CEE distillers pivot to domestic sales as exports fall, tastes shift

Alcoholic spirits producers across Central and Eastern Europe (CEE) are shifting to domestic markets as geopolitical shocks, sanctions and changing consumption patterns undermine exports.

Producers in Poland, Czechia and Moldova are rebranding locally and pursuing new strategies to stay afloat after the collapse of major foreign markets, in the wake of Russia’s invasion of Ukraine and Western sanctions on premium alcohol.

Spirits face structural decline amid tax increases and shifting demographics, market intelligence firm Euromonitor said in its 2024 Czechia report.

Producers in Moldova, once reliant on outbound brandy shipments, are being forced to reconsider strategies after decades of international positioning.

“KVINT is one of (breakaway state) Transnistria's largest exporters, to Italy and China as well as Russia and Ukraine; its brandy has gone to the Vatican and into space,” the company said.

Domestic rebranding, demand stabilisation

With high-end export destinations contracting, many firms have turned to local branding and value-added repositioning.

Sales of Russian whiskey have more than tripled in the last two years, Reuters reported in 2023, citing internal distillery data. “A Russian man would buy one bottle of a quality liquor instead of ten bottles of cheap stuff like vodka,” said Gennady Silivanov, master blender at Kemlya Distillery in rural Russia.

Mixed export dependency in Czechia, Poland

Czech producers continue to rely partly on international buyers, although domestic sales remain their anchor. “Exports account for almost 12% of its total alcohol production,” said Palirna U Zeleneho stromu (Green Tree Distillery), the country’s largest family-owned distiller.

The Czech alcohol industry, however, is feeling the squeeze from both ends. The drop in sales of spirits is not only due to restaurant closures, but also lower exports, Radio Prague International reported in its recent market overview.

In Poland, Polmos Bialystok, which produces 30mn litres of liquor annually - including Zubrowka and Absolwent - is shifting its emphasis inward after decades of export-oriented growth.

Policy shifts, new regional strategies

The collapse of spirits exports from CEE has forced producers to reorient toward local markets and alternative geographies. Premium vodka and whisky exports from Poland, Czechia and Slovakia have contracted sharply, while Moldova, once a major exporter of brandy and wine, is facing what one analyst described as an “existential crisis”.

In response, mid-tier producers in Poland and the Baltic states are rebranding for domestic consumers. Several firms have introduced nostalgic packaging or emphasised heritage credentials, backed by state subsidies and promotional support in Lithuania and Poland.

Regulatory shifts are also emerging. Governments across CEE are considering protective duties on imported spirits, while tax regimes are recalibrated to favour homegrown producers. In Poland, several whisky brands have begun marketing themselves using national “self-reliance” advertising strategies.

Rural distilleries in Romania, Bulgaria and Hungary have reported rising orders for contract manufacturing and niche varietals. These operations offer local employment benefits, but observers note their limited scalability without co-financing. Some projects want support from the EU's Recovery and Resilience Facility (RRF) to expand operations.

With Western demand declining, several producers are targeting Southeast Asia (SEA) and the Gulf states, though competition remains intense. Hungary and Moldova are developing halal-certified lines, while Romania’s brandy sector is leaning into the global “new terroir” narrative to appeal to premium-conscious importers.

Structural risks remain

While domestic markets may offer a temporary lifeline, rising production costs, stagnant consumer income and shifting drinking preferences are challenging the sector’s long-term health.

Without sustained policy support, EU co-financing or access to new foreign markets, analysts warn the domestic pivot may lead to regional fragmentation, rather than resilience.