Finland Finnish Grocery Stores Allowed to Sell Strong Beer
The Finnish parliament has decided that beverages with an alcohol content of up to 5.5% can be sold through retail stores, starting next year. The state-owned monopolist Alko maintains its rights to sell anything stronger than this, with a few exceptions. The previous limit was 4.7% – which means that strong beers and ciders can now be sold in grocery stores, kiosks and forecourt stores.
The new Alcohol Law will be passed in its entirety this week and the governing parties have already committed to vote in favour of its current form, including the new 5.5% limit approved last week. In addition, there is an amendment to remove the requirement for retail stores to only sell alcoholic drinks produced by fermentation. This opens up the possibility for these outlets to sell long drinks and alcoholic sodas which have been produced by adding distilled alcohol. Further important changes are that micro-breweries and bars will be allowed to commence retail sales of alcohol. The latter will also receive more flexible sales permits and opening hours. The state-owned monopolist Alko estimates that its sales of beer, cider and long drinks will consequently decrease by about 70-90 percent.
Daniel Johansson (Retail Analyst)
Opinion Minimarkets and A-Brands Celebrate
The amendment will clearly benefit all grocery formats in Finland as they will be able to cater to an entirely new demand, previously fulfilled only by Alko. We believe that the biggest winner will be minimarkets, as they typically have a much higher share of alcohol sales than bigger formats. Also, Alko stores are usually located close to larger stores, retail parks and shopping centres which means that stores in those locations have previously indirectly benefited from Alko’s sales in the category. This is a welcome break for minimarkets which have suffered following the opening hour liberalisations introduced last year. Lidl could also stand to profit since it doesn’t enjoy the same proximity to Alko stores as the grocery giants S Group and Kesko do.
LZ Retailytics forecasts Alko's sales will drop significantly in 2018, due to the increased competition from grocery stores.
Of course, with the new law also comes new competition for the grocers in the form of micro-breweries and bars. It is also likely that the stronger beverages will somewhat cannibalise those with a lower alcohol content. Even so, these factors are likely to be marginal and will not significantly impact the expected positive sales effect for the grocers.
Another group likely to profit from the changes are well-known beer and cider brands. Alko’s aim is to provide a wide assortment within each category, including local or niche suppliers. With a narrower assortment, it is likely that minimarkets and even supermarkets will mostly opt for the most popular brands. Also, given Alko’s mission to limit the negative impacts of alcohol and thus sales volumes, a natural effect would be an increase in sales in the category overall.
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