Report Highlights:
Table wine consumption continued to increase in Sweden in 2004, although Systembolaget's monopoly wine retail sales dropped for the first time in many years. New World wines are gaining market share at the expense of wines from traditional European wine countries. Good market opportunities exist for U.S. quality wines, as the lower dollar exchange rate now makes it possible to compete with other New World wines.
Executive Summary
Table wine consumption continues to increase steadily in Sweden and has more than doubled since 1970.In 2004, wine consumption accounted for 38% of the total alcohol consumption in Sweden.EU products still dominate, but are loosing market share to New World wines.Good market opportunities exist for quality wines as tastes and knowledge become more sophisticated. After several years of declining sales, mostly due to the strong dollar, U.S. exports are on the rise again.In 2004, U.S. wine exports to Sweden increased to US$ 8 million from US$ 6.7 million in 2003.
Retail sales of wine and liquor in Sweden continue to be restricted to a government agency, Systembolaget.Systembolaget handles all over-the-counter sales of wine, spirits, and full-strength beer through some 400 liquor stores throughout Sweden.The Government of Sweden (GOS) managed to retain the retail monopoly despite its accession to the EU in 1995, but had to relinquish its monopoly on importing, wholesaling, production and exporting of wines and spirits.With the dissolution of the import monopoly, more and more restaurants and caterers have started to import directly.
Sweden retains one of the most restrictive alcohol regimes in Europe, but in the past few years the rules have been challenged as Sweden is under pressure from EU harmonization requirements.Consequently, Sweden has been forced to increase private alcohol import quotas and reduce the tax on wine.The EU is pushing the GOS to further reduce taxes as the Commission still maintains that the tax scheme disadvantages imported wine.Also, Sweden has been taken to the European Court of Justice over its ban on individual purchase of wine via the Internet.
Systembolaget's monopoly retail sales have been falling steadily since Sweden raised the limit on private alcohol imports on January 1, 2004.The new quota allows Swedes to buy much cheaper alcohol from neighboring countries.The situation has been aggravated by several other developments in the region including the May 1, 2004 EU enlargement which added new Member States including Poland and the nearby Baltic States where alcohol sells at a fraction of the Swedish price.In addition, Finland and Denmark have also reduced their tax on alcohol.
The GOS has traditionally favored high taxes on alcohol for public health reasons.However, the Sweden is now facing a dilemma.If taxes are cut to meet the competition, Sweden could consequently face the possibility of increased alcohol consumption.If taxes are not cut, Systembolaget’s retail sales could continue to decline, cross-border trade would continue and illegal resale would persist.On March 16, 2005, the Government’s own “alcohol investigator” proposed a 40% tax cut.A final decision has not been made, but a cut is likely to come.
Advertisements for alcoholic beverages were prohibited in Sweden until February 2003 when a verdict by the Swedish Market Court cleared the way for alcohol advertising in Swedish newspapers and magazines.Subsequently, the Swedish Government passed new legislation banning advertisements for alcoholic beverages stronger than 15 percent by volume.A new strict law on alcohol advertising came into force on January 1, 2005.
Following a three-year investigation into the bribery scandal within Systembolaget, the first verdict against 18 Systembolaget store managers was announced on December 19, 2005.The 18 store managers suspected of accepting bribes from suppliers were fined between US$ 375 and US$ 2,500.This was the first of five trials regarding the bribery scandal at Systembolaget.In total, charges have been brought against 77 Systembolaget employees and 15 employees of three different suppliers.