Today new stores are rapidly springing up across the region, which has also become the gateway for the flow of alcohol into the rest of Iraq.
The Turkish Export Promotion Centre recently ranked Iraq as the top global export destination for Turkish beer, worth some U.S $22.1 million in 2008. Most of this alcohol enters Iraq through the Kurdish Region.
In Ainkawa, the predominantly Christian area of Erbil city, the alcohol industry is now thriving. The neighbourhood has become the alcohol centre for the whole of Iraq and tens of commercial offices representing alcohol businesses have set themselves up in the district.
Alcohol stores and bars line the streets.
According to Sargon Josef, a Christian who owns a store selling alcohol in Ainkawa, business is getting better and better despite the large number of new stores that have recently opened.
"I think that because people's lives have improved, people are now looking for entertainment and they are going to the bars to drink,” he said.
But Khidhir Sheikhani, who owns a famous alcohol store in the predominately Muslim downtown area of Erbil city, says the best business is to be done in the Muslim area where the alcohol shops are few and the customers many.
Sheikhani, who doesn't close his shop until one o'clock in the morning, said he has no concern about security or extremists. Even so, most of the people working in the bars and alcohol stores are either Yezidi or Christian.
In the 1990s things were very different.
Islamic extremists were very strong in the northern Kurdish region and alcohol shops across Erbil city and other cities were destroyed, including Sheikhani’s former store.
"It was 1998. At seven o'clock in the morning extremists blew up my store by putting a bag full of TNT in front of it," he explained.
The threats and attacks forced the closure of all the alcohol stores in the Muslim area.
Today, however, the industry is enjoying a revival. Extremist threats against the stores have ended and the government allows businesses to open alcohol stores so long as they are not close to a mosque or school and are located on the main roads.
Sheikhani, who is now planning to open a second store to cope with the increase in demand, says that his biggest challenge is now government bureaucracy and the need to complete tiresome paperwork with the various ministries.
Such is the growing success of the industry, that locals are now encouraging investors to open alcohol factories in the region. At the moment there is no local production and all alcoholic beverages are imported from Turkey and Europe.
"Having an alcohol factory in Kurdistan region would be like having an oil pipeline," said Josef, the Christian shop owner.
According to Sheikhani the region possesses everything needed to be successful and local producers would also profit by being able to meet the high demand for alcoholic beverages across the rest of Iraq and even in the Arab gulf countries.
At the same time, the local economy would gain from new investment say locals.
Haitham Sabri, from Duhok Province, says that unemployment is a huge issue across the region but that alcohol production could provide jobs and help farmers by buying up their barley and grape produce.
However, despite the desire for a local industry, taxes on alcohol imports remain low making foreign products very attractive and complicating efforts to establish local production facilities.
A government employee told Niqash on condition of anonymity that in the past ten months alone 380 billion Iraqi dinars worth of alcohol and cigarettes were imported to the Kurdistan region.
"The government here demands very little tax for every imported good, that's why the price of alcohol is very cheap,” said Josef. “The price of one can of German pilsner beer is less than a dollar."