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Czech distillers hit hard amid bootleg alcohol deaths

New restrictions on domestic alcohol sales have been placed after the deaths of 23 citizens - but they're harming reputable businesses, claim producers

AFP, Sunday 23 Sep 2012
Views: 1254
Views: 1254

Czech distillers are facing the first ever dry spell after Prague banned the sale of domestic liquor both at home and abroad after bootlegged spirits killed 23 Czechs.

Under pressure from the European Union, Czech authorities banned exports of liquor with over 20 per cent alcohol content on Thursday on the heels of a sales ban at home imposed on 14 September.
"The export ban is terrible for my brand," says Anthony Schofield, chief executive of Jan Becher - Karlovarska Becherovkathe, maker of the Czech Republic's world-renowned traditional herbal liqueur.
"This prohibition only penalises the reputable producers and importers," said Schofield, whose high-profile Czech brand is owned by France's Pernod Ricard, the world's second largest spirits maker.
Reputable Czech producers sell liquor worth 15 million koruna ($786,000) a day, or 5.5 billion koruna a year, according to the Czech association of spirits makers and importers.
Czech alcohol exports amounted to 1.093 billion koruna between August 2011 to July 2012, up from 1.012 billion koruna a year earlier, according to the Czech Statistical Office.
Neighbouring Slovakia bought the most with purchases worth over 600 million koruna over the 12 months. Bratislava banned Czech imports Tuesday after at least four Slovaks ended up in hospital after drinking Czech plum brandy tainted with methanol.
Czech spirits makers have urged authorities to lift the ban and target only producers whose spirits have high methanol content. They warn of job losses if the ban lasts.
"The damage that has been done to Czech brands, to Czech exports is unquantifiable at this stage," Schofield observed.
Since early September, the wave of methanol poisoning has killed 23 people and sent dozens to hospitals across the Czech Republic, some of them in serious condition and
placed in artificial comas.
Although the police have not found the main culprit yet, they have uncovered a huge black market, estimated to account for about 25 per cent of overall Czech liquor sales.
Besides tax losses due to bootlegged alcohol -- estimated at 1.6 billion koruna a year -- Czech state coffers are losing 130 million koruna in sales tax revenue per week under the sales ban.
With the Czech economy in recession, further losses in tax revenues threaten to wreak havoc with public spending in the ex-communist country of 10.5 million which has the world's second highest adult alcohol consumption after Moldova.
"I am very certain that once this crisis is over, we will be approaching the government to look at how we can cover our losses," Schofield said, adding to Prague's woes.
With this all in mind, the Czech cabinet said it wanted to lift all restrictions as soon as possible and introduce new excise stamps on spirits bottles to help distinguish good liquor from potential poison.
It also rushed to ban exports in fear the EU might slap a two-month ban on Czech liquor imports.
But an association of 12 Czech producers and importers were skeptical, saying their bottles already had unique codes.
The association's vice-president Vladimir Darebnik has asked the government to lift the ban "on sales of traceable products" and to allow the sale of over 20 million litres of liquor pulled off the market as the ban was imposed last week.
Ending the ban would also please Czech restaurants, now losing 200 million koruna a day, according to analysts from the MAG Consulting agency.
Robert Hurda, manager of a restaurant and bar in a popular music club in Prague, said their sales had fallen by an estimated 40-50 per cent since the ban was imposed.
He would be forced to sack some of his 21 employees if the situation continued, he said.
"People leave much earlier, because they don't have as much fun as usual," he told AFP.
"We're trying to react, we have bought sweet liqueur. But when you drink too much of that, it gives you a terrible headache!"
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