The New Gastronome
The Alcohol Wardens
A Northern Monopoly System
by Sara Emilia Nässén
by Sara Emilia Nässén
The Nordic countries have had a somewhat problematic relationship with alcohol in the past. During the Viking era, drinking was assumed to bring man closer to God, no wonder that fermented fruit and berry beverages – ancient ale – was consumed in infinite amounts. In an already strongly rooted drinking culture, vodka later came to be seen as a universal solution to all problems, leading to excessive consumption. The founding of state monopolies for alcohol distribution in the Nordic countries was an attempt to control the consumption and promote public health.
Overview of the Nordic monopolies
Governmentally run alcohol retail stores today exist in all Nordic countries except for Denmark where the monopoly system is seen as an infringement of the freedom of trade. The aim of the monopolies is to minimize alcohol-related problems, by selling alcohol without profit motive and by offering restricted opening hours. Prices are stable in all stores and it is not allowed to offer extra prices or to encourage customers to buy more than they intended. Three main tools – accessibility, price and regulated marketing – are considered the most efficient ways to reduce alcohol consumption. The monopolies also work with public alcohol information and alcohol research. The monopolies work through a system of tenders, releasing contests with specific requirements for products, followed by tastings and selection. The monopolies have a fixed selection and an “on-order-range” with items that are offered through importers but have not passed the tender selection.
A. D. V. E. R. T. I. S. I. N. G.
The first monopoly store in Sweden was founded already in 1850 but Systembolaget exists in its present form since 1955. Today it hosts 440 retail points all over the country. Systembolaget has a monopoly on sales of beverages with an alcohol level higher than 3.5 vol %. The Norwegian state alcohol monopoly Vinmonopolet was founded in 1922 and runs 327 stores throughout the country. Other than an attempt to limit alcohol consumption, the Norwegian monopoly was a result of trade agreements with wine exporters in southern Europe, mainly in France. Vinmonopolet has the sole right to sell alcoholic beverages stronger than 4.7 vol. %. The state alcohol monopoly Alko founded in 1932 is Finland’s single channel for sales of beverages stronger than 5.5 vol. %. Micro-breweries can also apply for a license to sell their products. In 2017, Alko had 355 shops across the country. In Iceland the state-owned company Áfengis- og tóbaksverslun ríkisins (ATVR) established in 1922, administers the Vínbúð- chain that functions as the country’s only retailer of alcohol, offering 51 self-service shops. Finally, on the Faroe Islands, officially a part of Denmark, the retail monopoly Rúsdrekkasøla Landsins was founded in 1992. There are 8 monopoly stores in the Faroe Island and 8 brewery outlets which can sell beverages with up to 5.8 vol %.
“The aim of the monopolies is to minimize alcohol-related problems, by selling alcohol without profit motive and by offering restricted opening hours. Prices are stable in all stores and it is not allowed to offer extra prices or to encourage customers to buy more than they intended.”
The Nordic monopolies have collaborated in a partnership on corporate social responsibility since 2008. As a part of their aim to create a sustainable supply chain, a Code of Conduct that reflects the beliefs of Nordic alcohol monopolies and the expectations they have towards their business partners has been developed. The set of principles and values also focuses on fair working conditions, human rights issues, environment and anti-corruption measures.
Origins
All Nordic countries have a long history of heavy drinking. Sweden, Norway, Finland and Iceland are all significant producers and consumers of spirits and part of the so-called ”Vodka Belt”. During the “Big Nordic Inebriation Period”, between 1500-1800, vodka was used as a remedy for all possible illnesses and problems. The Swedes are thought to have learned to produce alcohol from grain in battles with the Russians during the 16th century and from potatoes in the mid-18th century. Until the late 19th century there was no regulation on consumption, production or sales of alcohol and in 1829 the consumption in Sweden was as high as 45 litres of pure alcohol per capita and year. These were poor and difficult times in the Nordic countries and vodka became the comfort blanket. But eventually, Nordic governments started opening up their eyes to the problems with excessive alcohol consumption and regulation attempts were made. In 1850 the first monopoly store in Sweden opened in Falun, a mining city, which suffered heavily from the damages from excessive drinking habits. In 1860 production at home became forbidden in Sweden, and in 1905 the first law on a “non-profit” on alcohol was established. Norway had similar problems and in 1871, a decision was made to use all private profits from alcohol sales to improve society. All of the Nordic countries except for Sweden and Denmark have a history of some period of prohibition on alcohol during the 20th century. The creation of monopolies for sales and distribution was an attempt to find an alternative to the total prohibition and restricts sales and distribution of alcohol. In 1917, in Sweden, the “BRATT- system” was founded, defining rules for monopoly sales, state prevention and cure for alcohol damages and controlled purchase through the ratio system Motboken. Motboken was abolished in 1955, the same year that the Swedish monopoly officially was founded. In 1957 the “Operation Wine” initiated by the Swedish monopoly aimed at making people drink fewer spirits and more wine. When Finland and Sweden become EU members in 1995, the strict regulations around alcohol policies had to be adapted. In theory, the principles of a monopoly contradicted the EU’s policy on free trade and competition, but Sweden and Finland managed to negotiate so that the monopoly for direct sales was kept, whereas the rules for import, export, production and sales to restaurants opened up. In 2004, personal import of alcohol from other EU countries became free in Sweden and in 2007, Internet sales of wine became legal. Though not an EU member, in 1994 Norway had to make an agreement with the trade organization EFTA regarding import and production.
The current situation
Today’s globalized society influences eating and drinking trends. Nordic people are generally curious and well-travelled, and their drinking habits have over time become more and more “European”, moving from booze to wine and from heavy to qualitative drinking. In the otherwise liberal and modern Nordic countries, the monopoly system is an odd exception. So how do the monopolies aim at balancing their core values with today’s customer needs and interests? The Norwegian monopoly describes its mission as follows: ”Vinmonopolet is society’s most important instrument for ensuring the responsible sale of alcohol. The role of the monopoly is twofold. The efforts to ensure that alcohol is marketed responsibly should be balanced against the growing interest in the products of committed customers. We will excite and create inspiring customer experiences. We will be Norway’s best specialist trade and leader in customer service, both physically and digitally. We work with this every day. At the same time, we shall limit the harmful effects of alcohol through responsible sales and reduced availability. This is a demanding balance. What drives us is to make society a little better. For all” (Vinmonopolet, my translation). The Swedish Systembolaget writes: “Our vision is a society where alcoholic beverages are enjoyed with care for health so that no one gets hurt. We are far from there. But if we look at where we came from – a widespread binge drinking and the problem that is implied – we move towards a new and more aware approach to alcohol. This is why Systembolaget is here. We are here because the alcohol damage is less when alcohol is sold without profit interest. Our mission from the state includes informing about the risks of alcohol, providing good service and selling with responsibility (…) Through our range and our knowledge of the risks of alcohol, we help our customers make conscious choices” (Systembolaget, my translation). These two governmentally run companies sell alcoholic beverages but at the same time they don’t really want to sell them – and they want to limit access to alcohol in a world where free choice is the model. Contradictory? To many people, yes.
During the past years, partial liberalisation of the monopoly has been a topic within political discussions in several Nordic countries. However, the support for the monopoly systems remains strong among citizens. A study from 2017 shows that 86% of Vinmonopolet’s customers were satisfied with the system and that 55% of Norwegians believed that it should keep its exclusive rights for sales of wine and spirits. In Sweden, 77,8% of the population supported the monopoly and the customer satisfaction rate was as high as 84,2%. Systembolaget was the most-trusted institution in Sweden in 2017. The authors of the study see a connection between the support for restrictive alcohol policies and citizen’s level of knowledge regarding the effects of alcohol. Some restrictions in personal freedom seem to be acceptable for the common good. The alcohol policies in the Nordic countries have been based on social conditions and cultural values and are closely intertwined with nation-building and welfare state projects. The monopolies are not only retail channels they are also symbols for a greater societal vision, something which is reflected in the citizen’s strong support for them.
“Until the late 19th century there was no regulation on consumption, production or sales of alcohol and in 1829 the consumption in Sweden was as high as 45 litres of pure alcohol per capita and year. These were poor and difficult times in the Nordic countries and vodka became the comfort blanket.”
From a personal point of view, as a wine enthusiast and Swede currently living abroad – and I dare to think many Scandinavian ex-pats would agree with me – the distribution of alcohol through a monopoly appears anachronistic in today’s world. In Sweden, the alcohol monopoly is the only still existing monopoly. Through strong campaigning, Systembolaget has been successful in transmitting their message into a mantra that most people do not question: that an alcohol monopoly is the best way to run a successful alcohol policy, that their offer is great and the service excellent. Is this really the case? Systembolaget’s general selection consists of around 2.521 items, not an impressive number if you are used to buying wine in countries such as Italy or France. Most wines in the general selection are suited for the general public, through tailor-made tenders. Famous and well-renowned wines are relatively well represented, but most small producers cannot enter the tenders due to narrow demands. The possibility to get a greater selection of wines through the order-range is there, thanks only to importers. Systembolaget takes a lot of credit for a work that we actually have private importers and EU law to thank for. The service argument can also be questioned: although some employees at Systembolaget do have good knowledge about wine and spirits, these are individual cases rather than a general rule. And there is no reason to believe that the abolishment of the monopoly system and insertion of small specialized stores could not lead to greater knowledge among wine sellers. It is true that prices can be negotiated through the tender processes and that this can lead to lower prices at the monopoly, but on the other hand, most small quality wine producers cannot live up to the request for high quantity at low prices and are therefore excluded. This contrasts the general trend among wine drinkers, which is moving towards higher quality and uniqueness.
Getting rid of the monopoly system could not only satisfy customer’s interest but also encourage smaller run businesses to grow. The public health argument, the origin of the establishment of monopolies, is also arguable. Since the founding of the monopoly in Sweden, the alcohol consumption has steadily increased, with an exception in the last years when some liberalization of the system – increased opening hours and looser rules for permission to sell alcohol in bars – actually led to a decreased consumption. There are other means to run public health education and to regulate consumption and distribution than through a monopoly system like other countries are already doing. Nordic countries have gone through big reforms in alcohol policy historically without catastrophic results, so why could that not happen again? Perhaps a more flexible and internationally adapted way of distributing alcohol will be embraced in the future. Only time can tell.
References:
Alko (2018). Information on the Nordic alcohol market 2018.
IAS (2019). Explaining the strong support for the Swedish alcohol retail monopoly. Retrieved.
Room, R. (2000). Alcohol Monopolies and Alcohol Control.
Facebook Live Talk with the author about this article.
