Producers boil over at alcohol policy «favouring Finland»

Liviko Viru Valge tootmisliin

PHOTO: Arno Saar/Õhtuleht

The government's ever toughening alcohol policy not limited to excise rises but curbing ads and rearranging shelves at stores seems random and based on outdated research and unrelated data, possibly undermining Estonian exports.

Though, for a long time, our major distilleries have been enjoying decent turnovers and yearly profit rise, the turmoil around stricter tipple policy is not about to die down.  

«The anti-alcohol war in Estonia is a business in its own rights, and is happening in the interests of Finland,» Postimees was told by Janek Kalvi, chief of Estonia’s leading vodka maker Liviko. «Every time some Estonian prime minister visits Finland, what follows is toughening of alcohol policy – beginning from Juhan Parts up to Taavi Rõivas.»

The forceful anti-alcohol campaign launched by social minister Jevgeni Ossinovski (Soc Dems) is based on a poll by which lion’s share of population is for the restrictions. 51 percent desire strict, 33 stricter restrictions; at that, the ranks of those for strict restrictions grow yearly.

The numbers show that, as opposed to popular opinion, the success of beer brewers and vodka distillers comes not on account of Estonians’ health alone, but by the very active export.

Quite recently, the Finnish state-owned alcohol group Altia reports featured complaints that a third of vodka and fifth of wine consumed by Finns is actually hauled in by tourists from Estonia. Last year, Altia sounded happier: amount of alcohol from Estonia was no longer increasing as Finnish authorities forced the tourists to carry it from ship by hand. As Estonia raised excise by 5 percent at the beginning of 2014, the situation changed little. But by the 15 percent excise rise at the beginning of 2015 it changed a lot and, according to Altia reports, was reflected positively in its sales as early as last December.

Institute of Economic Research data says Finnish tourists carry away over half of vodka and low-alcoholic beverages sold in Estonian stores.

As assured by Prime Minister Taavi Rõivas, he meets the Finnish colleague at least once a month but is in no way swayed by the neighbours.  

«As former social minister, I know that the data says the price is the most effective means of fighting alcohol abuse which the state can regulate through excise policy,» said Mr Rõivas. «My governments have raised excise and we plan to keep doing it in years ahead.»

With all other restrictions imposed, the Prime Minister said there’s the danger to overdo it, wherefore Estonia ought to opt for agreements between enterprises whereby market players volunteer to limit themselves.

«As an example of that, even today there is this agreement between major beer producers not to make it over seven percent strong and I believe we have room for more of such self-regulation,» said Mr Rõivas. «Naturally, the state does have an important role in alcohol policy to show the way; first and foremost, we should focus on reducing abuse and consumption by minors.»

But the producers say the excise rise planned till 2020 will take Estonian prices so close to those in Finland that tourists will lose interest to carry alcohol across the bay by hand.

«If by 2017 the state fails to apply economic analysis to its alcohol policy, the production will move elsewhere and Estonia will lose out,» said A. Le Coq brewery chief Tarmo Noop, in Tartu. He went on to say there has been no discussion nor serous research-based arguments around the stricter alcohol policy. «For example, building the separating walls in stores will cost much money, while it has no effect on consumption whatsoever,» noted Mr Noop.

While Economic Research Institute alcohol market overview treats production and sales thoroughly enough, the damage by alcohol is – surprisingly – studied superficially.

In the green book on alcohol policy promoted by social ministry, they cite figures published abroad at the start of the century. Estonia is treated on basis of a Master’s thesis built on 2006 data, the outdating of which was admitted to Postimees by the very author Marge Reinap. «The methodology of the research is usable, but the data needs an update,» said Ms Reinap.

Meanwhile, social ministry chief specialist Triinu Täht says the scientific research from nine years ago is thorough enough, as well as the thesis defended on the data as recognised by President by Young Scientist Award. «Such studies are not done yearly or every two years, the way we measure consumption,» underlined Ms Täht.

She said the most deep-delving damage study in Europe was «Alcohol in Europe» published in 2006, showing that the benefits from alcohol are almost ten times smaller than the damage.

By the time the article was published, Postimees was unable to find explicit figures, neither on the Internet, not by help from social ministry’s officials.

The green book prices a human life lost at €1.43m and arrives at the conclusion that in 2011 Estonia lost over €2bn due to alcohol deaths. Compared to that, the over €30m paid from Health Insurance Fund to treat alcohol related diseases is a small amount. Meanwhile, Finland where people drink more and outnumber us by five times lost €1.5bn by alcohol-related deaths according to a Terveyslaitos study published by BNS two years ago.

«In 2011, Estonian population lost a bit above 50,000 people due to sicknesses and early deaths from alcohol, and considering that 2011 GDP per capita was €12,556.2 in current prices, we lost at least €627.8m,» explained social ministry in its reply to Postimees.

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20 years of political vodka rally

In the spring of 1996, Estonian delegation met European Commission in Brussels to contest a plan by Finland to limit bringing home alcohol from short-term trips to Estonia, BNS wrote back then. As pressurised by EU, Finland had often backed down to some measure from setting stricter alcohol import rules as these contradicted free trade treaties between Estonia and EU.

Last year, leftwing Finnish parliamentarian Eila Tiainen vociferously opposed purchases of booze from Estonia. «I think it is patriotic for people to buy their vodka in Finland and pay the taxes here,» she said to Kansanuutiset.

The politician was also irritated by the Finns-owned Prisma handing out bonus points to Finnish clients buying alcohol in Estonia, which are also valid in their stores in Finland.

At the last parliamentary elections, Ms Tiainen was no longer a success.

This September, at Helsinki Court, a dispute was launched as initiated by Finnish alcohol monopoly Also whereby the state-owned chain demands €100,000 in compensations from the Super Alko store operating near Tallinn’s Old City Harbour – for unlicensed use of their trademark. Super Alko owner Aldar Eesti registered the trademark in 2002 and has never used it in Finland. For the Finnish company, however, their claims are founded enough by the fact that the Estonian company’s website is also translated into Finnish.

Pursuing a tough alcohol policy, the Finnish state in 1999 split vodka monopoly Alko in two: social ministry acquired the vodka stores chain operating under Alko, and the trade ministry got Altia’s distilleries.

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