If to base on the H&RA monitoring, one can confidently say that the dominating majority of alcoholic beverages sold in the food service sector are counterfeit. There are also lots of facts of the presence of contraband alcohol.
Amid the growing number of foreign tourists visiting our country there is positive dynamics in the development of catering facilities, among which those that offer alcoholic drinks are prevailing. In particular, among them are restaurants, bars, cafes and other facilities, some of which are functioning at hotels. And as we know, foreigners are consuming more and more imported beverages, names and the taste of which are familiar to them. Many world famous brands of whiskey, tequila, rum, champagne, brandy, liquor and others, having no analogue among local producers’ output, could be called among those alcohol beverages.
The presence of counterfeit alcoholic beverages in the market of hotel, restaurant & catering (HORECA) causes serious concern. The result of consumption of substandard, counterfeit alcohol can be serious health problems, and death in some cases. If this happens with foreign tourists, then besides the fact that it would be a blow to the image of the facility, where it happened, the negative impact can also affect the image of the country. The HORECA sector facilities need to think seriously about where and from their goods are bought.
We even have evidence that a fake product is ordered by bartenders and managers, who obviously know about the origin of alcoholic drinks, and delivery of counterfeit goods is performed not only by shuttle traders, but also by not bona fide employees of official distributors. Strikingly, in some cases, the initiator of both purchase and sale of counterfeit alcohol is the owner of the business with the purpose to increase profits.
In 2016 production, import and sale of alcoholic beverages and tobacco were excluded from the list of types of activity requiring licensing that in turn stimulated development of this business segment in the country. Also, the mechanisms of state control have been improved and penalties tightened, and criminal prosecution for sale of alcohol for cash, with the exception of retail trade, entered into force.
But, unfortunately, many of the HORECA facilities, pursuing personal interests, put at risk the health of the population and foreign tourists and keep on ignoring the existing legislation, continuing to buy alcoholic beverages for cash from both "shuttle" traders and other violators of the law - the traditional wholesalers.
The fact that some dealers buy containers for alcohol at prices that do not conform to the cost of recycling confirms the availability of counterfeit goods in the market. For example, if the cost of recycling of a bottle is in the range of 4 to 10 gapiks, a bottle of branded alcohol is bought for 2-4 manats. This means that it will go into re-production of counterfeit goods. This fact would be justified if the empty bottles had been bought by importers in order to protect the product, but they fail to do that. The situation is compounded by the fact that even recycling companies are involved in that, but they are obviously mediators in the criminal scheme. In addition, the night alcohol sales market has activated. After dark the "shuttles" deliver counterfeit and smuggled alcohol to the facilities.
This situation forces official importers and distributors of alcoholic beverages to carry out dumping and sometimes even sell counterfeit alcohol, as otherwise they can't compete. Given the scale of importer companies and their well-developed logistics network, their participation in illegal alcohol trade will lead to unpredictable negative consequences both for consumers and for the country's budget and business as a whole. Azerbaijan State Security Service’s recent operation on the identification and detention of more than 600,000 counterfeit excise stamps is a clear evidence that the scale of counterfeiting in the country is quite impressive.
The market of counterfeit alcohol causes annual damage to European alcohol producers for more than €1.3 billion that makes up 3.3% of total sales in the European market. This is the official data of EUIPO (European Union Intellectual Property Office).
In our opinion, brand-owning producer companies need to be concerned about the state of the brand they present in the market and its image. As first and foremost, it is of their interest. Ambassadors of brands should be involved as well. There are economic and technical tools with help of which you can easily check the quality of the product.
We can undertake the initiative to appeal to specialized companies for quality testing of alcoholic beverages. We encourage all public organizations involved in the sector of public catering and consumer protection to join this initiative.
Also, we appeal to law enforcement agencies and all other relevant ministries and departments so that they would toughen control of production, import and sale of counterfeit and smuggled goods.
Special attention should be paid to the system of governmental regulation in the sphere of production and turnover of ethyl alcohol, alcoholic and alcohol-containing products in order to protect the economic interests of the Republic of Azerbaijan, meet consumer needs in the specified products and improve its quality and the control over the compliance with laws, rules and regulations in the regulated area.
One of the ways to enhance quality of control and streamlining processes related to turnover of alcoholic beverages may be the creation of a single state automated information system on the analogy of other countries.
We also want to remind that the Azerbaijan Food Security Agency is being established and will start operating from 1 January 2018 in compliance with the relevant decree of Azerbaijani President Ilham Aliyev on additional measures aimed at improving the food security system. The Agency will play an indispensable role in strengthening the quality control of food products, including beverages and consumer protection.
Chairman of the Board
Hotel & Restaurant Association
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