The alcoholic drinks market has witnessed major changes during the past few years. In 2013, a major tax reform went into effect changing the face of the alcoholic drinks market. Prior to the reform, the tax was derived from the price of the bottle; the reform of 2013 based taxes on the level of alcohol in the beverage. This caused a significant price drop on premium products, bridging the gap between the price differences of the different segments, with a great impact on consumers' alcohol consumption habits.
With premium products becoming more affordable, we have seen a significant shift towards premium beverages such as single malt whiskey. On the other hand, some categories which used to be very popular, such as the previously low-cost araq, now witnessed price rises due to the new tax structure and dropped in volume terms as a result.
Online low-cost retailers have also begun to affect the market. Internet retailers such as Paneco offer alcoholic beverages at very low prices, which even compete with the Duty Free. This has allowed greater exposure to new brands, as they are offered at more affordable prices and are also more easily found. In addition, online retailing has encouraged competition, prompting many physical retailers to lower their prices as well, and narrowing the gap between low-cost and premium products even further.
The combination of the tax reforms and internet retailing have had a significant impact on the market, as consumers are increasingly interested in purchasing premium spirits and craft beers, as the price gap between premium, mid-priced, and economy is no longer significant.
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