Lowering of beer tax vital for the Finnish brewing industry and employment
Press release 11 March 2003
Private imports cut domestic beer sales and threaten thousands of jobs Lowering of beer tax vital for the Finnish brewing industry and employment
Each year 1.3 million Finns bring beer back from abroad. The average purchase is about 8 litres each trip. If this amount triples next year, it will amount to one-fourth of beer consumption in Finland. If more trips are taken, the influence will be even greater. The future of brewing in Finland is threatened.
From the beginning of 2004 Finns will be able to bring back 110 litres of beer from another EU country for their own use. Estonia is set to become a member of the EU on 1 May 2004. At present Finns can only bring back 16 litres of beer from Estonia, and only on trips lasting over 20 hours. Beginning in May of next year they will be able to bring back 110 litres legally. Examples of the beer rally between Britain and France and bustling border trade between Germany and Denmark paint a worrying picture of growing beer tourism between Finland and Estonia.
According to a fresh survey conducted by Finnish Gallup, 650,000 Finns intend to bring back over half of all the alcoholic beverages they consume from abroad if the present tax level remains unchanged. Finns will bring back an estimated 35.2 million litres of beer from abroad when import limits rise next year. This signifies an increase of 8.2% compared with the present. It should be noted that this figure does not included organized grey imports or illegal sales, which are not covered by the survey. Furthermore respondents always tend to underestimate their consumption in surveys. The real figure is probably much higher.
Lowering beer tax just as important as lowering tax on spirits
Beer has long traditions in Finland. Finnish beer is high in quality and internationally recognized. In recent years Finns have rediscovered beer and its status as a mild party and meal beverage has risen. The long-term goal of Finland's alcohol policy has been to steer consumption from spirits to milder beverages. There is no reason to change this policy when private imports are freed.
Future of the branch and employment in the balance
From the point of view of employment and business, it would be inexcusable to "wait and see what happens". This is not possible without dire consequences for employment and the entire branch. Tax solutions will affect thousands of jobs. Beer alone employs about 30,000 persons directly and indirectly, mostly in restaurants and agriculture. The competition situation without lowering the beer tax will be intolerable for domestic breweries.
A sufficient reduction in the beer tax is 70%. The tax would still be three times as high as in Estonia. According to a survey conducted by Finnish Gallup, the price of alcoholic beverages would have to be reduced by about 30% to stop private imports from abroad. This is the only way to ensure the competitiveness of the Finnish brewing industry on its home market.
Additional information:
Managing Director Risto Saarinen, Federation of the Brewing and Soft Drinks Industry, tel. +358 9 1488 71 (switchboard)
Facts about the changing alcohol policy situation
• From the beginning of 2004 Finns will be able to bring back 110 litres of beer at a time from another EU country. Estonia is set to become a member of the EU on 1 May 2004.
• Beer sales in Finland totalled 413 million litres in 2002. This is about 80 litres of beer per person.
• Last year 1.3 million Finns brought beer back from abroad. The average purchase was about 8 litres.
• If 1.3 million people bring back 26 litres of beer once a month, this would be equivalent to total beer consumption in Finland at the annual level.
• At present Finns can bring back two boxes of beer per person on trips lasting over 20 hours. When Estonia joins the EU Finns will be entitled to bring back 110 litres of beer many times a day. The ferry trip takes about an hour and a half.
• It is just as easy to bring back four boxes of beer as it is to bring back one.
• Beer tax (5% alcohol by volume) is currently €1.43/litre in Finland, €0.18/litre in Estonia.
• It is no longer possible to continue import restrictions.
• It is not realistic to expect the other EU countries to raise alcohol tax.
• The Finnish brewing industry employs about 3,000 persons directly and 30,000 persons indirectly.
• High tax at home leads to uncontrolled imports of beer and other alcoholic beverages from abroad and particularly Estonia.
• The high tax on beer distorts competition in an unbearable way.
The Federation of the Brewing and Soft Drinks Industry promotes the interests of producers of beer, cider, long drinks, soft drinks and mineral waters in Finland. Its members are Oyj Hartwall Abp, Olvi Oyj, Pirkanmaan Uusi Panimo - PUP Oy and Oy Sinebrychoff Ab. The Federation of the Brewing and Soft Drinks Industry operates in connection with the Finnish Food and Drink Industries' Federation and represents one of the oldest branches of industry in Finland.
