For the first time since the 1980s, sales at Norway’s state liquor and wine monopoly Vinmonopolet have declined. Some blame competition from far lower taxes and prices in Sweden, and are calling for an end to tax-free sales at, for example, Norwegian airports.
Newspaper Aftenposten reported on Wednesday that Vinmonopolet’s sales normally rise around 4 percent at this time of year but they fell 2.2 percent in September and the decline continued into October.
Meanwhile, Norwegians are spending even more money over the border in Sweden, where prices are up to 40 percent lower on many items, not least tobacco and alcoholic beverages. State statistics bureau SSB reports that so-called grensehandel (cross-border trade) is up nearly 9 percent so far this year.
With Norwegian taxes on alcohol set to rise by another 7 percent from January 1, the difference in prices between a carton of wine in Sweden and the same carton in Norway will widen even more. Norwegian officials had thought their Swedish counterparts would be raising taxes, too, but that hasn’t happened yet.
Wine and liquor importers and retail outlet Vinmonopolet believe Norwegians will keep streaming over the border to buy their wine and other products. “We warned about this,” Ingunn Jordheim of importers group VBF told Aftenposten. “By raising taxes now, it’s like grooming a trail right to Sweden.”
Kai Henriksen, who heads Vinmonopolet, told Aftenposten he thinks it’s fine if Norway’s high taxes and prices reduce consumption of alcohol, long the goal of politicians and state authorities.
“But if the decline (in consumption) isn’t real, and only is tied to sales leakage to border trade and tax-free sales, it can affect Vinmonopolet’s legitimacy and economy,” Henriksen said.
He said that tax-free sales currently make up 15 percent of all sales of alcoholic beverages in Norway. He thinks it would be sensible to forbid tax-free sales.
Asked whether it wouldn’t be better if the authorities refrained from increasing taxes, Henriksen said he “had no opinion on tax levels. That’s the politicians’ domain, while my job is to point out the consequences of various alternatives.”
Roger Schjerva, state secretary in the Finance Ministry for the Socialist Left party, said taxes are being raised because health-care costs tied to alcohol use are higher than the state’s income from wine and liquor sales. He downplayed any link between cross-border trade and sales at Vinmonopolet, claiming that “for many years, sales increased at the Vinmonopolet while they also increased over the border.”
The parking lots at Swedish liquor retail outlets located just over the border continue to be full of cars with Norwegian license plates. Several Norwegians interviewed by Aftenposten in Strömstad, for example, said they shop in Sweden at least once a month and were convinced that looming tax hikes in Norway will prompt even more Norwegians to shop in Sweden.