Domestic sales 2004: Moderate growth in beer sales, doubling of private imports

Press release 20 January 2005

Domestic sales by members of the Finnish Federation of the Brewing and Soft Drinks Industry 2004

Moderate rise in beer sales and doubling of private imports despite promotions of medium-strength beer in shops

The members of the Federation of the Brewing and Soft Drinks Industry sold 820.9 million litres of beer, cider, long drinks, soft drinks and mineral waters in Finland in 2004. The total fell by 14.1 million litres or 1.7% compared with the year before. Beer sales turned up after a slight drop in 2003, rising by 3.5% to 417.9 million litres. Sales fell in every other category. Considering heavy price promotions in retail shops, growth in beer sales remained quite moderate. The members of the Federation of the Brewing and Soft Drinks Industry account for about 96% of beer sales covered by Finnish statistics.

As a result of heavy campaigning in retail shops, the rise in beer sales was limited to sales of medium-strength beer. Beer sales through shops rose by 9% last year. Sales through Alko fell by 14% and restaurant sales by 8%.

Cider sales totalled 41.9 million litres, which was 3.6 million litres less than in 2003. Long drink sales totalled 23.4 million litres or 0.7 million less than the year before. Sales of fermented long drinks declined, while sales of stronger long drinks rose by 13.5% compared with the year before.

Sales of soft drinks in Finland totalled 274.9 million litres in 2004. This was 7.4% less than the year before. Sugar-free soft drinks accounted for about 28% of the total. Sales of mineral waters fell by 3.1% to 62.7 million litres.

DOMESTIC SALES 2004

Beverage	2004 mill.l	2003 mill.l.	Change mill.l.	Change %
Beer	417.9	403.7	14.2	3.5
Cider	41.9	45.5	-3.6	-7.9
Long drink	23.4	24.1	-0.7	-2.9
Soft drink	274.9	296.8	-21.9	-7.4
Mineral water	62.7	64.7	-2.0	-3.1
Sales total	820.9	834.9	-14.1	-1.7

Source: Member companies of the Federation of the Brewing and Soft Drinks Industry. The statistics do not include sales by actors outside the Federation, nor private imports of brewery products, which are not statistically recorded.

Nearly 54 million litres of beer imported privately, tax over 80% of the price of beer
According to a survey conducted by TNS Gallup, Finns brought back 53.7 million litres of beer from abroad for their own use in 2004 (2003: 27.1 million litres). The figure does not include organized grey imports and illegal sales. As much as 70% of the strong beer that is consumed in Finland is privately imported at present. Finns also brought back 6.4 million litres of cider and 4.5 million litres of long drinks from abroad. The connection with the drop in domestic sales is obvious.

In promotions tax makes up over 80% of the price of Finnish beer. As a result of competition the price of beer on the Finnish market has fallen to a level that is close to what consumers consider fair, and this has prevented a stampede to Estonia to buy beer. In a survey that was conducted by TNS Gallup last spring, consumers said that the price of beer would have to fall by 39-40% to discourage private imports. This is what has happened, but most of the cost of price cutting has been shouldered by shops and breweries since beer tax was not reduced sufficiently last spring.

Beer tax needs to be halved
Beer tax in Finland should be halved from the current level so that domestic sales will be competitive with private imports over the long run. The effects of unhealthy pricing are already visible in the changing structure of sales and higher prices for other products as well as lower profitability in the restaurant sector. As soon as the price of beer rises, private imports will grow.

Additional information:
Communications Manager Katri Tuulensuu, tel. +358 (0)9 1488 7601, GSM +358 (0)40 777 1938
Managing Director Risto Saarinen, tel. +358 (0)9 1488 71

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 three largest industries in the food and drink branch in terms of the value of production.