.99 million from excise taxes and UAH 16.2 million of income tax.

At the same time, if 70 legal producers of alcohol distillate appear on the market by 2030, annual sales of craft distillate will amount to 2.52 million bottles, and gross revenue will reach UAH 1 billion. Moreover, to produce 1 dl of alcohol distillate, 60 kg of fruit and 40 kg of grain need to be processed. New producers will process 28,000 tonnes of grain and 42,000 tonnes of fruit annually.

The development of small business and small farming in the post-war period will create conditions for the employment of former military personnel, as well as for the development of women's entrepreneurship, family businesses in rural areas, and will promote the development of related markets for the production of containers, labels, equipment for production and storage.

As Kamysheva reported, Ukrainian craft alcoholic distillates are already highly rated by European tasters, who complain about the impossibility of purchasing them legally.

"One of the main goals of changing legislation to legalize the work of craft distillate producers is to simplify the conditions for obtaining licenses and the financial component of obtaining permits," explained Liudmyla Khomichak, head of the department for food safety and excisable products of the department of state policy in the field of sanitary and phytosanitary measures.

When developing rules for the functioning of the market for alcoholic distillates and alcoholic beverages and developing working conditions for craft producers, a law on geographical names of alcoholic beverages was introduced, which distinguished the concepts of "alcoholic beverage" and "alcohol distillate." In addition, 44 categories of alcoholic beverages have been defined in accordance with European legislation, and uniform principles have been created for obtaining licenses, registering storage locations, reporting, waste management, etc.

As Khomichak noted, a craft producer of alcohol distillate is allowed not to undergo complex certification to obtain a license. It is enough for small manufacturers to prepare declarations of conformity of the material and technical base and submit them to the State Consumer Service.

The law that has come into force has significantly reduced the cost of obtaining production permits. Thus, a license for production of alcohol distillate and alcoholic beverages will cost a craft producer UAH 780; license for wholesale trade in alcoholic beverages – UAH 30,000 per year; and retail license – UAH 8,000 per year for each type of such product.

Chairman of the subcommittee on interaction between the state and business and investments of the Verkhovna Rada Committee on Economic Development, Ihor Marchuk, expressed hope for the revival of the art of distillate production in Ukraine and for its transformation into a powerful industry.

According to Marchuk, the Verkhovna Rada and the Cabinet of Ministers are seeking financial incentives for the development of processing in Ukraine and the creation of value-added products. In turn, the state hopes for the legalization of craft distillate production, its work in the legal field, the creation of new jobs, and the payment of taxes to the state budget.