Recognition of craft distillers at the legislative level will double the number of legal producers by 2030, attract EUR7 million in investments in the industry, and create about a thousand jobs, said Kateryna Kamysheva, chairman of the Association of Craft Distillers, 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 Certain Laws of Ukraine on Simplifying the Conditions for the Production of Distillates by Small Businesses” came into force in Ukraine, which will be fundamental in the formation of a legal market for craft spirits.
“Among other things, the 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 spirits,” emphasized the head of the association.
Kamysheva said that when drafting the legislation, its initiators were guided by data showing that one craft distillery employs two to ten people. One producer can bottle products in 250 0.5-liter bottles per month, which will allow them to sell 3,000 bottles annually. At a cost of UAH 300 per bottle of craft distillate, the producer’s annual revenue can reach UAH 900 000.
According to the expert, the shadow market for the production of craft alcohol distillate currently includes about 500 entities with annual production volumes of 1.5 million bottles, resulting in a loss of UAH 75 million in VAT, UAH 39.99 million in excise taxes, and UAH 16.2 million in income tax to the state budget annually.
At the same time, if 70 legal producers of alcohol distillate enter the market by 2030, annual sales of craft distillate will amount to 2.52 million bottles, and gross revenue will reach UAH 1 billion. To produce 1 dkl of alcohol distillate, 60 kg of fruit and 40 kg of grain need to be processed. The new producers will process 28 thousand tons of grain and 42 thousand tons of fruit annually.
The development of small business and small farming in the postwar period will create conditions for 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.
According to Kamysheva, Ukrainian craft alcoholic distillates are already highly regarded by European tasters, who complain about the inability to buy them legally.
“One of the main goals of changing the legislation to legalize the work of craft distillers is to simplify the conditions for obtaining licenses and the financial component of obtaining permits,” explained Lyudmyla Khomychak, head of the Food Security and Excise Products Division of the Department of State Policy in the Sphere of Sanitary and Phytosanitary Measures.
In the course of developing the rules for the functioning of the market of alcoholic distillates and alcoholic beverages and developing the working conditions for craft producers, the law on geographical names of alcoholic beverages was enacted, which distinguishes between the concepts of “alcoholic beverage” and “alcoholic distillate”. In addition, 44 categories of alcoholic beverages have been defined in accordance with European legislation, and unified principles for obtaining licenses, registering storage facilities, reporting, waste management, etc. have been established.
According to Khomychak, craft producers of alcohol distillate are allowed to avoid complex certification to obtain a license. Small producers only need to prepare declarations of conformity of the material and technical base and submit them to the State Service of Ukraine on Food Safety and Consumer Protection.
The newly enacted law significantly reduced the cost of obtaining production permits. Thus, a license for the production of alcohol distillate and alcoholic beverages will cost a craft producer UAH 780; a license for the wholesale of alcoholic beverages – UAH 30 thousand per year; a license for retail trade – UAH 8 thousand per year for each type of such products.
In addition, a craft distillery producer is obliged to submit a quarterly report to the State Service of Ukraine on Food Safety and Consumer Protection on the volume of production and/or turnover (including exports) in the form approved by the order of the Ministry of Finance. In case of violation of the law, including failure to submit and late submission of the report, a fine of UAH 1,020 is imposed. In case of sales of more than 10 thousand dkl of distillates during the year, the fine will be equal to 200% of the value of the products sold, but not less than UAH 17 thousand.
Ihor Marchuk, Chairman of the Subcommittee on State-Business Interaction and Investments of the Verkhovna Rada Committee on Economic Development, expressed hope that the art of distillate production will be revived in Ukraine and transformed into a powerful industry.
“The economic policy is aimed at stimulating family and craft production. We are working on expanding the line of craft goods, which will eventually be converted into relevant legislative initiatives. The Parliament is preparing to add a draft law on beer producers to the existing specialized laws on small producers of distillates and small producers of wine products and turn them into a craft triad of alcoholic beverages that will develop the Ukrainian gastronomic ethnic culture and culture of alcohol consumption,” he said.
According to Marchuk, the Verkhovna Rada and the Cabinet of Ministers are looking for financial incentives to develop processing in Ukraine and create value-added products. For its part, the government hopes to legalize the craft distillery industry, to ensure that it operates within the legal framework, creates new jobs, and pays taxes to the state budget.
distillate, Kamysheva, Khomichak, legal production, КРАФТ, Марчук
