Norway: Vinmonopolet is facing possible smaller changes

The Norway Post reported that as Norway’s government-controlled wine and liquor stores are losing revenue due to increased duty free sales and customers who shop in Sweden, Vinmonopolet might consider opening more stores and extending their opening hours.

“The role of the Wine Monopoly as a political instrument to control alcohol, as well as the monopoly’s legitimacy, are being threatened. We are losing the share of the alcohol that is being sold in Norway,” says the Head of the Wine Monopoly Kai Henriksen. He asks the government to take a close look at what they can do to help prevent the situation to get worse.

The Wine Monopoly’s sales steadily increased from  the mid 90s to 2009, before it reached a plateau in 2010. This year the decline has been as high as 7,7 percent compared to the same time period last year.

Stig Erik Sørheim “It is of course not a problem if alcohol sales decrease, but the monopoly director’s concern is that the monopoly is losing market shares to cross border shopping and (particularly) tax free sales,” explained Stig Erik Sørheim who is a NordAN board member from Norway and the head of international department of Actis. “The legitimacy of the monopoly to some extent rests on its dominant position in the Norwegian alcohol market. If other sources of alcohol gain too large market shares, the rationale for the monopoly is undermined.”

“There is no data to suggest that there has been a large increase in cross border shopping recently, but there are significant price differences between Norway and Sweden/Denmark on all types of products, not just alcohol and tobacco. However, the biggest share of the “unrecorded” consumption is from tax-free sales,” Sørheim added.

Kai Henriksen said to Norway Post that measures that could reverse these developments, namely reducing taxes or lowering the limit for alcohol purchased abroad, are not acceptable in Norway, so they are considering opening more monopoly shops and extend opening hours.

“The Monopoly has traditionally been very restrained when it comes to political issues. The Monopoly director points out that the most important factors, taxation and travelers’ quotas, will not be changed. However, he does suggest some minor changes to improve their situation, e.g. more monopoly stores, longer opening hours and some adjustments of the marketing legislation to allow the Monopoly on-line store to show pictures of products. This may be problematic with regard to the strict marketing ban, since other operators may do the same.

The new government, although more liberal in principle, has come out as supporters of the main elements of Norwegian alcohol policy, and particularly the Monopoly.

Several newspapers and politicians have stated that we should do something about the tax-free trade. Some have suggested to abolish the tax-free trade altogether. However that would probably prove to be hugely unpopular. An alternative solution would be to give the tax-free trade to the Monopoly, thus increasing their share of the total alcohol market,” Sørheim explained the background of the situation in Norway.