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Thursday, June 13, 2024

Battle looms over liquor monopoly

NEWS ANALYSIS: Norway’s new conservative government has recently uncorked a series of proposals to ease tight restrictions on wine and liquor sales in the country. The state-sanctioned monopoly on sales of alcohol, Vinmonopolet, feels threatened, and opposition politicians are already fighting to maintain the monopoly’s control over access to highly taxed wine and liquor, and beer with high alcohol content. 

The duty-free shops at Oslo's main airport at Gardermoen may be compelled to halt sales of tobacco products. PHOTO: Avinor
Airport officials argue that tax/duty-free sales contribute important revenues for airport operations. Norway’s state wine and liquor monopoly, Vinmonopolet, sees the tax-free sales as a growing threat, as do many politicians, and moves are afoot for Vinmonopolet to take charge of them in the future. PHOTO: Avinor

Norway’s minority government coalition, formed by the Conservative Party and the more conservative Progress Party, has won the first rounds in what amounts to a looming battle over Vinmonopolet. Apart from the tax-free sales still allowed at airports in Norway, Vinmonopolet holds a legal monopoly over sales of all drinks in Norway containing more than 4.7 percent alcohol, and many Norwegians want to preserve it. It’s recently been feeling pressure on several fronts, however, from an ongoing decline in sales to demands that its outlets stay open longer.

The biggest threat, as Vinmonopolet sees it, comes from the booming tax-free sales at Norwegian airports. From July 1, Norwegians (who are traveling more than ever before) will now be able to bring home another two bottles of tax-free wine when they travel abroad, if they don’t use their tax-free quota for tobacco. The government won the votes it needed in Parliament for the proposal from one of its two support parties, the Liberals (Venstre). Its other support party, the Christian Democrats (Kristelig Folkeparti, KrF), strives to keep alcohol expensive and hard to get on moral and health grounds, so wouldn’t go along.

Residents of Norway can currently bring in three liters of tax-free wine (the equivalent of four bottles) or a combination of liquor, wine and tobacco. Norwegians have long been able to bring in more wine if they don’t use their liquor quota, and now the government is extending that right to those who don’t bring in the legally allowed single carton of tax-free cigarettes.

Vinmonopolet’s managers, already faced with tough competition from tax-free sales given the huge increase in Norwegians traveling abroad, raised immediate objections. They fear additional loss of sales, and opposition politicians fear a corresponding loss of tax revenues, when wine-loving Norwegians can now bring home six bottles of tax-free wine per person starting this summer.

It’s ironic that a state-sanctioned institution like Vinmonopolet objects to a reduction in sales of its alcoholic products, since its very existence is aimed at restricting wine and liquor sales. The feared decline, however, won’t affect alcohol consumption, and comes on top of the declines already tied to the purchases Norwegians make in Sweden, where taxes and prices are much lower than in Norway.

Norway's new conservative government also wants to make it easier for small-scale producers, like cider-makers on apple orchards, to sell their alcoholic products. PHOTO: Landbruks- or mat departementet/
Norway’s new conservative government also wants to make it easier for small-scale producers, like cider-makers on apple orchards, to sell their alcoholic products. PHOTO: Landbruks- or mat departementet/

The Liberal Party, meanwhile, also has agreed to support a government proposal that may allow direct sale of alcoholic drinks from small-scale producers, such as cider produced by apple growers. The goal, according to the government’s Ministry for Agriculture and Food, is to first get a legal evaluation of how such sales could be allowed while still maintaining Vinmonopolet. Another goal is to allow for new sources of revenue in rural areas. “The government wants to usher in policies that can make business ventures more competitive and create greater value,” Agriculture Minister Sylvi Listhaug told members of a beverage industry trade association last week. While many farmers have been furious with Listhaug for chipping away at the protectionist policies they enjoy, some will likely welcome the opportunity to produce and sell niche products directly from their property, instead of having to go through Vinmonopolet. It will be difficult for the farmer-friendly Center Party to oppose Listhaug on this issue as well. The Health Ministry is behind the study, which will be carried out by Professors Finn Arnesen and Fredrik Sejersted.

Listhaug also introduced, and won political support from the Liberals, for yet another move to liberalize Norway’s tough alcohol regulations. She’s clearing the way for beer producers to finally be able to offer information about their brews without violating Norway’s strict rules against alcohol advertising. Consumers, Listhaug argues, should be able to read about local brews, just like wine drinkers can read critics’ reviews in local newspapers or online. The industry has long lobbied against current restrictions, viewing them as unfair, and brewers cheered Listhaug’s proposal.

Opponents join forces
Various forces, however, were quick to criticize the government’s attempts at alcohol deregulation. Mina Gerhardsen, secretary general of the Actis umbrella group concerned with alcohol and drug dependency, warned against any “shift” in Norwegian alcohol policy that’s aimed at controlling consumption. Gerhardsen, from a family with strong ties to the Labour Party, conceded that none of the proposals is dramatic on its own, but collectively, they could move Norway “in the wrong direction.”

If opposition politicians get their way, Norway’s still-powerful Vinmonopolet will take over the operation of tax-free sales at Norway’s airports. They’re now controlled by private companies including Travel Retail Norway, half-owned by the major tax-free retailer Gebr Heinemann SE of Germany with the remainder of its shares held by Norwegian grocery store, retail and wholesale giant NorgesGruppen and Stykket Holding.

It will likely take several years before any major changes are made, because Travel Retail Norway has a contract with state airports administrator Avinor that runs until 2021. It must eventually come up for bid, however, and then Vinmonopolet may be groomed to step in. The goal, say backers of such a move within KrF and Labour, is to at least keep all the tax-free sales revenues in Norway’s state treasury, instead of allowing them to further enrich private players both at home and abroad. The new allowance of two extra bottles of wine from July 1 is alone expected to generate revenues of as much as NOK 325 million, reported newspaper Aftenposten.

‘Free us from tax-free’
Others, including the environmentally conscious Greens Party (Miljøpartiet De Grønne), advocate scrapping the tax-free system altogether on the grounds it rewards people who use transport (airlines) that threatens the climate. Newspaper Dagens Næringsliv (DN) agreed in an editorial as early as last summer, but proposed cutting Norway’s punitive alcohol taxes in return. That could cut the exodus of Norwegians who shop for cheaper wine and liquor in Sweden or when they pass through airports. Since tax-free sales in practice subsidize cheap airfares, tax-free revenues could be recouped by higher airport fees and fares, so that those who fly actually pay the costs of their flights.

Debate was picking up in recent weeks, with trade union federation LO joining the cries to preserve Vinmonopolet and Norwegian liquor and wine wholesalers hiring PR firms to try, unsuccessfully, to halt the government’s extra tax-free allowance. That’s because they sell mostly to Vinmonopolet and not to the tax-free provider, Travel Retail. Berglund



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