Excise tax increase reshapes Hungary spirits market

EU

A two-step increase in the excise tax on alcohol in 2011 has changed the structure of Hungary's spirits market, daily Magyar Nemzet said on Tuesday, citing data from market research company Nielsen. Spirits makers have lowered the alcohol content of their products to keep prices down or are focusing on high-end drinks, the paper said. While "pálinka" – Hungarian-made fruit brandy – was the most popular spirit in the country before the excise tax increase, vodka is now market leader, and even bitters sell more than pálinka. The Nielsen data cover just commercial spirits sales, not home-distilling, which is popular in Hungary. Legislation in force since the autumn of 2010 allows Hungarian households to distill for personal consumption the equivalent of 50 litres of 86%-alcohol pálinka a year tax-free. The European Commission recently referred Hungary to the European Court of Justice over the tax exemption, but the government said it had no plans to tighten regulations and was ready to defend its stand in court.

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