General economic indexes of Czech Market:

Czech Republic is a quite young country from the point of independency, situated in the Eastern Europe, and a very young member of European Union (entered 1 May, 2004). Its GDP equals to $172,200,000,000 USD approximately (this is quite large indicator for such country), GDP per capita equals to 16,800 USD approximately, inflation rate equals to 4,7 percent, unemployment rate equals to 8,5 percent; Czech external debt equals to 24,600,000,000. Czech economy has overcame a crisis recent years but now it is a stable country splendid. Now Czech Republic can be characterized as a quite stable country concerning policy, legislation and economics. It is difficult to imagine that average statistical Czech can afford drinking expensive whiskey (70 pounds per litre), but obviously Czechs can afford whiskey from cheap and average price segment especially taking into consideration Czech passion for spirits and alcoholic beverages.

Drinking preferences:

Czechs are one of the worlds leaders in consumption of beer (they are beer lovers) and do not drink lot of spirits as a rule. There is even a category of beer culture exists in Czech Republic. Researchers claim that Czechs consumed 9.9 litres of 100 percent alcohol per capita in 1999th, 159 litres of beer and 8.3 litres of spirits per capita the same year. It looks like Czech market can consume a lot of whiskey if there would be an effective marketing strategy developed because spirits can be found at any bar, restaurant or supermarket and statistical indicators prove that.

Investment Climate

a. General information:

After the collapse of the Soviet Union, Czech Republic gained independency along with economic crisis but Czechs surmounted it and were good to attract lots of investors. Large foreign investments restored the economy, reduced unemployment and inflation rates, and brought stability to this country. Nowadays there are plenty investments from the world (USA, European Union countries, Russia etc) and this is the indicator of the openness to the investments. Country is a member of WTO, ITC (International Trade Council), Organization for Economic Cooperation and Development (OECD) and other international organizations. In addition there are eleven duty-free (tax-free) trade zones and free ports in this country this makes favor to the distribution system of The Olde Distillerie company.

b. Taxation:

It is an interesting fact that both foreign and domestic companies in the Czech Republic are subjects to the same taxes. Income taxation system bears progressive character. Personal income tax rates vary from 15 percent - 32 percent from taxable income, corporate income tax 26 percent from taxable profits, in addition there is 15 percent tax imposed on dividends paid by Czech corporations.

Employers have to pay large social contributions 35 percent from the wages fund (gross salary).

Value added tax (VAT) rate equals 22 percent and applies to all goods and services sold in Czech Republic. The excise duties on alcohol are imposed in accordance to European Union rates: minimum 2.2 Euro per litre of a product (considering spirits).

Thus taxation is quite heavy in this country.

c. Legislation:

Most Czech laws and regulations correspond to the legislation of the European Union and international law, they are transparent and consistent. Thus there is not expected any troubles with jurisdiction in this country except for bureaucracy.

d. Corruption:

In spite of strict punishments and penalties corruption in Czech Republic still exists and prospers especially when registering foreign companies, obtaining licenses etc. Government struggles with bribery but results are not visible still.

e. Competition:

There is expected a high competition in the Czech Republic because there are 11 tax-free trade zones where most whiskey producers sell their products and taking into consideration that Czechs consume lots of alcohol yearly it is very profitable to sell alcohol in this country. Regardless of the fact that Czech Republic is a member of European Union all foreign corporations have to open bank accounts and perform all transactions in Czech banks.

f. Entering barriers and other disadvantages:

While making business in this country many companies faced with bureaucracy and corruption which slowed down their prospering and business activities (especially in registering companies).

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