E-Malt.com News article: Finland: Transferring higher-strength beer to grocery stores would increase the State’s revenue - study

Transferring higher-strength beer (> 4.7% ABV, categorised as Class IV beer) from Alko to grocery stores would increase the State’s revenue from alcohol taxation and create over 300 person-years of employment at breweries. The transfer would also significantly contribute to reducing travellers’ private imports, indicates a study published on February, 7 by Pellervo Economic Research (PTT).

Transferring higher-strength beer from Alko to grocery stores would increase State tax revenues, as it would generate an extra EUR 54 million in alcohol tax alone. Due to travellers’ private imports, the State currently loses an estimated EUR 330 million plus in tax revenue. About a third of this is VAT and the remaining two thirds alcohol tax. Most of the beer imported by travellers is higher-strength beer, and it is mainly bought from Estonia and on ferries.

The store price of higher-strength beer would be less than the current Alko price, and domestic sales would rise to the detriment of travellers’ private imports. Travellers’ private imports would fall to half of their current level. Consumption would shift towards milder beverages, as people would no longer feel the need to pick up a few strong alcoholic drinks while fetching beer.

“This change would steer consumption from strong to milder alcoholic beverages, which is part of a responsible alcohol policy. It’s also a sensible solution with regard to Finnish employment, creating jobs not only in the brewing industry, but also in retail,” says Elina Ussa, Managing Director of the Federation of the Brewing and Soft Drinks Industry.

The current limit for beer sold in grocery stores, 4.7 per cent alcohol by volume, was set in conjunction with tax bands back in the 1960s. These tax bands are no longer in existence. Many types of beer, such as globally popular pale lager, are best at a strength of about 5 per cent.

“This arbitrary percentage limit prevents special beers from reaching store shelves. Transferring higher-strength beer to grocery stores would diversify the range and encourage people to combine food and beer in new ways. Debate should move away from percentages and towards discussions of different flavours and different beer-drinking occasions,” says Ussa.

Beer accounts for about 47 per cent of recorded alcohol consumption in Finland, although this figure would fall if travellers’ private imports were included. For comparison, beer accounts for 57 per cent of alcohol consumption in Belgium and 50 per cent in Spain. Finnish alcohol consumption is around the European average.

The study was funded by the Federation of the Brewing and Soft Drinks Industry and the Finnish Grocery Trade Association.

08 February, 2013