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Panimoliitto: Domestic sales of brewery beverages fall – tax increases move trade to Estonia

Domestic sales of brewery beverages hit a historical low last year, a trend that is continuing this year. In the January–June period of 2013, Finns drank a total of 379.4 million litres of beer, cider, long drinks, soft drinks and mineral waters. Domestic sales fell by 3.9 million litres, or 1.0 per cent, on the corresponding period of 2012. These figures are based on sales statistics compiled by members of the Federation of the Brewing and Soft Drinks Industry.

Domestic sales of brewery beverages have contracted by over 55 million litres in the 18 months since the beginning of 2012. This notable fall in the beverage market means that the State is losing not only VAT revenue but also EUR 57 million in alcohol tax and EUR 1.8 million in soft drinks tax.

“Not even the warm weather we’ve had since early summer was able to generate sales growth. If domestic sales continue to fall substantially, Finnish jobs could be in danger. Tax increases steer consumers towards Estonia, so breweries must fight even harder to win market shares from Tallinn harbour. A tax reduction would be the most effective way of curbing travellers’ private imports and safeguarding jobs,” says Elina Ussa, Managing Director of the Federation of the Brewing and Soft Drinks Industry.

Compared to the January–June period of 2011, domestic sales of brewery beverages have fallen by over 25 million litres, or almost 7 per cent. However, exports to international carriers – primarily Estonian ferries – have grown significantly. During the January–June period of 2013, exports of cider grew by 105.8 per cent and beer by 21.6 per cent on the corresponding period of 2011. A total of 9.7 million litres of beer and 1.7 million litres of cider were exported to international carriers during the January–June period of 2013. Only about half of imports from Estonia are Finnish brands, and beers produced elsewhere are accounting for an increasing percentage.

The Finnish brewing industry currently employs almost 30,000 people, when you include the entire chain from field to flagon. Every tenth hectare of agricultural land is used to grow malting barley. And yet the Finnish beer-producing industry is still punished by the highest beer tax in the EU. Twenty per cent of all the alcohol consumed in Finland comes from unrecorded sources, the majority of which is imported by travellers. Travellers’ private imports already noticeably exceed total on-trade sales in Finland.

Taxation squeezes beer harder than strong alcoholic beverages

According to Nordic statistics, significantly more strong alcoholic beverages are consumed in Finland than in the other Nordic countries. Since 2000, the real prices of wines and strong alcoholic beverages have fallen whilst the real prices of beer, cider and long drinks have risen. This is revealed in a National Institute for Health and Welfare report, Alkoholijuomien hintakehitys 2012 (Price trends in alcoholic beverages 2012). When the tax on alcoholic beverages was last raised, in 2012, it favoured strong beverages and wines – they received an increase of 10 per cent, while the tax on brewery beverages was raised by 15 per cent.

“It appears that, once again, the government intends to increase tax on mild alcoholic beverages more than on strong ones. The government’s policy is extremely contradictory: it suggests weakening medium-strength beers and selling them only through Alko, but then implements tax solutions that favour strong alcoholic beverages. In the majority of EU countries, alcohol taxation is geared towards strong alcoholic beverages. So this is our responsible alcohol policy, is it?” Ussa wonders.

DOMESTIC SALES 1 Jan – 30 June 2013

Beverage 2013
mill. l. mill. l. mill. l. year, %
 Beer 191.5 192.3 -0.8 -0.4
 Cider 15.2 15.3 -0.05 -0.3
 Long drinks 19.1 20.5 -1.4 -6.8
 Soft drinks 119.4 124.1 -4.7 -3.8
 Mineral waters 34.2 31.1 3.0 9.8
 Total sales 379.4 383.3 -3.9 -1.0

Source: Member companies of the Federation of the Brewing and Soft Drinks Industry. The statistics do not include sales by actors outside the Federation nor private imports of brewery products, which are not statistically recorded. As of the beginning of 2011, the statistics include all the brands of the members of the Federation of the Brewing and Soft Drinks Industry and any private label brands they produce.

Category: Opinions, Taxes