Estonian Spirit to relocate production operations from Rakvere to Moe

TALLINN – Estonian Spirit OU, the sole spirit distiller in Estonia, is about to discontinue the business of the Rakvere distillery in the county town of the same name and relocate its equipment to its second location at Moe about 25 kilometers away. 

Where originally it was planned to make a major investment in the Rakvere plant, it has become clear by now that investing there would not make sense, owner of Estonian Spirit Sven Ivanov told BNS. He said that the decision on discontinuing business at the Rakvere facility has been made and manufacturing operations at the plant have ended, but relocation has not started yet. 

Ivanov explained that at present designs are being prepared and he expects the company to be able to start work at Moe maybe in spring 2021. 

In 2018, Estonian Spirit laid off more than two-thirds of its workforce citing increases in the price of organically grown grain and other inputs. The number of employees was ten in September 2019.

The company finished 2017 with a loss of 1.25 million euros on sales of 2.17 million euros, and its equity had become negative  to the extent of 1.1 million euros. Estonian Spirit is yet to file its annual accounts for 2018. 

The record grain harvest that Estonia saw this fall made things easier for Estonian Spirit.

"The price was very good, and after we had made our first purchases the price started to fall further," Ivanov said. Since Estonian Spirit sells its production residue as animal food, the price of which does not depend on grain prices, it is possible for the company to increase its profit margin this year despite the drop in raw material and product prices on its target markets. 

The long process of registration of Estonian Vodka as a geographical indication, sought by Estonian Spirit OU and Remedia AS,  reached its completion in the European Commission in March this year.

Estonian Vodka is a Protected Geographical Indication to vodka that has been made from ethyl alcohol produced from raw materials grown in Estonia and from water of Estonian origin. With the registration of the GI, the words "Estonian Vodka" can only be used on the labeling of vodka that has been produced in accordance with the requirements set out in the technical file.

Ivanov said that as all alcohol sales indicators have moved up of late as a result of the cut in the alcohol excise duty, it's difficult to tell whether the introduction of the geographical indication has affected sales on the Estonian market. It is, however, taken into account for sure in other markets.

"It's interesting to observe that if we talk about Germany, for instance, it is a sales argument there. If you have, say, three or four products side by side -- organic, with a geographical indication and so on -- then the one that has more things hanging on it, so to speak, will be chosen," Ivanov said.

He said the company expects the geographical indication to have a positive impact on their image in France when they expand to that market next year.

Estonian Spirit started export to Russia in spring 2018 and raised its export volume to that country in 2019. The company exported an estimated two-fifths of its output this year and Russia accounted for 50-60 percent of exports. 

A week ago, the first ever batch of craft whisky made in Estonia was bottled at Moe Peenviinavabrik, a holding of Estonian Spirit. The whole batch is sold by reservation only. Preparation of the production of the next batch is to start in spring 2020 and broader marketing of the product is planned to start in 2024.