Latviski English По-русски
Saturday 19.08.2017 | Name days: Melānija, Imanta

Latvijas balzams: one-third of alcohol consumed in Latvia is of unknown origin

(+2 rating, 2 votes)

Baltic news, News from Latvia, BNN.LV, BNN-NEWS.COM, BNN-NEWS.RUOne-third of strong alcoholic drinks consumed in Latvia contain contents of unknown origin – mixtures of water and spirit. This situation exists because of the still remaining and still problematic matter of limiting illegal alcohol market, which became apparent for the first time in Latvia in 2009, as Chairman of Latvijas Balzams Guntis Aboltins mentioned in his interview to BNN.

What are some of the most notable recent developments in your sector?

The geopolitical situation is rapidly changing. Recent events have become a major development-impacting factor. It affects priorities and changes our views on risks. The geopolitical environment and its processes can bring unexpected development opportunities and put business development several years in the past. It is normal to perform risk assessment – our country’s economy is very sensitive to current events and the result – good or bad – always has an impact.

The matter regarding limitation of illegal alcohol remains notable in the alcoholic drinks sector. It has been since the crisis in 2009. Even though law enforcement authorities and representatives of the sector have been trying to change the situation for the better on a legislative level, combating the illegal market on a practical scale seems like a long road for us. It is not normal when one-third of strong alcoholic drinks consumed in the country are basically mixtures of water and spirit of unknown origin. What is worse is that contents of these mixtures are not controlled and are very dangerous. According to laboratory test results of some of these drinks, the concentration of methanol in counterfeit alcoholic drinks sometimes exceeds the norm dozens of times. This can result in death, blindness or heavy poisoning.

Measures aimed at combating the illegal alcohol market should go hand in hand with education about reasonable consumption of alcoholic drinks. Even though the matter regarding so-called legal drugs and free availability of them for youths has become more problematic recently, the matter of consumption of illegal alcohol of unknown origin is just as important. I believe solutions to society’s health problems can be solved through matters of combating illegal alcohol and legal drugs.

The policy regarding the circulation of alcoholic drinks affects the sector’s development in a direct way. I believe decision that were made in 2013 were a step in the wrong direction for combating the main problem – reducing alcohol consumption among young people. Last year’s amendments to the Handling of Alcoholic Beverages Law provide significant restrictions only in regard to specific types of alcohol. Amendments sort alcoholic drinks based on their origin and contents. Now we see the consequences of this policy – discussions have been launched about whether or not the law applies to everyone, who should comply with it and whether or not it can bring the desired effect.

This approach is absurd, because it does not comply with the initially defined goal – reduce availability of alcohol for minors. I would say the government ‘fooled around’ with such decisions instead of approving laws that would have otherwise had a positive impact on business and solved problematic issues.

Can you say there are improvements to economic conditions and business growth on the market?

There is some degree of growing optimism in the business. It is due to the growing purchasing power and consumption dynamics. We have not yet reached our pre-crisis figures, but positive development is felt nonetheless. However, the current geopolitical events have left an impact and reduced previous growth outlooks in Latvia. I believe it is a signal to every entrepreneur. The geopolitical factor can be very strong, especially when it comes to our neighbours.

How would you describe the government’s economic policy aimed at improving the country’s economy?

The economic policy lacks decisiveness, a strong backbone and certainty about achieving priorities. I have a feeling that the shadow of political caution often only increases the number of lost opportunities. Several years ago, I was among those who believed in the National Development Plan. Unfortunately, now I feel more sceptical about it. It is all because of this uncertainty. Even the government’s Re-emigration Plan is something that is part of the general economic policy. I do not see the transition from words to actions.

I would like to emphasize – the country should respect all businessmen, especially those who are at the beginning of their roads. Short-sighted and fluctuating legislation and unfriendly tax policy could become the final straw for some businessmen to lose everything and end up unemployed. Of course, businessmen should also respect their country and fulfil their promises.

How is your business affected by Latvia’s politics? What changes to legislation would you like to see? What helps you? What makes things difficult for you?

The ‘three whales’ provide development and growth. Firstly – predictable legislation; secondly – constructive dialogue between entrepreneurs and politicians; thirdly – fewer obstacles in every process.

Any initiative, even the best, will fade if there are unexpected legislative obstacles in the way. Bureaucracy steals our time and resources.

How would you describe the sector’s position in the Baltic States? What about competition with Estonia and Lithuania?

Development of Latvia’s economy cannot be performed without new investments and creation of new jobs. This is why an important competitiveness criterion is labour tax. Last year, the government made an important step by reducing PIT by 1% (down to 24%). It is also planned to reduce it further to 20% this year. Even though Latvia’s tax burden in relatively low, the low income level makes up a large proportion. On top of that, the tax burden in regard to small wages remains high.

Latvijas Balzams remains a leader in the Baltic States. It should be said that all leading companies in the Baltics focus primarily on export development and construction of their logistical networks. In the largest export markets (Russia, Lithuania, Ukraine), LB cooperates with the largest companies, which guarantees sales for us. Even though our home market – Baltics – retains an important role for LB’s export, our potential continues to grow in other European countries. We have set ourselves a rather ambitions goal – increase turnover by 14%.

What is your ‘trump card’ and what is your Achilles’ heel?

The alcoholic drinks sector brings the state plenty of money to the state. Additional benefits include increased employment and exports. As the largest company in Latvia’s sector, we brought the state nearly EUR 59 million in taxes last year, including EUR 43.4 million in excise tax revenue. The alcoholic drinks sector is one of the largest exporters in the country. What I’m trying to say is that our ‘trump card’ is its value and benefits for state development. It should not be taken for granted. We represent ancient production traditions, because Black Balsam is one of the oldest brands of alcohol in Europe.

In regard to our ’Achilles’ heel’ I would say we are in a sector where businessmen have to be very responsible in their communication and actions, because the alcohol sector is one of the so-called factories of sin. Our weakness is definitely the domestic market’s tax policy. Even now Latvia’s control measures over the country’s alcoholic drinks sector are some of the strictest in Europe, and the industry is very sensitive to any new additional control initiative introduced by the state. And there are numerous new types of regulations introduced regularly, because the proportion of the illegal market is 30% in Latvia.

Do you feel a lack of skilled labour force in the country?

Our company has been maintaining a constant number of employees for some time – around 600 employees. We are proud to say these people have been with us during the crisis, and we do not replace employees often.

At the same time, we do feel a lack of skilled specialists on our production lines. We have to train potential workers ourselves.

Why is it so? I believe there is a gap between demand and supply in terms of education. It is apparent in many sectors, not just manufacturing.

What can you expect in the next five years? Will the situation in the sector improve, worsen or stay the same?

The situation in the sector is affected by two factors: the direction of the alcoholic drinks policy and the government’s ability to control and reduce shadow economy.

Reasonable legislative initiatives and their introduction is Latvia’s biggest long-term problem. Often the influence of political lobby allows the adoption of incomplete laws, surface solutions that are open to interpretation.


Leave a reply

  1. Linda says:

    is that the yellow liqueur – drink of the 1970s – lemony taste then now more chemically?

    Thumb up 0 Thumb down 0

Kirsis asks police to assess possible forging of votes at Riga City Council

Riga City Council’s Unity faction chairman Vilnis Kirsis has asked State Police to check if the city council’s electronic voting system was used without another deputy’s knowledge or consent, said the politician.

Expert: attack in Spain shows how terrorists switched to more easily reachable targets

Terrorist attacks that transpired in Spain this week shows how terrorists have switched to more easily reachable targets, where security requirements are not as strict, says Latvian National Defence Academy’s Security and Strategic Research Centre researcher Martins Hirss.

New mandatory tests in schools to be introduced four years from now

In four years’ time – 2021/2022 school year – it is planned to introduce completely new mandatory tests in schools, as reported by State Education Content Centre Director Guntars Catlaks.

Nearly 9,000 children and their parents got homes thanks to state support programme

In the first half-year of 2017, state support helped 1,527 families in Latvia to buy homes. Compared with last year, families’ demand for state support has grown 6%, as reported by Altum finance institute.

Prediction: Aseradens will likely take control over Unity

Economy Minister Arvils Aseradens will become the head of Unity, Betsafe bookmakers predict. The possibility of Aseradens becoming the head of the party is given 45% probability by Betsafe.

Provisional estimate for next year’s fiscal space in Latvia is EUR 60 million

Next year’s fiscal space has been estimated at EUR 60 million, as noted by Finance Minister Dana Reizniece-Ozola, adding that a more precise estimate will be available at the end of August.

Reconstruction of Vilnius airport runway concludes; aircraft return to Vilnius

On Thursday, 17 August, Vilnius airport’s runway was festively opened. This was the most massive reconstruction for the airport in the past 20 years. It was a unique project for Lithuania and all of Europe, airport representatives say.

Islamic State terrorist group takes responsibility for Barcelona attack

The recent terrorist attack in Barcelona, in which a shuttle bus rammed a crowd of people on La Rambla, killing 13 and injuring at least 100, has become this week’s topic.

Weather in Latvia to be warm but rainy on weekends

The sun will appear every now and then between clouds on Friday, 18 August. Still, some rain is expected, especially in the afternoon in Latvia’s eastern regions, where thunderstorms may appear. Rain is expected to reach the capital in the afternoon. Wind will draw in from the south. Air temperature will reach +21° C… +26° C, according to State Environment, Geology and Meteorology Centre.

Latvia’s export growth was moderately rapid in the first six months of 2017

Compared with the same period of 2016, Latvia experienced a moderately rapid export growth in the first six months of 2017, according to data published by Eurostat on Thursday, 17 August.

Latvia’s annual inflation in July was one of the highest in Europe

Inflation indexes in Latvia and the UK both reached 2.6% in July, which is one of the highest indexes in the European Union, according to data published by Eurostat on Thursday, 17 August.

Kirsis withdraws his candidacy in favour of Aseradens

Riga City Council member Vilnis Kirsis has decided to withdraw his candidacy from the race to become chairman of Unity in favour of a different candidate – Economy Minister Arvils Aseradens.

Rinkevics expresses Latvia’s interest in maintaining political consultations with Palestine

On Thursday, 17 August, Latvia’s Foreign Affairs Minister Edgars Rinkevics met with the leader of Palestine’s diplomatic mission in Latvia, ambassador Taissir Al Adjouri, to discuss mutual relations between Latvia and Palestine and the peace process in the Middle East.

Putin grins to the world’s seven billionth baby, Lithuania wary of border incidents

Russian President Vladimir Putin paid a visit this Wednesday to Kaliningrad, the westernmost point of Russia, but the reports about his trip in the Russian enclave and over the border in Lithuania were strikingly different.

Survey: red considered the safest colour for a car

Most Latvian drivers consider red to be the safest colour for a car. The most popular, however, is black, according to results of a survey by Virši-A fuel trader.

airBaltic’s number of carried passengers reaches a record in second consecutive month

Latvian airBaltic airline carried 393,312 passengers in July 2017, which is 21% more than the same period last year. The number of passengers carried by airBaltic remains the highest it has ever been in the airline’s history, BNN was informed by the company.

Brivais vilnis: nearly all fish processing companies are experiencing losses

Currently nearly all fish processing companies in Latvia are experiencing major or minor losses, says Brivais vilnis chairman Arnols Babris.

American helicopters to perform low-altitude flights within Latvia’s airspace

U.S. Air Force Brigade’s Task Force Phoenix helicopters, which are stationed in Latvia as part of Atlantic Resolve operation, will be performing low-altitude flights from 16:00 to 18:00 from Lielvarde to Dobele on Friday, 18 August.

Healthcare Ministry’s state secretary Karlis Ketners may be replaced

Latvian Healthcare Ministry may replace its state secretary Karlis Ketners. It is possible he will be transferred to work at Finance Ministry, as reported by LTV.

Suspects in Europe's insecticide egg scandal before Dutch court

In the Netherlands, two men have been in court in relation to the scandal of eggs containing banned insecticide that has caused an EU-wide health scare and cost millions of euros of damages.

Indian national with fake documents apprehended on Latvian border

An Indian citizen travelling from Moscow on a bus was caught at Terehovo border control point in Latvia for presenting officers a fake EU family member’s resident card. No criminal process was launched. The person returned to the country he was travelling from.

Latvijas dzelzceļš will not have to pay dividends from last year’s profits

The government decided on Wednesday, 16 August, that Latvijas dzelzceļš will not have to pay dividends from last year’s profits, which were EUR 880,998.

Latvian citizenship provided to 103 people

The Cabinet of Ministers has issued an order to provide Latvian citizenship to 103 people through naturalization.

Estonian Inbank's profits reach EUR 5.7 million in six months

Estonian financial services' provided Inbank made a profit of 5.7 million euros in the first half of 2017, which is a 429.4% increase compared to the respective period in 2016.

Agriculture Ministry invites residents to sign up for measures to support fisheries

From 21 August onward, Rural Support Service plans to start accepting applications for projects to receive support from European Maritime and Fisheries Fund’s action plan for development of fisheries in 2014-2020 as part of projects Innovation, Productive Investments in Aquaculture and Fishing and Aquaculture project processing.

Newest comments