THL: Alko’s exclusivity scheme reduces alcohol harm, so it’s worth maintaining

In THL’s view, Alko’s single rights system should be maintained. This is based on public health grounds.

“The current exclusive rights system is the most responsible way to sell alcohol in terms of the well-being, health and safety of the population,” says Markku Tervahauta, Director General of THL.

According to studies and reviews published today (13.4) by THL, the retail exclusivity system effectively limits the availability of alcohol, i.e. the number of outlets, and curbs price competition, marketing and other promotional activities, thereby reducing alcohol consumption and harm.

Increasing access to alcohol and increasing overall consumption increases the proportion of problem drinkers and alcohol-related harm in the population as a whole. Therefore, maintaining Alko’s system of exclusivity will contribute to socially and economically sustainable development.

“Alcohol is not a normal consumer product, but it causes considerable harm. For example, in 2020, there were 2 209 recorded alcohol-related deaths in Finland and many times that number of other harms. Thus, Alko is not just a chain of stores, but an effective tool for reducing alcohol-related harm,” says Pia Mäkelä, Research Professor at THL.

According to calculations by an international team of researchers led by Professor Tim Stockwell, alcohol consumption in Finland would increase by 9% and alcohol-related mortality by 14% if the exclusive system were abolished.

The 2018 Alcohol Act increased recorded consumption by around three per cent

The 2018 Alcohol Act exempted the sale of mild alcoholic beverages of less than 5.5% from Alko to grocery stores.

THL has estimated the independent impact of the law change on statistical alcohol consumption using a time series model that took into account the impact of other factors on alcohol consumption, namely changes due to alcohol tax, travellers’ imports of alcohol, the economy, the warm summer, and pre-tax storage.

The time series model covering the study period (2000-2021) suggests that the 2018 alcohol law increased recorded consumption by around 3%.

Selling wines in grocery stores would also scrap the system of exclusive sales of spirits

Allowing the sale of wines, i.e. virtually all alcoholic beverages below 15%, in grocery stores would undermine the exclusive system that also covers spirits.

The sale of wines and wine-based mixed drinks in shops would take a significant proportion of Alko’s sales. As a result, it would not be possible to maintain a geographically comprehensive network of specialised outlets offering a wide range of products. At the same time, the exclusive arrangement would lose its role in preventing and reducing alcohol-related harm.

The 2018 Alcohol Act opened three per cent of Alko’s sales to the competition. If the sale of beverages below 15% were allowed in grocery stores, up to 75% of Alko’s sales would be open to competition. In 2020, 45% of Alko’s sales were wines and 30% were diluted spirits.

“Such a change would be on a completely different scale from the 2018 Alcohol Act. ‘Wines in grocery stores’ would eventually abolish Alko as we know it today,” says Mäkelä.

The number of outlets selling alcoholic beverages over 5.5% would increase 12-fold if existing retailers of milder alcoholic beverages were given the right to sell stronger alcoholic beverages as well.

Alko’s exclusivity system divides public opinion

In a recent THL opinion poll, 54% of respondents thought that wine should be available in grocery stores. The proportion of those who wanted them to include strong drinks was 14%.

“However, public opinion is not so unanimous. If spirits were sold alongside wines in grocery stores, only 29% would want wines in grocery stores,” says Thomas Karlsson, Senior Expert at THL.

Overall, the survey shows that a narrow majority of Finns, 53%, are in favour of the current alcohol policy, while 8% want a stricter policy. A more lenient alcohol policy is supported by 29% of Finns.

THL´s report (in Finnish)

Source: THL