spiritsNEWS September 2016

Sweden: Concerns that new pricing model in retail monopoly discriminates against spirits

We have recently received information concerning the pricing policy operated by Systembolaget (SB), which will shift a significant financial burden onto spirits and wine, both mainly imported, while reducing it on beer, most of which is made in Sweden.  We hope you may be able to help encourage Sweden not to make such a protectionist move.

 

We understand that, when fixing the prices of the alcoholic beverages it sells, the monopoly plans to increase the fixed surcharge on spirits by 86% (and on wine by 50%).  In the case of beer, it will be reduced by 12%.  SB intends to implement this measure in January 2017.  Our preliminary calculations suggest this will add €4.6 million costs on spirits, €11 million on wine and reduce charges on beer, their domestically-produced competitor, by €8.7 million. 

 

The rationale for the proposed change has not been fully explained but clearly, the biggest beneficiaries of the change will be local producers while those who will suffer most will be importers.  Thus the proposed move will promote domestic industry at the expense of imports.  We understand that two thirds of the spirits market is imported and that 100% of wine is imported.  On the other hand, nearly 80% of the beer market is locally produced.

 

This is not the first time we are confronted with a controversial measure by SB, namely its new tax on bottles, which was again prepared without the involvement of the sectors affected and which would hit imports hardest.  We very much hope that we have not entered a phase of relations where a state-owned monopoly in a privileged position is introducing policies without meaningful consultation or objective justification and which favour local products.

 

We urge SB not to proceed with the proposed new pricing measure, at least until it has published, and we have had an opportunity to assess the study that substantiates the proposed change.  Moreover, we hope the monopoly can be more transparent and constructive when dealing with the suppliers of alcoholic beverages.  The latter have no option but to sell through the state owned monopoly in Sweden’s retail market.

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