6th Feb 2020 10:10
(Alliance News) - Stock Spirits Group PLC saw a surge in first quarter demand in Poland and Czech Republic ahead of an increase in excise tax in the countries, the alcoholic drinks maker said on Thursday.
With effect January 1, excise tax in Poland rose 10% and by 13.2% in the Czech Republic.
Stock Spirits said it experienced increased demand as customers stock up on products before the tax was imposed.
"Overall, the performance in both markets to date has therefore been significantly ahead of the same period last year although, based on previous experience of such changes, we expect the current quarter will see some consequential impact from the strong first-quarter," the company said ahead of its annual general meeting on Thursday.
Also in Poland, an additional tax on small format - less than 300 millilitres - alcoholic products has been proposed.
The proposal will get a first reading in Polish parliament shortly.
Stock Spirits explained: "At this stage it is too early to identify accurately or with sufficient certainty the likely impact or any response that we may make. We are already considering a range of potential commercial and operational actions that we could take in response to manage or mitigate the situation, including legal action under European Union law."
In the three months to December 31, the total vodka market in Poland grew in value by 2.3% year-on-year.
During December, Stocks Spirits posted its 32nd successive month of volume share growth in Poland, despite reporting a "competitive" pricing environment.
In the Czech Republic, the spirits market grew in value by 6.4% during the first quarter.
Stock Spirits also added that it expects to win an appeal in Poland, in relation to a 2013 income tax return.
A court hearing on the matter took place on January 28, and Stock Spirits expects a verdict before the end of February.
"Based on advice from our taxation and legal advisors, we continue to consider it likely that our appeals process will ultimately be successful and our position will be upheld," Stock Spirits said.
The Polish Tax Authority also began an audit of a Stock Spirits subsidiary's 2014 tax returns in January. The company noted the audit is in its early stages.
Shares in the company were 1.2% higher at 212.50 pence each in London on Thursday morning.
By Eric Cunha; [email protected]
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