Sttill, despite this, there is still room in the Polish alcohol market for small niche players who are banking on the success of traditional, high quality spirits some of which are seeing resurgence after many years.
The Polish alcohol market was controlled by a state monopoly from the 1920s to the late 1980s and early 1990s when most of the industry was privatised. In 1991, the state-owned Polmos monopoly was broken down into 25 different entities with their many different brands divided between them. After that, a number of major events played big roles in shaping the market to what we see today. In 2002, the excise tax for imported spirits was lowered by 30% which resulted in increased popularity of whisky, gin and other spirits not traditionally popular in Poland. With Poland’s entry into the European Union, custom fees were abolished, putting Polish players on the alcohol market on a level playing field with other countries in Europe. EU membership also led to increasing disposable incomes in Poland, one result of which was that Poles began to travel more and subsequently, experienced new and different types of alcohols that they wanted to also be able to buy at home. Increasingly, the Polish taste for alcohol became more sophisticated and premium and super-premium products began to grow in popularity.
Today, vodka continues to be the leading alcohol in Poland however, other types of spirits such as whisky, gin and perhaps most surprisingly partly because it is not produced in Poland, wine. Poland has also quickly become a nation of beer lovers. On the whole, despite some setbacks caused by the global economic situation, Poland’s alcohol market continues to grow. According to a report by AC Nielson, the alcohol market in Poland grew 9.2% in terms of volume and 17% in value between November 2007 and December 2008 to PLN 25 billion (approx. £ 5.33 billion). In January 2009, an increase to the excise tax was introduced which may result in a decrease in the market once final figures for the year are made available, however, by most accounts, this will not be significant if at all.
Within the industry, the overall trend in the Polish alcohol market is towards consolidation as multinational companies play an increasingly important role and become leaders on the Polish market through growth and the acquisition of Polish players. Companies such as CEDC and Belvedere which were established in Poland are also gaining an increasingly large share in international markets.
The largest player on the Polish alcohol market is CEDC. Probably most known for its Bols vodka brand, the company produces over 9 million 9-litre cases of vodka each year in the four main segments of the Polish vodka market: top premium, premium, mainstream and economy. CEDC is also well known for its Absolwent vodka which is the best selling vodka in Poland and Żubrówka which is becoming increasingly popular in countries outside of Poland including the United States, Japan and England. In all, the company has a portfolio of over 700 brands and is the leading distributor of alcoholic beverages in Poland as well as being a leading importer of spirits, wine and beer with a portfolio of over 40 brands of spirits, wines from 40 different producers and 8 brands of beer.
The largest competitor for CEDC in Poland is the Belvedere group which is often associated with the well known Sobieski vodka brand which holds the seventh place in the world when it comes to sales in the premium segment. The group is present throughout Europe, Asia and North and South America. According to the company’s website, Belvedere group had record sales in 2007 of 1 042 million Euro – a rise of 35.5% over the previous year. Poland is one of the largest markets for the company accounting for a 40% share of the record sales. Aside from Sobieski, some of Belvedere Group’s other major brands include Marie Brizard which is available in 130 countries worldwide, William Peel whisky, and the well known Dutch vodka, Danzka. In Poland, the group is also very well known for its Krupnik brand, which is the most recognized honey based liquer in Poland and Polonaise and Starogardzka vodkas.
Other major players which are very active in Poland include global leaders such as Pernod Ricard which has some of the world’s most prestigious brands including Absolut Vodka, Jameson, Chivas Regal, Martell, Glenlivet, Havana Club, Ballantine’s, Malibu, Kahlúa and others and Diago, which includes brands such as Smirnoff, Johnnie Walker, Captain Morgan, Baileys, J&B, José Cuervo, Tanqueray, Guinness, Crown Royal, and the Beaulieu vineyard in its portfolio.
A major player in the Polish beer market is Kompania Piwowarska (Brewing Company). Established in 1999 as a result of a merger of Tyskie Browary Książęce and Lech Browary Wielkopolski, Kompania Piwowarska, a subsidiary of one of the world’s largest global brewers, SABMiller, is the leading and largest brewer in Poland and is most known for its widely popular and award winning Tyskie beer, Żubr (Bison) which is the second largest Polish beer brand and Lech beer. Other brands in the company’s portfolio include Dębowe Mocne, Redd's, Wojak and international premium brands Pilsner Urquell, Peroni Nastro Azzurro and Miller Genuine Draft.
The other major player on the Polish beer market is Grupa Żywiec S.A. which is owned by Heineken. According to the company’s website, every third beer sold in Poland has been manufactured by the company. The most recognized brands of the group include Żywiec, Heineken, Warka, Strong, and Tatra. The group is also well known for some of its local brands including Królewskie (Warsaw and surrounding regions) and Leżajsk (South-Eastern Poland) and a brand of beer which specifically targets women called Freeq. Other brands of note include foreign beers such as the tequila flavoured Desperados, Paulaner, Murphy’s Irish Stout, Murphy’s Irish Red, Fischer, Kaper and Żywiec Porter.
The third largest player on the Polish beer market is Carlsberg Polska which has three popular national brands in Harnas, Okocim and Karmi which is targeted at women to go along with three regional brands, Kasztelan, Bosman and Piast. Together, Kimpania Piwowarska, Grupa Żywiec and Carlsberg control 85% of the Polish beer market.
The market for wine in Poland, which is quickly growing, is still largely fragmented with many small importers playing a significant role. However; importers such as Partner Center which imports and distributes over 500 different types of wines and Centrum Wina with over 700 different wines that it imports and distributes, are emerging as the leaders. The main challenge for the Polish wine industry will be to convince Poles that wine is not just a luxury product to be consumed on special occasions but a drink that can be enjoyed more frequently and even every day as is the case in many wine producing countries such as France, Italy and Bulgaria.
What most people outside of Poland, and in fact many Poles as well, don’t know about is that Poland has a centuries old tradition of producing flavoured spirits that are specific to the country. So called ‘Nalewkas’ have been produced in Poland since the 15th century, primarily for medicinal purposes in the beginning, are a flavoured spirit that is sweeter than a fruit vodka, with a similar alcohol concentration but not as sweet as a liquer. Where the Greeks have Metaxa, the Italians - Grappa, the Spanish - Porto and the Germans - fruit brandies, Poles have Nalewkas. Most Poles have forgotten that Nalewkas were traditionally a noble drink mainly because of a lack of an official definition of the drink. This resulted in lower quality alcohols which moved away from fundamental criteria of production of the drink being called Nalewkas. These fundamental criteria include the use of real fruits and 100% use of natural ingredients with no artificial colours or flavours, a specific maceration process and an aging process which should in most instances be at least one year. Nalewkas, besides tasting good, also have certain health benefits that many other types of alcohols do not. Nalewkas are said to improve digestion, increase circulation and as with red wine, help to destroy free radicals and are said to be good for the heart.
During the past five to six years, a number of small private companies and entrepreneurs have gotten back to producing Nalewkas in Poland with the hope of reviving this long Polish tradition. More recently, some larger players such as Toorank Polska and Polmos Lublin (part of Stock Spirits Group) have taken notice and also started producing Nalewkas. However, because of the labour intensive process (i.e. much of the work should be done by hand) of producing Nalewkas which are true to the tradition of the drink, production has for the most part remained in the realm of smaller players who generally have a true passion and are not necessarily out to make huge profits.
One such smaller player who has emerged during the past few years in the niche Nalewka segment is the family owned Z. Kozuba i Synowie (Z. Kozuba & Sons). The company was founded by Zbigniew Kozuba and his sons Maciej and Jakub who previously produced Nalewkas for friends and family for many years based on family recipes that were passed down for generations. Seeing opportunity in this niche in the Polish alcohol market, the Kozuba family decided to make a business of it and started larger scale production in 2005 at a small production plant in Jabłonka, a village in Poland’s Mazury Lakeland. A year later, the company brought 20 000 litres to market and since that time, the company’s products have been gaining in popularity while winning several rewards for taste and quality along the way including silver and gold medals at the International review of Spirits which is organized by the Beverage Institute in Chicago.
Not being able to compete directly with larger players on the Polish alcohol market by way of large advertising campaigns or on price, the company organized as many tasting sessions as possible. “We knew that the only way to appear on the alcohol market in Poland was to allow as many people as possible to sample our products and we were convinced that by doing so, our Nalewkas would eventually sell themselves”, said Maciej Kozuba who is responsible for sales and marketing at the company, “So far, this has been the case as we have been seeing a steadily growing demand for our products and more people are beginning to recognize our brand.” The company has also begun tasting sessions outside of Poland with a very positive initial response and plans on exporting in the near future.
Although Z. Kozuba i Synowie and most other small players on the Polish alcohol market will likely never grow to be as large as the major players on the alcohol market in Poland, there is and will continue to be room for them in high quality niche markets. The largest challenge, and in fact the key to survival however, will be in being able to convince consumers that it is worthwhile to sometimes pay a premium price for a quality product that is not conducive to mass production.
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