Breakthrough in Bulgaria
08 Nov 2013
As is the case in many markets across the world, Scotch Whisky
is growing in popularity in Bulgaria.
Since Bulgaria joined the European Union in 2007, a number of
trade barriers have been removed. Improved market access and EU
legislation has been good for trade: Scotch Whisky exports rose
from £8.5 million in 2006 to £20.1m last year.
But deeper-rooted problems remain, especially poor tax
collection on local spirits and a large grey / black market. The
Bulgarian government has tried to address these issues by regularly
changing the style of strip stamp - the paper band placed over the
closure of a bottle in many markets to show tax has been paid.
While strip stamps are intended to guarantee government revenues,
we greatly doubt their effectiveness.
There was huge disruption the last three times strip stamps were
changed in Bulgaria in 2004, 2007 and 2009. Traders had to retrieve
stock from retailers and wholesalers to remove the old stamp and
apply a new one. Tax had to be paid again and Scotch Whisky
producers waited as much as two years to be reimbursed the original
When the Bulgarian government announced it was changing stamps
again this year, alarm bells rang. Changes in legislation
since 2009 meant stock could not be returned for re-stamping and
excise already paid could not be reimbursed. The only option
seemingly available was destruction of stock.
With the government initially reluctant to act, the SWA raised
high level concerns in the European Commission and British
Embassy. A working group involving Bulgarian officials and
Scotch Whisky traders was quickly established and a 12 month
transition period was agreed to allow stock with old stamps to be
sold. While this addressed our biggest concerns, officials
would not consider further action for any 'old' stock still on sale
after the transition period.
With some high value Scotch Whiskies potentially affected, we
visited Sofia to discuss the situation with senior Customs
officials. This month, officials agreed to make provisions
for any Scotch Whisky left unsold after the transition
Thanks to a resolution being reached on this issue, Scotch
Whisky importers have avoided costs of almost 3 million euro.
The pragmatism of Bulgarian officials is greatly appreciated, as
is the considerable support from the Embassy in Sofia. The
episode is an excellent example of collective action involving
trade and officials delivering results for the industry.
Nick Soper is SWA Director of European Affairs