Slight rise in domestic wine production – Decrease in revenues and a spike in illegal trade due to the Special Consumption Tax (S.C.T.)

The domestic winemaking sector is the subject of investigation in a recent study conducted by Infobank Hellastat S.A. According to Alexis Nikolaidis, Economic Research & Sectorial Studies Senior Analyst, the limited purchasing power of consumers has negatively affected domestic winemaking, since a shift in tastes is observed, from bottled products, to cheaper wine sold in bulk. The bulk product accounts for 60% of demand in terms of volume, reflecting thus the consumers’ need for more economical solutions.

According to the Central Cooperative Union of Wine Products (KEOSOE), domestic consumption has shown a downward trend over time, with strong fluctuations in-between, however. During the period of 2005/2006 – 2009/2010, the average size of the market amounted to 3.16m hectoliters. Subsequently, the average size for the following five-year period (2010/2011 – 2014/2015) was formed at 2.82m hectoliters, having dropped by 10.7% versus the previous five-year period.

The cultivated vineyard areas have shown a decline over time, since many vine growers, within the context of the uprooting policy, have exited the sector, also given the low prices in several grape categories. Therefore, during the period of 2015-16, the planted areas were formed at 627,234 stremmas (627,234,000 square meters), showing a further decline of 2.1% from the year before.

In 2016, domestic output was formed at 2.55m hectoliters, having increased by 2% versus 2015. The biggest part of the rise was derived from table wines, the output of which was formed at 1.79m hectoliters (+3.5%).

The imposition of Special Consumption Tax on wine (at 20 cents/liter), as of 1.1.2016, has had a negative effect on wineries’ revenues, in conjunction with any liquidity problems caused by the obligation for prompt payment of the tax. The Special Consumption Tax has significantly favored grey economy and illegal trade (it is characteristic that, in 2016, the tax was only imposed on 1.18m out of the 3.5 hectoliters that were consumed), which has prevented the collection of public revenues.

According to Mr. Nicolas Gouzelos, CEO of Infobank Hellastat, “Winemakers should turn their attention to boosting their exporting activity, in order for them to take advantage of the undisputed high quality of their product. The USA, Canada, and also the emerging markets are referred to as the most attractive destinations.”

 

Financial analysis

In the study conducted by IBHS, an analysis takes place of the financial statements of 70 winemakers. The key conclusions drawn are summarized as follows:

•    In 2015, Turnover amounted to €224.42m, showing a rise of 2.9% since 2014
•    EBITDA increased by 24%, at €24.8m. Pre-tax losses were limited to €0.27m
•    The EBITDA and EBT margins rose to 13.8% and 3.4%, respectively
•    Capital leverage improved to 1.1 over 1
•    Receivables were collected within a period of 5.5 months, while Inventories were held for 7 months

 

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