The Finnish Institute for Health and Welfare (THL) has published new research that shows the Finnish alcohol retail monopoly Alko needs to be protected.
Selling alcohol through the government-run retail monopoly removes he profit maximization drive from alcohol retail and puts public health first. This is the best way to limit the harm caused by the products and practices of the alcohol industry.
THL concludes that the monopoly system effectively limits the supply of alcohol, i.e. the number of points of sale, ensures age limit compliance and curbs price competition, marketing, and other sales promotion activities, thereby reducing alcohol consumption and damage.
Research by Professor Tim Stockwell and his team found that if the alcohol retail monopoly in Finland was abolished, alcohol consumption would rise by 9% and alcohol mortality would rise by 14% in the country.
Already the weakening of alcohol laws through the 2018 Alcohol Act has increased alcohol use in Finland. The Act allowed alcohol products with alcohol content below 5.5% to be sold in grocery stores outside of Alko.
THL conducted a time series analysis from 2000 to 2021 to find out how this deregulation affected alcohol consumption in Finland. The time series analysis controlled for other impacts on alcohol consumption such as changes caused by the alcohol tax, travel imports of alcohol, the economy, the hot summer, and storage of alcohol before the tax change.
The study found that, alcohol consumption increased by 3% because of the deregulation in the 2018 Alcohol Act.
Data shows that allowing wine to be sold in grocery stores would also dismantle the alcohol retail monopoly. Allowing wine to be sold outside of Alko means allowing any alcohol products with similar alcohol content (ABV 15%) to be sold outside Alko. This would bring a significant portion of Alko’s sales to grocery stores. In turn, Alko could not maintain the geographically extensive network of specialty stores offering a wide range. At the same time, the monopoly system would lose its importance for the prevention and reduction of alcohol harm.
The worsening of alcohol policy through the 2018 Alcohol Act opened 3% of Alko’s sales to competition. In 2020, 45% of Alko’s sales were wine and 30% were strong alcohol products, such as liquor.
If wine and other alcohol products with less than 15% alcohol content were allowed in grocery stores, up to 75% of Alko’s sales would be opened up to competition and selling alcohol with profit maximization motives.
Such a change would completely dismantle the alcohol retail monopoly.
Such a change would be on a completely different scale than the change in the Alcohol Act 2018. ‘Wines in the grocery stores’ would eventually lead to the closure of Alko as we know it today,” said Pia Mäkelä, research professor at THL, as per their website.Pia Mäkelä, research professor at THL
If the current retailers who have the right to sell alcohol products below 5.5% alcohol content were to gain rights to sell alcohol products with higher ABV, the number of outlets allowed to sell alcohol would increase 12-fold.
The increased supply of alcohol increases the total consumption which leads to more alcohol-related injuries, diseases and more people with alcohol use problems among the entire population. This is why preserving Alko’s monopoly system is important. It promotes socially and economically sustainable development.
Alcohol is not a common consumer product, but it causes extensive damage,” said Pia Mäkelä, research professor at THL, as per their website.
For example, in 2020, 2,209 deaths caused by alcohol were registered in Finland and there are many other injuries. Therefore, Alko is not a common store chain but an effective tool for reducing alcohol harm.”Pia Mäkelä, research professor at THL
The Finnish people support the current alcohol policies, including the alcohol retail monopoly.
A poll by THL found that 53% of Finns are in support of existing alcohol policies and 8% would like to see improvements to the alcohol policies.