E-Malt.com News article: Finland: Beer sales down 5% in January-February on higher taxes on alcoholic beverages introduced this year

In January - February 2012, sales of beer by members of the Federation of the Brewing and Soft Drinks Industry fell by over 5 per cent, the trade association reported last week.

The total sales of Hartwall, Nokian Panimo, Olvi and Sinebrychoff have fallen by 2.8 per cent since the turn of this year, when the tax on mild alcoholic beverages was raised by 15 per cent. Beer taxation in Finland has now reached a record high, and every tax rise increases travellers’ private imports.

“We cannot deduce full-year sales on the basis of a two-month period, but domestic sales have always fallen when tax rates have risen. Tax increases fuel both travellers’ private imports and the grey economy. The government’s new budget framework should not include an increase in alcohol taxation,” says Elina Ussa, Managing Director of the Federation of the Brewing and Soft Drinks Industry.

Alcohol tax rates have been increased four times in the last four years. Finland’s beer tax is the highest in the EU, standing at over five times that of Estonia’s. At the moment, taxes already account for 60–80% of the per-litre retail price of beer. High taxation makes it worthwhile to buy alcoholic beverages abroad. Last year, travellers imported about 67 million litres of alcoholic beverages, mainly from Estonia.

“Substantial loads of beverages are imported at once and, as we have recently read in the newspapers, sold onward. The grey market is completely unregulated and bootleggers don’t ask buyers’ ages. Tax solutions should not be fuelling such trends,” says Ussa.

Current estimations indicate that travellers’ private imports deprive the State of over EUR 300 million in tax revenue per annum. VAT accounts for about a third of this loss, and alcohol tax revenue for the other two thirds. Increases in alcohol tax rates won’t generate the same kind of revenue for the State as they used to in past years, as the tax base has been narrowed by, for example, travellers’ private imports.

Fifteen per cent of all the alcohol consumed in Finland is already imported by travellers. Private imports already exceed on-trade sales for the whole of Finland. Another tax increase would further shift trade to Estonia, and Finland would lose tax revenue and jobs.

“When you include the entire chain – from field through distribution and restaurants to consumers – the Finnish brewing industry employs almost 30,000 people. Even so, the Finnish beer-making industry is punished with the highest tax in the EU,” says Ussa.

In 2011, Finland’s total domestic beer sales increased to 4.23 mln hl from 3.95 mln in 2010. Sales of medium-strength beer, 2.9-4.7% alc. vol., saw the biggest increase in demand: to 4.1 mln hl from 3.73 mln in 2010.


28 March, 2012