Head of the Alko1000 chain Einar Visnapuu, who has spent nearly two years selling cheap alcohol on the border between Latvia and Estonia, said the company never expected the business to grow so big. That said, it might not last forever.
The Alko1000 store in the old Valka border station building is buzzing on a Tuesday afternoon. Every minute a person pushing a heavily laden trolley exits the building. This has been going on for two consecutive summers.
How did you start selling alcohol in Latvia?
We were driving along the border two years ago and saw old Valga-Valka border stations just standing there. They were just waiting to be utilized. Alcohol sold well right from the beginning. The media did a lot of the work for us. This brought immense crowds.
I suppose you are very glad you decided to go into the booze business back then.
Thrilled. We’ve had plenty of luck. Half of us initially thought nothing would come of it. The rest were more hopeful. However, no one expected to see the volumes we have today.
The past two years have been hectic. I live in Võru, and I come to work in Valka every day. I visit our other stores once a week (in Ikla, Ape, and near the Lithuanian border). I drive 7,000 kilometers every month. My days are 12-13 hours. I’m not one to sit behind a desk; rather I move around and organize things on location.
Have you made a lot of money in that time?
I’m not the owner, I’m the manager. But business has been okay. Turnover is considerable, while margins are rather modest. It is important to keep prices down.
Why is alcohol so expensive in Estonia?
One reason is excise duty hikes; the other is that traders are simply too greedy. They want a lot and fast, and if they can’t get it, they blame everyone else. They have fancy stores that need to be maintained.
It is amusing to hear Coop complain how we’ve taken their clients in Southern Estonia. Do they have dedicated alcohol shops? They don’t. Their problem is their markup, which is just too big.
Is the lament of the breweries justified? They are saying half of alcohol sales will move to Latvia, and that people have brought 7 million liters of beer from there this year alone.
All this talk, as well as the statistics they provide is false. Utterly exaggerated. It would be impossible for half of beer sales to move to Latvia. We would have queues stretching into days. We couldn’t handle such volumes.
Breweries lose nothing to cross-border trade. Rather they stand to gain when their Latvian subsidiaries or fellow group members sell directly to us.
Do you have any criticism for the Estonian government? Or should you thank them for providing you with this opportunity to make money?
This might sound funny, but I think the state is on the right path. It’s just that some interest groups are complaining. I’ve seen plenty of cases where people have decided not to drink because alcohol is so expensive in Estonia.
Enter Alko1000 to lend a helping hand offering cheap booze?
A lot of it goes to Finland. Not as much of it stays in Estonia as is being suggested. And what harm is there in us selling it cheaper? If people like to drink, they will anyway.
Before people went to Russia for alcohol, now they go to Latvia. People will go where it’s cheaper and better. I liked it very much when a politician once asked whether it is prohibited to live cheap in Estonia. It isn’t! Estonia has been facilitating the Finns’ alcohol tourism for close to 20 years. I cannot hear complaints over how immoral that is.
How are sales this summer?
Brisk. As they were the summer before that. The excise duty hike has not manifested in an obvious increase in the number of clients. Estonian shops still have some cheap beer left. That said, we have plenty of clients.
Are you planning to open new shops in the near future?
We are not planning new stores in Latvia as we already have four. We will be expanding our existing stores. We will build a warehouse next to the Valka shop. We will also construct an additional 750 square meters of sales area. We will be selling food products there.
The future looks bright for border trade?
I wouldn’t give it very long. It will end one day. No good thing can last forever. Once excise duties level out, we’ll have to come back home.
Sometimes I think how funny this is, wonder what the hell is going on.
What do you mean?
Just how absurd it is. When you’re queuing in your local supermarket, everyone is nervous, the cashier takes abuse over the slow service. In our shops you can spend 30 minutes waiting for your turn and walk away with a new friend. I have never come across clamor or unsavory remarks.
People lighten up when they see the prices. Then they discuss Minister of Health Care and Labor Jevgeni Ossinovski.
There was talk of an alcohol bus from Tallinn to Valka for a time? How far are you in those terms?
We gave up on that plan. We simply couldn’t service a busload of people. We have masses of clients as it is.
You probably recognize Valga residents who shop here by now?
Yes, I really do recognize the locals by now. I’ve been greeted when walking in Tartu. I like the people who come here. They are friendly and talkative. And they do not really have an opinion on border trade. Opinions come from those whose businesses are hit and whose job it is to lobby.