British Journal of Addiction (1992) 87, 1393-1408

RESEARCH REPORT

The prices of alcoholic beverages in the Nordic countries OYVIND HORVERAK' & ESA OSTERBERG^ M/S Vinmonopolet, Box 6675 Rodeli^kka, 0502 Norway & ^Social Research Institute of Alcohol Studies, Kalevankatu 12, 00100 Helsinki, Finland

Abstract Apart from Denmark, all the Nordic countries have state-owned monopolies which handle all of the offpremise retail sales of wine and spirits. In some of the countries, the state monopoly also distributes strong and medium-strong beer. This paper discusses how the prices of beer, wine and spirits are set in the Nordic countries and compares the setting of prices in each. The paper shows that there are great differences both between the prices of alcoholic beverages in the Nordic countries and between the price-fixing mechanisms. The main part of the price differential is due to differences in taxation, but substantial discrepancies still exist when we look at prices exclusive of alcohol taxes. The reason for this is to be found in differences in profits and in the efficiency of producing and distributing alcoholic beverages. According to our data, it seems that some of the state monopolies are more effective than firms in the Danish market.

Introduction Disregarding Denmark, alcohol policy in the Nordic countries shares many common features. Iceland, Finland, Norway and Sweden all operate state alcohol monopolies. One of the justifications for the state monopoly arrangement is that exclusion of private interests from the alcohol trade permits the regulation of sales in the desired manner.''^-' Giving private interests a free rein would mean giving a free rein to powerful expansive forces.'*-^ This would be undesirable since increased alcohol consumption leads to increased alcohol-related problems. This type of alcohol policy, in which justification of the state alcohol monopolies is based on social political and anti-capitalistic sentiment, is historically of relatively recent origin and is rooted in the emergence and vigour of the labour movement and the temperance movement around the turn of the century and in ensuing decades. In earlier times it was customary to justify the establishment of state monopolies on grounds of tax collection, and even

today this motive plays a crucial role in many countries.^ Although four of the Nordic countries have a state-run sale monopoly for spirits, wine and some types of beer, the functions, influence and organization of the monopolies, however, vary widely. The differences turn on what items they are to sell, i.e. beer, wine or spirits; on the monopolies' functions, i.e. production, import, export, wholesale activity or retail activity; and on what influence the monopolies have on alcohol policy, i.e. on prices, sales outlets, advertising etc.^ Because the state-run monopolies impinge on all these areas, they are viewed as possibly the most important agency through which the Government can put its alcohol policy into practice. This article does not, however, examine the total role played by the state alcohol monopolies; it merely examines their role in determining alcohol prices. Furthermore, this article deals exclusively with off-premise retail sales. It is not concerned with sales and

1393

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Oyvind Horverak & Esa Osterberg

prices from licensed premises and related conditions. Alcoholic beverages are also fairly heavily taxed in Denmark and, therefore, in the wider international context it is fair to say that it is relatively expensive to drink alcohol in all Nordic countries.^ Thus it is of interest to examine alcohol prices in the Nordic countries as a whole. Secondly, a panNordic approach permits comparison of two different systems of price formation; viz. on the one hand a system involving competition and market adjustment such as in Denmark and on the other a system of state-run monopolies and price fixing. The article concludes with a brief look at the level of prices and taxes in the Nordic area in the context of the proposals put forward by the EC Commission for the harmonization of taxes on alcohol beverages in the EC area.

Price determination The constituent elements of the price of alcoholic beverages are identical throughout the Nordic area, and are shown in Fig. 1. The price consists, first, of that part which is retained by the producer, wholesaler and retailer of the beverage, and secondly, of taxes accruing to the state which are of the following three types: alcohol tax, value added tax (V'AT) and environment tax. The alcohol tax may comprise various elements, and the amount of the tax is likely to depend on alcohol content, volume and value. In countries with a state-run alcohol monopoly, the part of the monopoly's profit which is transferred to the state must also be regarded as an alcohol tax. The amount of VAT varies among the Nordic countries, and it may also vary depending on the type of good or service in question. In the case of ordinary consumer goods, such as alcoholic beverages, the lowest rate is in Norwary where VAT constitutes 16.67% of the retail price. The corresponding rate in Finland is 17%, Denmark 18.03%, Iceland 19.68% and Sweden 20%. The environment tax is a tax on disposable packaging. In many cases the environment tax is replaced by a deposit arrangement. As shown m Fig. 2, in all Nordic countries taxes are fixed by parliament on the proposal of the Government. But who or what can be said to fix the price? Despite their heavy taxes on alcohol, the Danes assert that it is market forces. They can only do so if they distinguish between the factors given independently of the market, such as alcohol taxes.

and factors influenced by market forces, such as costs and profit. Taxes are imposed extraneously, they are non-discriminatory and are not directly affected by competition. The actual price-fixing process consists in the setting of costs and profit margins; it is these variables which are exposed to market forces and which are squeezed by efficient competition. This approach to alcohol taxes is only appropriate as long as all alcoholic beverages offered on the market carry the same taxes. Once price disparities arise due to differences in taxation, the taxes will also be affected by market forces. Differences in taxation may arise, for instance, when border controls or similar restrictions betw'een two countries with differing tax levels are lifted. The country with the lowest taxes acquires a competitive advantage, and this can only be removed by equalizing the respective countries' tax levels. Denmark is experiencing this problem to an increasing degree now that the restrictions, especially on beer but also on wine and spirits imports from Germany, are being removed.*'" In Iceland, Norway and Sweden it is often said that alcohol prices are set by the Government through the tax policy, and that the monopolies have little influence on the retail price. This is asserted because tax constitutes such a large part of the price; by way of example, almost 90% of the price of a bottle of spirits in Norway consists of various kinds of tax. However, the tax system is shaped in such a way that the retail price falls by 5 kr. for each krone the Norwegian monopoly relinquishes. In the case of table wine the tax component in Norway is a little over 50%, and for each krone that the monopoly's costs and/or profits fall, the retail price falls by twice that margin. Hence, the monopolies exert substantial influence on the price-fixing process, even though the price level is to a large extent determined by the amount of tax. In Finland, the Finnish Alcohol Company Alko asserts that it determines the prices of wine and spirits itself, despite the fact that 60% of the retail price of wine and spirits goes straight to the Treasury in the form of alcohol beverage tax." Alko can nonetheless make this assertion with greater justification than the other Nordic monopolies, since the Finnish alcohol act states unequivocally that it is Alko's board of administration which determines alcohol prices after negotiations with the Ministries of Social Affairs and Finance. Alko also enjoys greater freedom to adjust prices to the market than is the case with the monopolies in Iceland, Norway

Alcohol prices in the Nordic countries Smirnoff (NOK 221}

1395

Egrl Blkav^r (NOK 50)

Deposit/ environment tax'

Deposit/ environment tax

Alcohol tax

Retailer's share

Wholesaler's share Retailer's share Wholesaler's shareC~ Manufacturer's share

Manufacturer' s share '—

Figure 1. The price components of alcoholic beverages. The examples show the composition of Vinomonopolet's prices of Smirnoff and Egri Bikaver.

Pre-tax price

Alcohol tax

VAT

Deposit

Denmark

Market forces

Parliament

Parliament

Ministry of Environment

Finland

State monopoly

Parliament

Iceland

State monopoly State monopoly State monopoly

Parliament/ State monopoly Parliament

Brewery/ Ministry of Environment State monopoly



Parliament

Parliament

Parliament

Parliament

State monopoly Ministry of Bnvironment State monopoly

Country

Norway Sweden

Parliameni

Environment tax

Parliament

Parliament —

Figure 2. Price determination in the Nordic countries. and Sweden. This is clear from the way the alcohol tax IS calculated in Finland, where in fact it is a fixed percentage of Alko's total turnover. This enables Alko to treat the alcohol beverage tax as if it were an

ordinary sales tax, and to endeavour to set prices with a view to maximizing the undertaking's earnings at a given cost/tax level. Hence, Alko can act as a classical monopoly in the economic sense, even

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Oyvind Horverak & Esa Osterberg

though the bulk of the monopoly's profits are transferred to the state. It must be emphasized that Alko's freedom to determine alcohol prices in Finland is not complete. In the first place, the preparatory works to the Finnish alcohol act emphasize that the reason for Alko's relative freedom to set prices is that the authorities believe such an arrangement to be desirable because appropriate pricing of its products puts Alko in a better position to prevent social and health damages caused by alcohol.'- Secondly, that part of Alko's profit which goes to the state is budgeted for by the Government in advance, and this places evident constraints on Alko's freedom to set prices. Under the Finnish system, Alko can apply different rates of profit to beverages with the same alcohol content. Should certain beverages become highly popular and thereby lead to increased alcohol consumption and increased alcohol problems, the Finnish system in fact presupposes that Alko will intervene to raise the price, and by the same token its own profit margin, on such beverages. This was, for example, the case with the product 'Sparkling Apple Wine', whose price was drastically raised in the 1970s when it was becoming popular among young alcohol abusers. It can also be mentioned here that, when, at the end of the 1980s, Vinmonopolet—the Norwegian wine and liquor monopoly—^attempted to follow suit in regard to bag-in-box wines, which were showing a disturbing increase in sales, the result was that the Ministry reported the matter to the Directorate of Prices on the grounds that Vinmonopolet was taking an excessive profit on this product. Because of the unusual configuration of the Finnish tax system the Finnish Alcohol Monopoly has, in principle, wider opportunities than the other Nordic monopolies—Vinmonopolet in Norway, Systembolaget/Vin & Sprit in Sweden and ATVR in Iceland—to favour its own products at the expense of imported alcoholic beverages. There is no denying that the other monopolies have ample scope for differentiating the prices between goods with the same alcohol content too. They can do this by employing different profit margins for different articles, e.g. in such a way that the rate of profit on popular articles is higher than on anides which sell less well. The opportunities for applying discriminatory treatment depend to some extent on the cost principle used when calculating prices. All undertakings which sell a number of different products

have to apply some principle for distributing fixed costs on their products. Since a number of methods are available to this end, and since all these methods contain discretionary elements, it is invariably possible to assert that some products are discriminated against on the basis of some other costdistribution principle. If the full-costing method —whereby the sale price equals the sum of cost price and net profit—is applied, there are ample opportunities for manipulation when distributing fixed costs on the various articles. If, instead, the contribution method is applied, whereby the sale price is the sum of variable costs and a so-called contribution margin, it is a simple matter to conceal differences in profit margins in the poorly specified contribution margin. Thus we see that despite the fact that the level of alcohol prices in the Nordic countries is largely determined by taxes on alcoholic beverages, the monopolies are able to exert great influence on prices. Their influence varies somewhat from country to country depending on the structure of the tax system, on what control is imposed on the monopolies and on what objectives the company itself sets for its price policy.

The tas systems in the Nordic countries Taxation of alcoholic beverages is usually based on a division into three groups: beer, wine and spirits. Each group may be subdivided on the basis of alcohol content. This sub-division is based partly on alcohol policy and partly on fiscal policy matters. In the Nordic countries the alcohol policy justification is predominant, and the various beverages are divided into sub-groups on the basis of alcohol content with the purpose of making intoxication an expensive matter, irrespective of whether one drinks strong or weak beverages. Hence the beer category may also contain other alcoholic beverages such as cider, tow-alcohol wines, etc. Thus, the usual pattern in the Nordic countries is that the rate of tax increases with increases in alcohol content. One could in principle conceive of a system in which one centilitre of ethyl alcohol costs the same regardless of whether it was purchased in the form of beer, wine or spirits. In no Nordic country is this principle fully adhered to; in all countries there are particular beverages which provide the cheapest intoxication.

Alcohol prices in the Nordic countries

B.O

1397

Class B WOK 7.27

ClHSB III

6.0

NOK 16.39

5.5 5.0 NOK 11.73

4.5

NOK 6.46

NOK 4.91

,Class III Class III

4.0 3.5

NOK 2.B1

3.0

(Class II)

Class II

2.5 2.0

0. Norway

Finland

Iceland

Figure 3. The classification and taxation of that part of beer which is considered to be an alcoholic beverage ( alcohol content in the commonest brand).

Taxation of beer None of the Nordic countries regard all types of beer as alcoholic beverages. In Iceland and Sweden the limit at which beer is to be regarded as an alcoholic beverage is 2.25% by volume, in Norway 2.5% by volume, and in Denmark and Finland 2.85% by volume. Despite the fact that these lowalcohol beers are not regarded as alcoholic beverages, they may nonetheless be subject to a special tax. These beverages will not be dealt with here. The subdivisions applied to alcoholic beer also vary among the Nordic countries. In Iceland there is only one tax class for beer; in Norway and Sweden there are two, while in Denmark and Finland there are three. However, in Finland no beer is sold in the lowest tax category (class II). The tax class limits also vary from country to country. Figure 3 gives an overview of tax class divisions. In Fig. 3 we have also indicated the alcohol content of the commonest types of beer in each tax class. In Iceland, Finland and Sweden we have, moreover, hatched those types of beer which can only be sold by the state monopoly. Within each tax

, the

class we have indicated the amount of the alcohol tax in the respective Nordic countries. For the purpose of comparison, we have also indicated the minimum rate for taxation of medium-strength and strong beer proposed by the EC Commission in 1989." We see that the proposed EC rates are substantially lower than the current Nordic rates. The striking feature of Fig. 3 is the great difference in the respective Nordic countries' policies on beer. This applies both to the division into tax categories, to sales in and outside the monopoly and to tax levels. After Denmark, Norway clearly has the most liberal policy on the sale of beer, in all other Nordic countries much of the beer is sold through the alcohol monopolies. To simplify the presentation somewhat, we will examine price and sale policy applied to two domestically produced types of beer available in all Nordic countries, namely a beer containing between 4.3 and 4.7% alcohol by volume (medium-strength beer) and a beer with an alcohol content between 5.2 and 5.8% by volume (strong beer). Table 1 shows retail price, alcohol taxes, VAT, price excluding all

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Oyvind Horverak

& Esa Osterberg

Table 1. Prices and taxes per litre on two ordinary types of beer in the Nordic countries (NOK') Norway^

Sweden'

Finland-*

Iceland'

Denmark*

Medium-strength beer Price excl. dep. Alcohol tax VAT Price exl. taxes To retail outlet I'o brewery Price of cl. alcohol

25.09 9.49 4.18 11.42 5.42 6.00 5.83

30.01 11.73 6.00 12.2B 4.33 7.95 6.52

21.54 9.79 3.67 8.08 2.64 5.43 4.90

28.03 12.15 5.52 10.36 3.71 6.65 6.23

15.31 4.91 2.40 8.00 2.00 6.00 3.33

Strong beer Price excl. dep. Alcohol tax VAT Price excl. taxes To retail outlet To brewery Price of cl. alcohol

38.32 16.39 6.39 15.54 8.28 7.26 7.10

31.28 11.73 6.26 13.29 4.51 8.78 6.02

32.80 17.67 5.48 9.15 3.67 5.48 5.98

34.71 17.32 6.83 10.56 3.91 6.65 6.20

18.63 6.14 2.92 9.57 2.43 7.14 3.21

' Rates applied are: Swedish kr. 104.25, Danish kr. 101.89, Icelandic kr. 10.63, Finnish mark. 163.15. - The price per bottle of pils (4.3% by volume) was NOK 8.78 and per bottle of "gold' (5.4% by volume) NOK 13.41. According to information from the Norwegian Breweries Association, the retail mark-up is 35% of the price charged by the brewery incl. alcohol tax but excl. VAT. ^ The price per bottle of Pripps Bla Original (4.6% by volume) was SEK 9.50 and lor Pripps Bla Light (5.2% by volume) SEK 10.00. The Swedish monopoly's mark-up is 18.03% of retail price less VAT and deposit. This corresponds to 22-23% of the price charged by the brewery incl. alcohol tax. •* The price per bottle Aura III (4.4% by volume) was FMK 4.40 and of Aura IV A (5.4% by volume) FMK 6.60. The Finnish alcohol tax also contains that part of Alko's profit which refers to the sale of beer and which accrues lo the state direct. ^ The price per bottle is based on the price of a six-pack of Egilssilfur (4.5% by volume) and a six-pack of Egils dokkur (5.6% by volume) and was, respectively, IKR 2360 and IKR 2920. (The beer is not sold by the individual bottle.) " The price per bottle of GrOn Tuborg (4.6% by volume) was DKR 4.96, and for Guld Tuborg (5.8% by volume) DKR 6.03. According lo Tuborg Breweries the retail mark-up is 15% of the price charged by the brewery incl. alcohol tax, but before discounts. This corresponds to 18.3% of the brewery price incl. alcohol tax but excl. VAT.

taxes, wholesale price and retail outlet mark-up for these two types of beer. The table also shows retail price per centilitre of ethyl alcohol. All prices are based on the price of a bottle of beer containing 33 cl (in Norway 35 cl) exclusive of deposit. The prices refer to September 1990. The exchange rates also refer to September 1990. Where mode of sale is concerned, mediumstrength beer is sold in ordinary grocery stores in Denmark, Finland and Norway, vthereas in Iceland and Sweden it is sold exclusively by the alcohol monopolies. Only in Denmark and Norway is strong beer sold in ordinary grocery stores; in all other Nordic countries strong beer is only obtainable Irom the monopoly's retail outlets. July 1, 1990 saw the introduction of tighter rules for the sale of strong beer in Norway. From that date self-service was prohibited, and sales staff now have to hand such beer personally to the consumer.

Table 1 shows that Denmark marks itself out from the other Nordic countries regarding prices and taxes applied to beer. The price of a bottle of medium-strength beer in Denmark is a little below 60% of the average price in the other Nordic countries, while the correspondmg figure for strong beer is 55%. The Danish tax on medium-strength beer is 46% of the average in the other Nordic countries, and in the case of strong beer only 39%. The retail price less both alcohol taxes and VAT provides a rough measure of the productivity and profit involved in the production and distribution of beer. It is seen that the Nordic countries form three readily discernible groups. Production and distribution of beer appears to be most efficient in Denmark and Finland, followed by Iceland and lastly Norway and Sweden. However, there are a number of reasons why these figures for efficiency should be taken with a

Alcohol prices in the Nordic countries pinch of salt, since what accrues to the various production and distribution elements is just as much a result of power factors In the beer industry as of efficiency per se. Thus, in order to explain the breakdown of the price of beer on the retail outlet and the brewery, it is also necessary to look at how the production and distribution of beer are organized. Doing this, we can say briefly that in Denmark and Norway it is the breweries that determine conditions in the distribution channel. In Denmark the Carlsberg group is predominant, whereas in Norway the industry has been almost totally cartelized. Today the Ringnes group has to some extent taken over the role of the earlier beer cartel. Centralization of beer production in Dennnark and Norway has led, so to speak, to a system of binding resale prices, i.e. the breweries not only decide their own profits, but also what mark-up rates are to be employed by the retail outlets. In Finland and Iceland domestic beer production also has been almost entirely monopolized. In Finland two breweries account for more than 90% of production, and the same is true of Iceland. Even so, the state-run monopolies are predominant in the distribution channel in both countries. In Finland this is because the breweries produce beer for Alko's account. Hence the breweries do not sell beer to Alko, but Alko meets the breweries' production costs. The costs are calculated on the basis of the breweries' average costs plus a profit margin. Thus the Finnish breweries are invariably interested in cutting their costs, since the difference between their own costs and the average costs either constitutes a supplement to or reduction of earnings. Iceland on the other hand imports a very large volume of beer, which is related to the fact that sale of alcoholic beer has only been permitted since 1 March 1989.'•^ Thus, domestic beer production meets strong competition from foreign breweries; in

1399

the first half of 1990, five foreign beer trademarks (Becks, Budweiser, Heineken, Lowenbrau and Tuborg) accounted for 79% of the Icelandic state monopoly's beer sales.'"^ Since Lowenbrau is produced in Iceland the share of Imports Is about 50%.'^ Foreign breweries function as price-leaders and, at the same time the state-run monopoly has ample opportunities to manipulate the prices charged by the domestic breweries under cover of the protection provided by the Icelandic beer tax. In Iceland, imported beer is namely subject to a tax of 108% of the purchase price, whereas the corresponding rate on domestic beer is 25%. In Sweden it is less obvious who dominates the distribution channel of beer, since three breweries (Falcon Pripps and Spendrups) account for more than 90% of all beer delivered to the state-run monopoly. Thus in this case both the retail and wholesale segments are subject to an almost complete monopoly. Hence it is possible to conceive that the breweries can obtain good prices because Systembolaget (the state alcohol retail monopoly) is able to pass additional costs on to the consumer direct. Table 2 repeats the figures given in Table 1 for retail mark-ups and prices to the breweries. It is seen that the price to the breweries in Denmark and Norway is higher than in Finland. Thus it may appear that the Finnish system—in which the state-run monopoly is predominant—pushes the brewery prices further down than the market is capable of in Denmark (where, moreover, economies of scale presumably operate) and Norway, where the brewing industry dominates the distribution channel of beer. Regarding the price set by the Icelandic brewery from which we have information, and which in the first half of 1990 accounted for about 40% of domestic beer delivered in Iceland, it is seen that it receives the same price for medium-strength beer as for strong beer. The relatively high price of medium-strength beer and low price of strong beer

Table 2. Prices to the brezvery (producer and wholesaler) and retail mark-ups for one lure beer in the Nordic countries Denmark

Norway

Finland

Iceland

Sweden

Price to brewery Medium-strength beer Strong beer

6,00 7.26

6.00 7.14

5.43 5.48

6.65 6.65

7.95 8.78

Retail mark-up Medium-strength beer Strong beer

2.00 2.43

5.42 8.28

2.64 3.67

3.71 3.91

4.33 4.51

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Oyvind Horverak & Esa Osterberg

in Iceland may be due to the keen competition from abroad. For beer containing 4.5% alcohol by volume and less, the competition is insignificant because the market is small and of little interest to the major foreign breweries. Table 2 shows that the Swedish breweries obtain by far the highest prices on their beer. It is difficult to state a specific reason for the large difference between the Swedish breweries and the other Nordic breweries. However, as already mentioned, it may be due to the existence of virtual monopoly both at the producer/wholesale level and at retail level. Looking at retail mark-ups, Denmark and Norway follow different paths. A Danish merchant makes only about one-third of what his Norwegian counterpart makes on the sale of a bottle of beer. In Denmark, Carlsberg employs a mark-up rate of about 18% of the brewery price, including alcohol tax, but excluding VAT as the norm, while the corresponding rate employed by Ringnes in Norway is 35%. Since the percentage retail mark-up in both countries is reckoned on the basis of price including alcohol tax, the difference will be further magnified in value terms because the taxes on beer are much higher in Norway than in Denmark. Moreover, in Norway, in contrast to Denmark, ii is not permitted to offer special discounts on beer sold in retail outlets, which is an effective barrier to competition at retail level. It is also difficult, for various reasons, for Norwegian stores to take in beer from Norwegian breweries which are not affiliated to the Norwegian breweries' association. To some extent this is due to the deposit-on-the-bottle arrangement. The only brewery of significance that is not affiliated to the Norwegian Breweries Association sells its beer through its own retail outlets. In September 1990, the retail price of medium strength beer from this brewery was 17.5% lower than the price of beer from breweries affiliated to the brewery association, while the retail price of strong beer was 31 % lower. The low retail mark-up on Danish beer could be due to several factors, but quite clearly the large quantities of beer sold in Danish grocery stores have a crucial bearing on the amount of the mark-up. In 1989, per capita consumption of beer in Denmark average 123 litres, compared with 79 litres in Finland, 21 litres in Iceland, 52 litres in Norway and 58 litres in Sweden.'^ However, there are also great differences between the other Nordic countries. The Swedish monopoly employs a mark-up rate of about 22% of the brewery price including alcohol tax but excluding VAT, and

this applies to both strong beer and mediumstrength beer. Because these two types of beer are subject to identical tax, the retail mark-ups are also rather similar; the difference refers merely to differences in price charged by the brewery/wholesaler. In Finland there is a clear difference between the retail mark-up on medium-strength beer and strong beer. The most likely explanation is that the sale of strong beer is monopolized, so that the difference is due to the power of the monopoly. Finally, looking at the price of medium-strength beer and strong beer per centilitre alcohol, we see that in Finland and Norway it clearly 'pays' to drink alcohol in the form of medium-strength beer while the opposite is true in Sweden. In Denmark it matters less what kind of beer one gets inebriated on, and the same applies in Iceland. Overall getting drunk on beer is dearest in Sweden, and of couse cheapest in Denmark.

Taxation of wine Wine, like beer, is classed according to alcohol content. Denmark, Norway and Sweden all employ three classes: low alcohol wine, table wine and fortified wine, while Finland and Iceland employ only two classes: table wine and fortified wine. Figure 4 gives an overview of the various classes of wine. The classification varies somewhat from country to country, but the differences are relatively minor, and far smaller than in the case of beer. In Fig. 4 we also indicate the amount of the alcohol tax in each class and, to permit comparison, the minimum rates for taxation of table wine and fortified wine proposed by the EC Commission in 1989. It is seen that the EC rates represent quite different level of taxation from the Nordic rates. In Denmark, as already mentioned, wine is sold in ordinary grocery stores, whereas in all other Nordic countries wine is sold exclusively in the monopoly stores. Despite the fact that the sales system is identical in the other Nordic countries, there are wide differences both in the level of tax and tax structure. As previously mentioned, the basis of the Finnish alcohol taxation was in autumn 1990 when Alko had to pay 60% of the sales value of wines and spirits in alcohol tax, in addition to the fact that the bulk of Alko's profit accrues to the state. However, this did not mean that Alko had to tax all classes of alcoholic beverages in the same way, or that all beverages

Alcohol prices in the Nordic countries

NOK 0.905 per vol.pot./ litre + 57% of p*

NOK 21.89 per litre + 39* of p*

NOK B.S2 per litre • 331 Of p*

NOK fl.a6 per litre • 39 % of p*

NOK 0.882 per vol.pet./ litre • 33% of p'

NOK 11.73 per litre

60 per cent of retail price

60 per cent of retalL price

NOK 4.70 per uol.pet./ litre from 2.25 vol.pet.

NOK 4.70 per uol.pet./ litre from 2.25 vol.pet.

NOK 23.84 per litre

NOK 5.98 per litre

NOK 12.84 pel litre

NOK 0.75 per litre

1401

NOK 8.30 per litre

Norway

Figure 4. The classification and taxation of tuine (p* = Retail price - VAT - Deposit/Environment tax.

within a tax class must be taxed identically. In practice Alko utilized its opportunity to differentiate the tax on the various beverages by imposing lower-than-average tax on low alcohol beverages and higher-than-average tax on strong beverages. In assigning prices to the various beverages, Alko has also endeavoured to give due regard to the risk that the tax on expensive beverages will rise to an excessive level, since it is reckoned as a percentage of the price. In Iceland the wine tax varies continuously in keeping with the strength of the wine, whereas in Denmark, Norway and Sweden the tax is linked tko the respective classes into which wine is divided. However, as regards the structure of the tax, the systems in the three countries differ. Denmark's system is the simplest in that the tax is a fixed amount per litre of product in each class. In Sweden too the tax consists of a fixed amount in each tax class. However, in Sweden there is an additional percentage tax which is calculated on the basis of what is termed 'reduced price', i.e. the price of the article less VAT and deposit. In Norway the tax system regarding table wine is the same as in Sweden. With regard to fortified wine, however, the system is structured in the same way as the Norwegian spirits tax. This means, first, a tax per litre of alcohol; and second, a percentage tax (which is higher than the percentage tax on table wine) calculated on the basis of 'reduced price'. Since the taxes on wine in Finland, Norway and Sweden are to some extent calculated as a percen-

tage of the product price, expensive wines are taxed more heavily than cheap wines, even though the alcohol content is identical. In Denmark and Iceland there is no such discriminatory treatment of expensive wines; instead, alcohol content determines the amount of the tax. Iceland is the most consistent country in taxing nothing more than alcohol content. In fact in Iceland the first 2.25% of alcohol by volume are exempt from alcohol tax, because only beverages with more than 2.25 volume per cent of alcohol are defined as alcoholic beverages. After the first 2.25 volume per cent of alcohol the tax rises in pace with the alcohol content. Table 3 shows for table wine what Table 1 showed for beer. It can be questioned whether the selected brands are fully representative of the red wind and white wine category in the respective countries, or for the category of wine imported in the bottle. However, in the present context we have chosen to emphasize cross-border comparisons, and to that end it is appropriate to employ one and the same article. Table 3 shows that table wine too is cheapest in Denmark, although the price difference is somewhat smaller than for beer. The price of a bottle of table wine in Denmark appears to be 20-30% lower than prices in the other Nordic countries. For beer, the price difference is primarily due to differences in the level of tax. The table also shows that the price of wine imported in the bottle is quite high in Finland. Whereas in Finland domestically bottle wine is far

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Oyvind Horverak & Esa Osterberg

Table 3. Prices and taxes per litre on two domestically bottled wines and one wine imported in the bottle (NOK) Norway

Sweden

Finland

Iceland'

Denmark

Red wine, dom.^ Price excl. deposit Alcohol tax VAT Price excl. taxes Price of cl. alcohol

65.71 26.89 10.95 27.87 5.48

50.04 24.67 10.00 15.37 4.17

54.38 22.32 9.44 22.62 4.73

81.53 45.85 16.04 19.64 6.79

40.62 12,84 7.32 20.46 3.69

White wine, dom.' Price excl. deposit Alcohol tax VAT Price excl. taxes Price of cl. alcohol

71.43 28.46 11.91 31.06 7.94

55.60 26.43 11.12 18.05 6.17

60.91 25.84 10.55 24.52 6.77

76.51 31.74 15.06 29.71 8.50

42.11 12.84 7.59 21.68 4.68

Imported in the bottle* Price excl. deposit Alcohol tax VAT Price excl. taxes Price of cl. alcohol

97.33 37.44-' 15.63 44.26 8.46

91.74 37.84 18.35 35.55 7.98

116.38 58.21 19.97 38.20 10.12

94.07 43.50 18.51 32.06 8.18

66.57 12.84 12.00 41.73 5.79

' No wine is bottle in Iceland. ^ Prices and taxes for Finland, Iceland, Norway and Sweden are calculated on the basis of a whole bottle of Egri Bikaver (11.5% by volume). For Denmark we have used the price of a French red wine in the same price range (DKR 29.90) and with the same alcohol content. ^ Prices and taxes for Denmark, Iceland, Norway and Sweden are calculated on the basis of a whole bottle of Moselbiumchen (9% by volume). For Finland we have used the price of a whole bottle of Moselwein with the same alcohol content. •* A bottle of Le Vallon Hanappier. ' Of which NOK 3.57 is environment tax.

cheaper than its equivalent in Norway, the opposite is true for wine imported in the bottle. The reason lies primarily in the struclure of the Finnish tax system, which in principle is a pure value-tax system that favours cheap alcoholic beverages. The retail price less both alcohol taxes and VAT gives us a rough measure of the productivity and profit pertaining to the distribution of table wines. On this measure Denmark no longer shows the lowest figure, despite bemg the only country in the Nordic area with unrestricted sale of wine. Competition is unable to create such good conditions for the consumer as some of the monopolies; it is seen that the Swedish monopoly has far lower costs/ profit on the distribution of wine than are obtained in Denmark's market-oriented system. The Icelandic monopoly also incurs lower costs on the distribution of red wine than the Danish system, whereas the Finnish Alko somewhat stands over the level of costs in the Danish market. The Norwegian state monopoly comes out worst. Regarding beer, the Norwegian system appears to be inefficient compared with the other Nordic countries. Finally, looking at the outlay per centilitre

alcohol, it seems as if it 'pays' in all countries to drink red wine rather than white wine if one's aim is intoxication. However, the wide difference between the price of intoxication on white wine and on red wine is due to the fact that we have chosen to look at a fairly low alcohol white wine; a different picture would emerge in the case of a stronger white wine. Intoxication on wine is dearest in Iceland, and of course cheapest in Denmark. In Norway and Sweden it is also cheaper to become intoxicated on wine than on beer.

Taxation of spirits In contrast to beer and wine, spirits are not divided into tax classes in any of the Nordic countries. All beverages containing more than 22% alcohol by volume are regarded as spirits, and are subject to the same rate of tax. In Sweden some brands containing less than 22% alcohol by volume are also taxed as spirits if they cannot be classed as malt beverages or wine. A pertinent example is Campari, which in Sweden contains 21% alcohol by volume but is still defined as spirits.

Alcohol prices in the Nordic countries

NOK 0.941 pec NOK 1.36 pa[ vol.pet./ vol.pet./ litre » litre . 72» of retail 60% of retail price eNCl. price excl. VAT and deposit VAT and deposit

60 pec cent of ratBll prlca

NOK 4.70 per vol.pet./ 11 tie from 2.25 vol.pet.

NOK 1.43 per vol.pet./ litre + 371 of Hholsaale prlc« aKCl I/AT and deposit

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NOK 0.90 poc vol.pet./ litre

Norway

Figure 5. The classification and taxation of spirits.

Figure 5 gives an overview of tax rates applied to spirits in the Nordic countries. We also indicate the minimum rate for taxation of spirits proposed by the EC Commission in 1989. As for beer and wine, the EC rate for spirits is on a completely different level from that in the Nordic area. Spirits are sold in ordinary grocery stores in Denmark, whereas they are only sold through the monopoly system in the other Nordic countries. Where the level of tax and tax principles are concerned, there are wide differences between the countries. In the first place, in Denmark, Norway and Sweden the tax rises by a specific, but differing amount per each percentage point in alcohol content. Secondly, a value tax is levied on spirits. In Denmark, the value tax is calculated on the basis of the wholesale price inclusive of all alcohol taxes, but exclusive of VAT. In Norway and Sweden the value tax is calculated on the basis of the retail price less VAT and deposit, in the same way as is done in the case of wine. The percentage tax means that costly brands of spirits are assigned a higher tax than cheap brands. The same applies to an extreme degree in Finland which levies a spirits tax dependent exclusively on price. In Iceland, on the other hand, the tax is related exclusively to alcohol content. Hence the tax on expensive brands is identical to that on cheap brands, as long as the alcohol content is identical. Table 4 shows the same items for spirits as Tables 1 and 3 show for beer and wine respectively. Like beer and wine, spirits are considerably cheaper in Denmark than in the other Nordic countries. Where domestic brands are concerned, the price on the Danish market is 20-40% lower than the price of domestic vodka in the four other Nordic countries. This is due to the relatively low tax on spirits in Denmark. The four other Nordic countries form two clear-cut groups; domestic spirits are far

cheaper in Iceland and Sweden than in Finland and Norway. However, as the foreign-produced vodka brand is concerned, the picture is different. The price of foreign vodka in Finland is far in excess of the price elsewhere in the Nordic area. Like wine imported in the bottle, the main reason is that the Finnish tax system is a pure-value-tax system. The retail price of spirits less all taxes gives us, as mentioned, a rough measure of productivity and profits pertaining to the production and distribution of spirits. Denmark does not show the lowest figures here either; we see that all the alcohol monopolies employ a lower price for distribution of foreign vodka than the market system in Denmark is in a position to. This may partly be because the monopolies achieve better purchase prices than Danish wholesalers, partly because the distribution costs in Denmark are greater than in the other Nordic countries where alcohol advertising is banned. It could al5o be due to economies of scale in the distribution system. However, it is possible to buy Smirnoff vodka in Denmark on offer at a price which corresponds to NOK 38-39 per litre exclusive of VAT and alcohol tax. Stifl, this price is above the price in the monopoly countries Iceland, Norway and Sweden, where the consumers do not have to pay for the costs of alcohol advertising, neither do they have to use their time shopping around looking for the best offer. The country which marks itself out regarding the monopoly's own costs and profit on the cheapest domestic spirits is Iceland. Table 4 shows that the Icelandic monopoly loses about NOK 9 per litre on the sale of its cheap, domestically produced vodka. In other words the sum of the VAT and alcohol tax is higher than the monopoly's retail price. The Icelandic monopoly confirms that this is indeed the

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&yvind Horverak & Esa Osterberg Table 4. Prices and taxes per litre on domestic spirits and Smirnoff vodka (NOK) Norway

Sweden

Finland

Iceland

Denmark

Domestic spirits' Price excl. deposit Alcohol tax VAT Price excl. taxes Price of cl. alcohol

282.86 207.35 47.15 28.36 7.07

227.96 160.47 45.59 21.90 5.70

256.15 187.39 43.82 24.93 6.40

209.65 177.53 41.26 -9.14 5.24

165.94 110.65 29.62 25.37 4.15

Smirnoff vodka^ Price excl. deposit Alcohol tax VAT Price excl. taxes Price of ci. alcohol

315.71 228.49^ 52.03 35.19 7.89

262.71 177.36 52.54 32.81 6.57

406.24 295.11 69.34 41.80 10.16

249.61 177.53 49.t2 22.96 6.24

211.06 118.16* 38.05 54.85 5.63

' Prices and taxes are calculated based on: Norway: Kalinka vodka, Sweden; Renat Brannvin, Finland: Koskenkorvan viina, Iceland: Brennivin and Denmark: Brc^ndums snaps. All the foregoing contain 40% alcohol by volume. ^ Prices and taxes are calculated based on a bottle which contains 0.7 litre vodka of 40% by volume (Denmark: 37.5%). The price in Denmark is the 'ordinary' price; Smirnoff is on offer in Denmark at a price per litre corresponding to NOK 189.08. ' Of which NOK 3.57 is environment lax. •* Of which NOK 1.65 is environment tax. case and asserts that it is because this item (which is Iceland's second best selling spirit—Smirnoff sells more) forms part of the basis for the Icelandic consumer price index. Thus, the Government chooses to subsidize the cheap domestic brand out of regard for the general price level in Iceland. Finally, looking at the outlay per centilitre alcohol, it is seen that in the Nordic countries Denmark is the cheapest in which to become intoxicated on spirits. As in the case of beer and wine this is due to the low level of alcohol tax in Denmark and has nothing to do with efficient competition. It is, by the way, worth noting that due to its tax and price policy, Iceland is the only Nordic country where spirits are the cheapest type of alcohol to become intoxicated on.

Intoxication, prices and demand Regardless of what one chooses to drink, it is cheapest to drink in Denmark. The dearest option in Denmark is cheaper than the cheapest option in any other Nordic country. But then Danish alcohol policy is a somewhat special case in the Nordic context, a fact which is borne out time and again in the arena of Nordic collaboration in this field. Of course, inebriation is not the only motive for drinking alcohol; alcohol can also, for instance, accompany meals or quench thirst. Nonetheless, to be intoxicated is still today an important motive for

drinking alcohol in the Nordic countries. Therefore, it is worth taking a look at how far the intoxicating ability, i.e. the price of ethyl alcohol in different alcoholic beverages may be determinative for one's choice of alcoholic beverage. Table 5 shows the composition of registered alcohol consumption in the five Nordic countries, together with information about the price of intoxication depending on the type of drink chosen. It is seen from the table that in the case of Denmark and Iceland there is a correlation between low-cost intoxication and high consumption. In Finland and Norway beer is the most popular alcoholic beverage despite being more expensive than wine as a source of alcohol, and in Sweden spirits predominate even though wine is far cheaper than spirits as a beverage of becoming inebriated. Thus, although there is no clear-cut connection between low-cost intoxication and high consumption in Finland, Norway and Sweden, the price level of alcohol nonetheless goes some way to explaining why beer is a far more popular alcoholic beverage in Finland and Norway than in Sweden. However, what most readily springs to mind when looking at Table 5 is the connection between beer consumption and the availability of beer. In all countries where medium-strength beer is sold in ordinary grocery stores, beer is the predominant alcoholic beverage. In Iceland and Sweden, where this beer is sold exclusively by the Government monopoly, beverages other than beer predominate. This is a

Alcohol prices in the Nordic countries

1405

Denmark, alcohol prices would be more than halved if the EC proposed minimum rates were introduced. The introduction of the EC Commission's proposal would therefore have dramatic consequences for alcohol consumption and alcohol-related problems in the Nordic area, There are nonetheless signs that the EC's alcohol tax policy signals are already beginning to influence price and tax policy in some Nordic countries. Denmark now appears prepared to adapt its price and tax level to the German level and in Sweden it seems unlikely that there will be any increase in the real price of alcoholic beverages in the years immediately ahead. This is because such a policy would contribute to widening the disparity between the Swedish price level and the level of prices on alcoholic beverages in the EC area, which is the price that Sweden, should it join the EC, would have to adjust to in the coming decades.'*'^ The Finnish Parliament approved new alcohol tax legislation in connection with its consideration of the 1991 Budget. The new law establishes four tax classes for alcoholic beverages based on alcohol content. In the case of the strongest drinks, i.e.

clear indication that the limited availability of beer in these countries both contribute to holding down beer consumption and to shifting consumption in the direction of stronger alcoholic beverages.

Alcohol prices under the EC alcohol policy regime In Figs 3-5 we also state the minimum rates that the EC Commission has proposed for alcohol taxes within the EC smgle market. Although there is a long way to go before one can raise any hopes of harmonizing alcohol taxes not to mention achieving exactly these rates in all EC countries, the amount of the taxes nevertheless illustrates the importance attached by the EC Commission to prices as a tool of alcohol policy. Table 6 shows what consequences the EC Commission's proposal would have for alcohol prices in the Nordic area if the Commission's proposal for minimum rates were introduced. The table states 'the EC minimum prices' in per cent of current prices. We see that these prices are far lower than the level in all Nordic countries; apart from

Table 5. Consumption of beer, wine and spirits, respectively, as a share of total alcohol consumption, and prices per centilitre alcohol in the form of the cheapest type of beer, wine and spirits in ihe Nordic countries Beer

Norway' SwedenFinland-' Iceland* Denmark'

Wine

Spirits

Price

%

Price

%

Price

%

5.83 6.02 4.90 5.70 3.21

55 22 49 34 59

5.48 4.17 4.73 6.79 3.69

19 35 10 12 26

7.07 5.70 6.40 5.24 4.15

26 42 41 54 15

Registered consumption in 1989. State alcohol monopoly's sales in 1989. Registered consumption in 1988. Registered consumption in the first half of 1990, Table 6. New prices of beer, wine and spirits in the Nordic area in per cent of current prices should the EC Commission's proposed minimum rates for alcohol taxes be adopted in the Nordic countries'

Medium-strength beer Strong beer Table wine^ Spirits^

Norway

Sweden

Finland

Iceland

Denmark

43 34 52 27

44 47 40 32

40 27 52 29

39 31 31 36

62 61 64 45

' We have assumed no change in the countries' VAT rates. ^ Calculated on the basis of figures for domestically bottled red wine in Table 2. •' Calculated on the basis of figures for domestically bottled spirits in Table 3. We have assumed a price of NOK 25.00 excl. taxes for Iceland.

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Oyvind Horverak & Esa Osterberg

containing more than 22% alcohol by volume, taxation will be on the same basis and at the same rate as before, i.e. 60% of the total sale price. For drinks between 15 and 22% by volume, the rate will be 55%, for drinks between 8 and 14% the rate will be 45% and for drinks below 8, but over 2.8% by volume and which are not beer, the rate will be 40% of the sale priee. This change represents both an adjustment to the tax system in the other Nordic countries, and to the price policy already conducted by Alko for a number of years. Also, the new law leaves intact Alko's freedom to determine prices, since it still only establishes the combined total of taxes within each class of alcoholic beverages, and not the tax on the individual beverage. In practice the new tax law has meant that notably the expensive wines bottled by the producer have become cheaper. For instance the price of Le Vallon Hanappier mentioned in Table 3 was decreased from NOK 116.38 to 105.50 when the new law came into force. In Norway too the alcohol tax system was revised as a result of Parliament's consideration of the Government budget for 1991. The revision was partly on alcohol policy grounds, i.e. a desire to tax alcohol content rather than quality, and partly as a step in adjusting to EC rules so as to avoid discriminating between domestic and imported products. As a result, somewhat greater emphasis was placed on that pan of the alcohol tax which was linked to the article's alcohol content and somewhat less on that part which was linked to the article's purchase price. The intention is to continue this process in the years ahead, so that alcohoi taxes cease to discriminate between expensive articles bottled by the producer and cheaper, domestically bottled articles.

Summary We have examined the formation of alcohol prices in the Nordic countries and the various price components. The article shows that wide differences exist between the Nordic countries regarding price formation, who influences the price formation process, what portion of the price accrues to the Government in the form of tax, and what portion goes to the alcohol distributor and producer. Alcohol products are considerably cheaper in Denmark than in the other Nordic countries. This is, however, not because alcohol prices in Denmark are market-determined, and concomitantly that the other Nordic countries, have high prices because

they have put the sale of wines, spirits and some beers in the hands of a monopoly. The price differentials between Denmark and the other Nordic countries are due mainly to tax differences; for the seven products we have been looking at the alcohol tax level in Denmark is only 52% of the average tax level in Finland, Iceland, Norway and Sweden. The monopoly approach seems in many respects superior to the market in terms of efficiency. However, the efficiency gains are probably in pan specious, and are due rather to the monopolies' favourable purchase prices than efficiency of operation. It is also obvious that a system without advenising costs, such as we have in the Nordic monopoly countries, will have lower distribution costs than a system which spends a lot of money on advertising. Nevertheless there is also reason to believe that genuine economies of scale exist in the production and distribution of alcohol. In this context the Nordic alcohol monopolies can be said to constitute an efficient organization of the alcohol market. From the Government's and the consumer's angle the problem is to ensure that the monopoly's potential efficiency is in fact exploited, and that the gains accrue to the community and the consumer. Being independent organizations, the monopolies are able to develop their own interests and endeavour to acquire a monopoly profit. If this is to be avoided, the Government must itself draw the monopoly profit at the same time as it presses the monopolies to operate cost-efficiently. This is a difficult task which the Nordic authorities are endeavouring to carry out with the aid of high alcohol taxes and through the Government's insight into the aleohol monopolies' actual price calculations. Table 7 shows the sum which the Nordic monopolies are left with after selling one litre of each of the five articles examined in Tables 3 and 4, and after paying alcohol tax to the state. The table also shows what the Danish market participants are left with after doing the same job. The table confirms our statement that the monopolies appear to be doing just as good a job as the Danish market. This is especially true for the Swedish monopoly system, which seems to distribute wine and spirits in a very efficient way. When it comes to comparing the various Nordic monopolies, the Norwegian monopoly may appear to incur somewhat higher costs/profits than the Icelandic and Finnish monopoly, and above all, higher

Alcohol prices in the Nordic

countries

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Table 7. Price exclusive of taxes of 3 litres of wine and 2 litres of spirits sold in the Nordic countries

Wine Spirits Total

Finland

Iceland

Norway

Sweden

Denmark

85.34 66.73

81.41 47.96 129.37

103,19 63,55 166.74

68.97 54.71 123.68

83.87 80.22 164.09

152.07

costs than the Swedish monopoly system. This seems notably to be true of wine, whereas spirits are produced and distributed with roughly the same efficiency in Norway as in Finland. However, it should be noted that both market conditions and the national cost level diverge fairly widely from country to country, so the differences may well be rooted in these conditions. Furthermore, it should be emphasized that the figures given here only refer to five brands, and that the picture could be a little bit different if other or additional brands are considered. As regards beer, it would appear that the Swedish monopoly has to pay the breweries somewhat more for the beer than is the case in the other Nordic countries. We have pointed out that the different Nordic tax systems allow the alcohol monopolies a varying scope to influence prices. The Finnish monopoly has the greatest freedom, while prices in Iceland are almost entirely determined by the tax system. The disparities in the monopolies' opportunities to influence prices appear to vary in keeping with the role played by value tax in the countries' tax systems. Finland's tax system is, so to speak, a pure value-tax system, whereas at the other end of the scale we find the Icelandic system which—if we disregard beer-—determines prices exclusively on the basis of the monopoly's costs and the beverages' alcohol content. If it turns out that the Nordic tax systems draw closer to the system planned by the EC, i.e. a system in which beer, wine and spirits are subject to identical tax regardless of whether they are bottled by the producer or domestically, the Nordic countries' influence on price determination will be considerably more limited than is the case today.

Acknowledgements This article is based on information obtained by us from the Nordic alcohol monopolies, the brewery associations in Denmark and Norway, and from Egill Skallagrimsson's brewery in Iceland. We would like to express our gratitude for the invalu-

able assistance provided by persons belonging to these organizations.

References 1. FUGLUM, P, (1972) Kampen om alkoholen i Norge 1816-1904 (The struggle about alcohol in Norway) (Oslo, Universitetsforlaget). 2. SVERDRUP, J. (1972) Et statsmonopol blir til (A state alcohol monopoly is founded) (Oslo, Vinmonopolet). 3. THULIN, E, J:SON & MARCUS, M , (1947) Goteborgs-

4.

5. 6.

7.

8. 9. 10.

11.

12. 13. 14.

systemet 1865-1945 (The Gothenburg System 1865-1945) (Gijteborg). ROMANUS, G. (1990) EG-samarbetet—ett hot mot den sociala alkoholpolitiken? (EC—a threat against the social alcohol policy?), in: TiGERSTEDT, C. (Ed.) EG, alkohol och Norden, NAD-publikation nr. 19 (Helsingfors). ROOM, R. (1987) Alcohol monopolies in the US: challenges and opportunities, in: The Role of Alcohol Monopolies (Stockholm, Systembolaget). ROOM, R. (1985) Alkoholmonopol som ide och realitet—nagra historiska perspektiv (Alcohol monopoly as an idea and in reality—some historical petspeciivcs), Alkokolpolitik, 2(1), pp. 1-6. MAKELA, K . (1987) State alcohol monopolies in Finland, Norway and Sweden, in: The Role of Monopolies, Report from a conference at Skarpo, Sweden, January 1987, (Stockholm, Systembolaget). OSTEBBERG, E, (1990) Would a more liberal control policy increase alcohol consumption. Contemporary Drug Problems, 17(4), pp, 545-573. TiGERSTEDT, C. (Ed.) (1990a) EG, alkohol och Norden (EC, alcohol and the Nordic countries), NADpublikation nr. 19 (Helsingfors). TiGERSTEDT, C. (1990b) Nya forslag om alkoholskatter av EG-kommissionen—eller: Vilken ar skiilnaden mellan marknadens logik och Mme Shriveners sunda fornuft?" (New proposals about alcohol taxation from the EC-commissioa.)^ Alkoholpolitift, 7(4), p, 232, SOMERVUOR], A, (1989) Pricing and taxation of alcoholic beverages as a means of alcohol policy, in: Proceedings of the 35th International Congress on Alcoholism and Drug Dependence, Vol, IV, National Directorate for the Prevention of Alcohol and Drug Dependence, Oslo, Norway. PEKKALA, J. (1970) Uusi alkoholitainsdadantd (The new legislation on alcohol) (Helsinki, Kansanvalta). EC (1990) Official Journal of the European Communities, No. C 12. OLAFSDOTTIR, H . (1990) First effects of beer legalization on drinking habits. Paper presented at Nordisk samhdllsvetenskapligt alkoholforskarmfite i Island 3-7 September.

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15. ATVR (1990) FRETTATILKYNNING, 13 July. 16. OLAFSDOTTIR, H. (1991) Personal communication. 17. Produktschap voor Gedistilleerde Dranken (1990) World Drink Trends. 1990 Edition.

18. Svemka Dagbladet 14 December 1990. 19. Nordisk komaki No. 18, 1990.

The prices of alcoholic beverages in the Nordic countries.

Apart from Denmark, all the Nordic countries have state-owned monopolies which handle all of the off-premise retail sales of wine and spirits. In some...
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