Press release

Date 26 March 2015

Contact Mihnea Anastasiu

Media Relations Officer

Tel: +40 21 225 3546

Email: mihnea.anastasiu@ro.pwc.com

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The coffee market reached 400 mil Euros as coffee prices soared;
however, the consumption stalled, shows a PwC Romania study

Bucharest, 26 March 2015 – The value of the Romanian coffee market was close to 420 million
Euros last year, a slight decrease from 2013, shows a PwC Romania study. As of 2009, the price of
coffee started to grow, increasing by 30% between 2009 and 2013 – one of the main reasons of this
boost being the high taxation level in the industry.

The annual coffee consumption level in Romania has been on the rise at a 9% rate between 2000 and
2009, amid the economic growth registered during this period, which doubled the amount of coffee
consumed annually. Starting with 2009, the coffee consumption felt the effects of the economic crisis
and started to decline, with the market contracting by 8% between 2009 and 2011, after which it
remained relatively constant.

Romania ranks 26 in Europe on average coffee consumption, with an annual per capita consumption
of 2.3 kg, compared to the EU average of 4kg per capita. This is caused by the high coffee price in
relation to the purchasing power of the consumers, but also by the VAT level and the maintenance of
the un-harmonised excise duty.

The elimination of coffee duty could lead to a decrease of the coffee price, boosting consumption and
encouraging the developing of the coffee and coffee products market in Romania. Such a measure
would have a neutral impact on the budget revenue, the 0.2% decrease of collected revenue from excise
duty being compensated horizontally by the other taxes collected following the development of the
coffee industry.

„Taking into account the correlation between the coffee price and coffee consumption, we estimate
that a price decrease by eliminating the excise, cumulated with the ascending trend of disposable
income could lead to an increase of the coffee consumption level and would generate a multiplication
effect on other economic sectors. The estimated value of additional taxes collected to the state budget
would reach 64 mil. lei” argues Bogdan Belciu, Partner, Advisory Services, PwC Romania.

PwC Romania, Lakeview Building, Barbu Văcărescu Street 301-311, Bucharest, Romania,
T: +40 (0) 21 225 3000, F:+40 (0) 21 225 3600, www.pwc.ro
Our country is one of the last members of the European Union that still applies excises to coffee
(together with Denmark, Germany, Croatia, Belgium and Latvia). All other 22 member states do not
apply excises on coffee.

„In terms of tax philosophy, excise duties are applied to products that either are considered as luxury,
or having a negative impact on one’s health or on the environment. Coffee does not meet any of this
criteria, being a mass consumer product, thus, maintaining the excise is justified strictly by budgetary
reasons. Our data show that the elimination of the excise duty for coffee would have a neutral impact
on the state budget. We actually see that the recently adopted new Tax Code proposed by the
Government eliminates these un-harmonised excise duties, with the main reason that there is a gap
between state budget revenues and the administrative costs of enforcing these taxes, as well as the
conformation costs for tax-payers”, stated Daniel Anghel, Partner, Tax Consulting, PwC Romania.

In terms of budget revenues, excise revenues for coffee in 2013 were as high as 51.7 million lei, only
0.2% of the total excise revenues of 21.1 billion lei.

„The ANAF human resources currently working on collecting and administering the coffee excise duty
could be redirected towards the alcoholic beverages and cigarettes sectors - two of the most important
industries when it comes to excise duty revenues and who are currently facing a high level of tax
evasion, estimated at around 2.5 billion lei. It is commendable that tax authorities have stepped up
efforts to combat tax evasion, because these will lead to an improvement of the business environment,
by eliminated the unfair competition in certain sectors and will generate additional resources for the
state budget. Even a modest reduction of the tax dodging in regard to the above mentioned products
by 1% could generate more than 24 mil. Lei in revenues for the budget” concluded Daniel Anghel,
Partner, Tax Services, PwC Romania.

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