Iraq’s alcoholic drinks industry remains underdeveloped and in a rather chaotic state due to a complex matrix of supply-side challenges including rampant smuggling, widespread corruption, infrastructure issues and the routine counterfeiting of well-known international brands. Nonetheless, demand is rising across beer, wine and spirits as local consumers are coming to view drinking less unfavourably, with young adults especially keen on consuming alcohol moderately in social settings.
The situation in Iraq’s alcoholic drinks industry become even more challenging over the course of 2022 as the supply side became increasingly chaotic due to even more players entering the market. This involved a proliferation of suppliers in the formal segment as well as an expansion in the clandestine distribution of illicit alcohol.
The acquisition, possession and consumption of alcoholic drinks remains in a legal and social grey area for most Iraqis. However, this adverse situation is slowly changing as more people become accustomed to the idea of liberated alcohol consumption.
Recent years have seen rapid and profound change in Iraqi society and, as a result, the taboos have traditionally surrounded alcohol consumption in the country are slowly disappearing. It is becoming less socially unacceptable to drink and, more importantly, to be seen drinking.
The distribution and importation of alcohol in Iraq remains very challenging and all of the major players in the market continue to face numerous formal and informal bottlenecks. Over the course of 2022, the cost of logistics inside and outside of Iraq increased substantially as most of the country’s imports of alcoholic drinks come from Turkey or the EU and the high inflation that was seen in this part of the world during the year dramatically inflated important costs.
Although there were no new legislative instruments relating to alcoholic drinks in Iraq during 2022, discussions in parliament points towards greater formalization of the entire industry. This is likely to lead to tax increases as well as providing consumers and industry players with greater clarity, making it easier and more cost-effective to operate industry, while benefiting consumers by reducing the impact of smuggling and counterfeiting.
No new taxes were introduced for alcoholic drinks during 2022. One point to note here is that there are groups operating within the government of Iraq who have a particular interest in maintaining the status quo as they stand to make considerable sums of money via extortion and informal taxation on the alcoholic drinks market.
The consumption of alcoholic drinks is expected to expand in Iraq during the forecast period. However, the industry remains underdeveloped and it is unlikely that it will reach its full potential before the end of the forecast period.
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Alcoholic drinks is the aggregation of beer, wine, spirits, cider/perry and RTDs.See All of Our Definitions
This report originates from Passport, our Alcoholic Drinks research and analysis database.
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