The Nordic countries of Finland and Sweden have both changed regulations on alcohol sales in recent weeks.
Both have state-run alcohol monopoly systems in place; Alko in Finland and Systembolaget in Sweden.
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But could relaxations in these control systems open or close doors for producers and retailers?
The changes and what they mean
At the start of the month, the Finnish parliament voted to raise the maximum alcohol content limit for drinks sold in supermarkets from 5.5% to 8% abv. The law came into effect on 10 June.
The changes apply to wine and beer, but not to ready-to-drink (RTD) products, long drinks and other mixed alcoholic drinks, which are – and will continue to be – capped at 5.5% abv.
Previously, grocery stores and supermarkets in Finland could only sell what it calls “fermented drinks” (wine and beer) with an abv of 5.5% abv and below. Alko, the Finnish state-owned monopoly, was tasked with the sales of beverages of 5.5% abv and above.
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By GlobalDataAlcohol-sales rules have been slowly relaxing in the country – in 2018, the abv limit for supermarket sales was raised from 4.7% to the current 5.5%.
In a similar regulation relaxation, the Swedish government this month announced plans to allow the sale of “artisanally” produced alcoholic beverages in small quantities at the point of source. Currently, state-owned retailer Systembolaget handles all sales of alcohol above 3.5% abv.
Systembolaget operates 450 stores across Sweden. It has limited opening hours and does not advertise alcohol nor put items on promotion. The proposed change to regulations could come into effect in the first half of 2025.
Sweden’s Prime Minister Ulf Kristersson said: “Customers who visit wineries and microbreweries should have the opportunity to buy a few bottles [for] home and the Swedish hospitality industry should be able to grow.”
If passed, producers with volumes of up to 75,000 litres of spirits, 400,000 litres of up to 10%-abv fermented beverages and 200,000 litres of fermented beverages at abvs above 10% will be able to sell directly to visitors.
Each person will be able to buy 0.7 litres of spirits, three litres of wine, three litres of strong beer or three litres of fermented beverages.
“This is incredibly important for Swedish domestic wine producers,” wine consultant Joe Fattorini tells Just Drinks. “They are a growing market, but it’s a much smaller thing than the UK. But for that market it is massively held back because people go to a winery and you can’t buy the wine.”
Fattorini notes it is easier for consumers visiting Swedish wineries located in the south of the country, who can cross into Denmark to purchase the wines they have tasted.
“The biggest impact this will have will be on Swedish domestic wine tourism, because it will be a big boost to people at this time of year, from now, really through to August, where lots of people love to go and visit Swedish wineries,” Fattorini says.
However, even if each visitor to a winery buys three litres of wine (the proposed allowed limit), it is unlikely to have a major impact on Systembolaget sales.
The biggest threat to the monopoly, some argue, may be from international sources, such as direct-to-consumer (D2C) retailers.
Last year, Systembolaget sued Danish online wine retailer Winefinder and its Swedish parent company over D2C alcohol sales in Sweden, with the aim of prohibiting its wine sales in the country.
The Swedish Supreme Court ruled Winefinder was not violating the state-run alcohol retail monopoly, which has been in action since 1955, however. The court ruled Winefinder had privately imported wine but its distance trading did not contravene the law.
The monopoly system could become untenable if alcohol sales from neighbouring EU states grow.
“The monopoly is under pressure, not from consumers, but it’s under pressure from the outside,” Fattorini adds.
Impact on Finland’s state-run Alko stores
In Finland, the change in regulations impacts 4% of Finnish state monopoly Alko’s sales volumes. However, the state supplier of alcohol estimates that in the first year under the new regime its volumes could drop by between 6% to 11%.
“The uncertainty in this estimate arises from factors such as how consumers will respond to new products, how consumer behaviour will ultimately change, how the new products will be priced, and the extent of the product selection in stores,” a spokesperson for Alko tells Just Drinks.
Alko has roughly 1,200 products with an abv of 8%, as well as 552 beverages with abvs of between 5.6% and 8%. There are also about 400 fermented products with an alcohol content between 5.6% and 8% stocked in the store.
The state-run monopoly notes that the biggest challenge for it will be in the sale of wines.
Producers move with regulation changes
Reacting to the regulation change, Nordic wine and spirits business Anora Group launched a line of 8%-abv wines in Finland. The range includes the company’s own brands such as Chill Out, as well as brands it distributes locally, including Treasury Wine Estates’ Lindeman’s.
Milena Hæggström, director of investor relations at Anora Group, tells Just Drinks: “We’re eager to see how consumer interest develops in this new category, especially as the interest in beverages with lower alcohol content continues to grow.
“We have unique capabilities for offering products in this category, thanks to our extensive partner network and local production capabilities here in Finland.”
Anora said it was focused on taking full advantage of the legislative change but noted that it would be closely following any future developments in legislation.
When the changes were proposed, S Group, a Finnish chain of customer-owned retail stores, said it had made preparations for the incoming regulation change and would have a “modest stock” of new products available when it came into effect.
Similarly, grocery and retail chain Kesko said that in the best case scenario it would have new products on shelves the same day of the rule change.
“The plan is to start deliveries to shops as soon as possible after the law has come into effect following its approval,” Aki Erkkilä, director of sales and procurement at Kesko, told Finnish national news organisation Helsingin Sanomat at the time.
Impact of regulations on spirits industry
It is perhaps distillers that could suffer most from changes in Finland’s alcohol regulations.
When it comes to beer, GlobalData analyst Kevin Baker tells Just Drinks that in Finland: “Comparatively few beers and ciders are over 5.5%, so raising the limit to 8% will make very little difference to the market in Finland. Indeed, only 6% of off-premise beer is currently sold through Alko.”
Spirits producers and brands, meanwhile, rely on the foot traffic into the Alko stores to shift stock. If consumers swap to lower-abv wines or pre-mixed cocktails and RTDs, then one trip to a market or grocery store would suffice and there would be no need to visit the state-owned monopoly retail unit.
Mikko Koskinen co-founder of the Finish-based Kyrö Distillery Company tells Just Drinks that the changed rules “works against spirits industry in two ways: more competition in RTD market and probably less people visiting the alcohol monopoly Alko stores”.
Koskinen hopes that sales from production sites or tasting venues will be allowed by the Finnish government in a similar manner to those proposed by Sweden. He says the Finnish authorities have already signalled an intention to carry out such plans.
“We have high hopes that the government will follow through with it as it would not only support the craft distilleries but also increase tourism to the communities the distilleries are located in,” Koskinen says.
Finland’s Federation of the Brewing and Soft Drinks Industry expressed its disapproval of treating beverages with similar alcohol content differently, based on how they are produced. It said it would provide a significant competitive advantage to other alcohol categories in the Finnish market.
It shouldn’t be forgotten that the reason behind the state owning part of the alcohol supply chain – in both Sweden and Finland – is to help mitigate the dangers and detrimental effects of alcohol consumption.
State-run Alko pointed out that the number of sales points in the country would increase “twelvefold and sales hours will expand by 20%”.
“The increased availability of stronger alcoholic beverages also comes with a human cost. It is important to remember that alcohol is not an ordinary commodity; it has harmful effects on the entire society and incurs billion-dollar costs,” Alko tells Just Drinks.
While incremental changes are afoot in both Finland and Sweden, the impact of these is set to be wide-ranging, affecting both alcohol producers and the retail channels their products are sold in.
While beer and lower-alcohol wines may be celebrating the relaxation of laws in Finland, spirits companies will need to innovate if they want to gain a slice of the enlarged pie. In Sweden, meanwhile, small producers have hailed the changes but the monopoly could need to rethink its sales strategy in the long term.
In both cases, these changes could mark the beginning of a wider shift in the way monopoly systems work.
