Greece: Why are Tsipouro and Raki so cheap?

Tsipouro is a pure grape distillate, similar to the Italian Grappa. It is made every year following the grape harvest. After the grapes are pressed to produce wine, crushed grape skins, seeds, pulp and stems remain in the wine press. These are then distilled to produce a strong spirit. The name Tsipouro is used throughout Greece, except for Crete, where the name Tsikoudia is used. The European Union protects Tsikoudia from Crete as a unique spirit coming from its original place, a fact not many people are aware of.
Raki is of Arabic origin as is shown by the origin of its name ʿaraqiyy means 'of liquor'. Turkey’s traditional drink, Raki, was also originally produced from the residue of grapes left over from the wine making. During the Turkish occupation of Crete, this name was given to the local Tsikoudia. Today, both names – Tsikoudia and Raki – are in use on Crete. The Turkish Raki is not the same as the Cretan one. Turkish Raki are processed with aniseed, resulting in a taste similar to Greek Ouzo.

During your holidays you might have noticed that Greek spirits are rather cheap in comparison to your local brands. This is the result of favourable tax status that is in place to protect small-scale producers who are licensed to produce just enough to cover household consumption.

But the government’s failure to contain illegal bulk sales of both traditional Greek spirits means it ran into problems with the European Court of Justice. If Greece is found guilty of favouring its own producers against foreign ones, all tsipouro and raki will be burdened the full special consumption tax imposed on alcoholic drinks.

The full tax amounts to about €10.20 per liter and the European Commission is demanding that this rate to apply to all alcoholic drinks except those that enjoy a special exemption, as in the case of ouzo. Greece has no special exemption for tsipouro or raki, but still imposes a 50 percent discount on the special consumption tax, amounting to about €5.10 per liter.

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