The results of TNS Gallup’s survey: One out of ten litres of beer is brought from abroad

Press release 18 May 2005

The results of TNS Gallup’s survey on private imports from May Day 2004 to May Day 2005
One out of ten litres of beer is brought from abroad; the lowering of the beer tax in 2004 is only a halfway measure

According to TNS Gallup, which has now monitored private imports for a full year, slightly over 42 million litres of beer were imported for private consumption. The figures for the period from May Day 2004 to May Day 2005 have been compiled. They show a significant increase in the amount of alcohol privately imported by Finns after Estonia’s accession to the EU. The survey was initiated a year ago to monitor week-to-week trends in private imports. The survey results are wholly based on a total of 23,517 interviews. If the current tax level is maintained, Finnish beer will not be able to compete with foreign prices for long. To ensure that the Finnish brewing industry will not wither away, the beer tax should be halved.

In the latest survey results, Finns said that they had brought home 42.4 million litres of beer from abroad for their own use, mainly from Estonia and ships. This represents EUR 50 million in tax revenue losses for the State. When these imports are added to the statistics kept by the Finnish Federation of the Brewing and Soft Drinks Industry, Finnish beer consumption totalled 461.4 million litres from May Day 2004 to May Day 2005. Almost one in ten litres of the beer consumed was brought from abroad. In 2003, private imports of beer amounted to only 27.1 million litres. Of all alcoholic beverages, beer is privately imported in the greatest quantities. This beer is almost always strong. Accordingly, sales of strong beer have slumped in Finland.

In addition to beer, private imports of ciders amounted to 5.7 million litres and those of long drinks to 4.5 million litres. During the one-year monitoring period, 7.6 million litres of light wines, 2.9 million litres of intermediate products and a total of 13.5 million litres of spirits were imported.

The monitoring survey that the Finnish Federation of the Brewing and Soft Drinks Industry commissioned from TNS Gallup can with good reason be considered the most reliable current study on private imports of alcoholic beverages. In the survey, 500 respondents have been interviewed by telephone each week. A total of 23,517 interviews were carried out during the year. However, the results of the survey do not include organised black-market imports and illegal sales of alcoholic beverages. Moreover, when asked about alcohol, respondents have a tendency to downplay their own consumption. In other words, it is likely that actual imports are even greater.

The bulk of the price of beer comprises tax; the halving of the beer tax is the only solution
Domestic beer sales are in direct competition with private imports. The reduction of the beer tax in March 2004 did not lower prices as much as is required. The rest of the necessary discount has been paid by the retail sector and breweries. In sales campaigns, over 80-90% of the price of beer may represent pure taxes. For example, once taxes and deposits are deducted from a 12-bottle multipack priced at EUR 5.95, the amount left over to be divided up between the store and the brewery is just 1.1 cents per bottle. It is obvious that such pricing will not sustain the Finnish brewing industry for long or benefit the retail sector. The present threat is that the whole field of industry – with its state-of-the-art facilities and thousands of employees – might wither away in Finland. However, if the price of beer in Finland were higher than it is now, private imports would be even greater than at present.

The reduction in alcohol taxes last year was weighted in favour of spirits. The focus of taxation should now be shifted to milder beverages by halving the beer tax. This would have positive economic and health effects.

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Additional information:
Managing Director Timo Jaatinen, tel. +358 (0)9 1488 71
Federation of the Brewing and Soft Drinks Industry
Communications Manager Katri Tuulensuu, tel. +358 (0)9 1488 7601, GSM +358 (0)40 777 1938

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 Oy Hartwall Ab, Nokian Panimo Oy, Olvi Oyj 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 is among the four largest industries in the food and drink branch in terms of the value of production