Archive for November 18th, 2008

The Brewers of Sweden should be very happy.

Their beer exports are up 44 per cent for the first eight months of 2008. But this is an example of needing to look beneath the surface.
In the same press release giving the positive figures, their CEO points out that this is not the result of Swedish beer conquering foreign markets. No, most of the beers end up in the border shops in Germany.

What kind of shops are we talking about ? For decades there have been warehouse-like no frills shops in Northern Germany, usually within spitting distance of the Danish border or a ferry terminal. You can buy a few discount food items here, but the main focus is on cheap booze. Wine and hard liquor, sure, but the main thing has been beer. Hard discount German brands are available, but their most prominent lines have been Danish beers. Domestic policies in Denmark used to ban canned beer, though there was en exception when it came to beers for export.
In Denmark you consume beer in large quantities, so within a few years, a significant part of the beer was sent to Germany just to be picked up by Danish shoppers on day trips. Large parts of Denmark are within a few hours drive from the border, the quotas age generous, and while the savings were not enormous, the satisfaction of saving a few kroner in taxes seemed to eclipse the price of petrol or ferry tickets.
It has taken some time, but now the market has reacted to the price gap between Germany and Sweden. The consumers are not content with the Danish prices, they drive a few hours extra to get their booze even cheaper. The Swedish Brewers are no longer content with watching their market disappear, and they have done a sensible move to get back some of their share.
There are reasons for Sweden (and Norway) having strict alcohol laws and high taxes, and the temperance movement still has a grip on both political parties and the government apparatus.
At the same time, it is time to face that we live in an age where people move around in large numbers. Thousands of people commute across the borders in Scandinavia. The Øresund bridge between Malmö and Copenhagen means that the two cities have, for may purposes, merged. It is blue eyed to believe that you can continue your domestic policies as if nothing has happened. It is even more blue eyed to think you can increase the difference – the Swedish beer taxes will be increasing next year. A 50 cl can costs less then 4 Swedish kroner in Germany, more than 10 in Sweden. No wonder they buy in bulk quantities and that the black market is growing.

The politicians can dream about the good old days when domestic policies were decided at home. Well, it is time to wake up. And one thing is for sure – there are no politicians who dare to propose a tenfold increase in customs and police staff at the borders. We need to have open borders for people to go on with their legitimate daily lives. That means, in the long run, we have to adjust. Or, obviously, we can breed a mafia specializing in smuggling consumer goods which are legal in other contexts. You can be sure that they will use the network for more dubious goods as well.

I don’t usually spend much time whining about the prices of the cheapest canned lager. But this has implications for the high end of the beer market, too.  And at a time when all politicians left, right and center are competing to be the greenest, having policies where breweries truck their beers over several borders just for the consumers to drive the same way to bring them back again makes very little sense. But maybe it’s just me not getting the point.

Read Full Post »