“If the special tax were to be abolished, this would mean at the same time the reduction of the price on the shelf by at least 10%”, argues the Union
Open wound taxation remains for the coffee processing and trading sector in Greece.
Last month, the Board of Directors of the Hellenic Coffee Union met with the Minister of Finance, Kostis Hatzidakis, where he raised the issue of abolishing the Special Consumption Tax on coffee, which burdens the sector annually with an amount of 140 million euros, provided of course that there is the required fiscal space. In fact, the Board of Directors proposed that part of the specific state revenues be allocated to deal with smuggling and illegal trade in our country.
According to what the president of the Hellenic Coffee Union, Tassos Yagoglou, said yesterday in the context of an informative event, from 2017 to 2023 the state coffers collected a total of 1 billion euros from the Special Consumption Tax. The initial budget of the measure was 70 million euros. In the first year, 90 million euros were collected instead of 70 million euros which was the initial budget and since then the specific number has been rising until 2023 where it reached 140 million euros.
It is noted that the excise duty amounts to 2 euros per kilo on green (raw) coffee, 3 euros on ready-made imported coffee and 4 euros on instant coffee.
“If the special tax were to be abolished, this would mean at the same time the reduction of the price on the shelf by at least 10%,” said Mr. Yagoglou.
In fact, he emphasized that businesses in the sector prepay the Excise Tax. When the Excise Duty was first imposed, active businesses needed twice as much liquidity as they had needed up to that time. When originally imposed, the tax was approximately 80% of the then market value of green coffee upon importation.
Increased coffee consumption
Regarding the consumption of coffee in Greece, it was pointed out that it has increased by about 4% to 5% after the pandemic. The first quarter of 2024 is 1.6% increased in volume in supermarkets compared to the corresponding quarter of 2023. On an annual basis in Greece, a total of approximately 40,000 tons of coffee is consumed.
At the same time, the quantities trafficked illegally in Greece are estimated between 10% and 15% based on market estimates. As pointed out, there is an intention to create mobile control units, a move that is currently unknown when it will be implemented by the Ministry of Finance. The approach of the Hellenic Coffee Association is that part of the annual revenue collected from the Excise Tax should be allocated to the fight against illegal coffee consumption. The largest quantities of smuggled coffee are imported from the northern borders of the country. It is noted that countries where the Excise Tax is applied, apart from Greece, are Germany and Belgium.
In relation to the increasing trends observed recently in the coffee market, it was pointed out that there is an increase in the prices of the Robusta varieties (38% of the world production) which also affected the prices of the Arabica variety (62% of the world production). Robusta varieties have traded up to 60% of their peak price and Arabica varieties have traded up to 30% of the variety’s peak price. Companies have absorbed most of the price hikes, but if it continues, according to Mr. Yagoglu, there will be hikes depending on the level of prices a company will be forced to buy from now on, with hikes ranging from 5% up to 15% on the supermarket shelf. It is noted that the last appreciation in the coffee sector took place in 2022.
Regarding the distribution of consumption in organized retail in terms of volume, Greece is the first in terms of quantities with a percentage of 50%, while in terms of value it occupies a share of 30%. Followed by the instant with a percentage of 18% in volume and 30% in value, the espresso with 15% in volume and 25% in value. The filter has a share of 17% in volume and 13% in value. The capsule of the total espresso consumption has a share of 50% in volume and 71% in value.
The total market in supermarkets amounts to 340,000,000 euros annualized in the first quarter of 2024 with a 3.2% increase in value compared to the first quarter of 2023. The consumption volume increased in the same period by 1.6%. The turnover from the sale of coffee capsules in supermarkets is estimated at around 60 million euros per year. It is noted that the figures concern organized retail, including Lidl Greece.
Source: Skai
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