"What has happened is that the biggest operations, with the most prominent brands have all been cherry picked," said a Polish drinks industry executive. "What is left is a succession of smaller distilleries with annual production capacities of under 50,000 hecolitres. But the biggest problem is the brands that these companies hold are not very distinctive or well recognised."
In a market that is already saturated with vodka producers - the mainstay of the Polmos distilleries - this problem has been further compounded by Poland's accession to the EU. Accession led to Poland dropping its prohibitively high tariffs on spirits, which in turn has opened up the market to imported sprits such as whisky and brandy. This has meant that the Polmos distilleries have lost the protection that once made their products substantially cheaper than foreign competitors.
"This puts those Polmos still to be privatised in a bad position," the executive added. "I doubt anyone will want to buy these businesses. This means that the likely outcome will be bankruptcy as the government will not want to maintain them."
"It also puts a lot of the existing Polmos in a bad position. Over-capacity means that five or six of the biggest Polmos would be able to meet the demands of the market right now. This will enevitably mean that a number of businesses that have already been sold off could be under threat."
Currently the Polish treasury is trying to sell off Polmos Bialystok by partly floating it on the country's stock exchange. The treasury has already tried to sell Polmos Bialystok twice, but the sales were withdrawn when bidders' offers fell below expectations. It is currently valued at PLN 600 million (€138m).
Polmos was first split up into 25 separate distilleries in 1991 and their gradual privatisation has been continuing since the late 90s. These privatizations have involved big international drinks businesses, such as French company Belvedere, which bought the Starograd Gdanski and Polmos Krakow distilleries in 2002 and Pernod Ricard which has the rights to the Wyborowa, the leading Polish vodka.