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Pellervo: class 3 beer restrictions would increase booze cruises

According to a report by the Pellervo Economic Research PTT think tank, transferring sales of class 3 beer to state Alko stores would increase passenger imports of alcoholic beverages by one-third. Other effects would be a reduction in state tax revenues and a greater concentration of retail outlets.

Finnish alcohol taxes are based on the classification of drink by alcohol content. Grocery stores are currently allowed to sell beverages from class 3 and below, that is below 4.7 percent in alcohol content.

The PTT report paints a poor picture of the effects on switching class 3 beverages to Alko stores. The proposed move would leave grocery stores only able to stock class 2 drinks, which are 3.7 percent alcohol or less.

If taxation and wholesale prices remain at current levels, the proposed move would see a 40 percent hike in class 3 drinks and a one-third increase in 'booze cruise' purchases, which Finns usually make, or on the ferry from, Estonia.

In order to counter the incentives to booze cruisers, the report says taxation on beer and/or Alko prices would need to drop. In both scenarios, state alcohol revenue would drop and hundreds of small shops could go out of business sales as sales of brewery products dropped by half.

Consumers pushed to stronger drinks

Sending customers over to Alko stores to purchase their favourite beer would also increase the consumption of stronger wines and spirits sold by the state monopoly retailer.

The PTT report says retail sales of class 3 beer would be reduced from 40 to 30 percent. Class 2 beer would reach 15 percent market share, according to the institute's calculations.

A reduction in the strength of alcohol allowed in grocery stores was mooted last year by the National Institute for Health and Welfare (THL). It has been firmly opposed by both the Association of Finnish Retailers and the Federation of the Brewing and Soft Drinks Industry.

The federation’s CEO Elina Ussa told YLE that not only would jobs be lost, but the government would also lose vital tax revenues.

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