A step into Latvia

A survey ordered by Postimees and carried out by pollster Kantar Emor suggests nearly 30 percent of Estonians between the ages of 17 and 74 have been to Latvia to purchase alcohol or have had their acquaintances bring them some this year.

5.4 percent of people questioned buy alcohol from Latvia, where excise duties are lower, at least once a month. People living in Southern Estonia are predictably the most active in crossing the border to Latvia as 55.2 percent said they have consumed alcohol bought in Latvia in 2017. A fifth of people in the south go to Latvia for alcohol once a month.

Expert at Kantar Emor, Aivar Voog, said that four people out of five buy alcohol in Estonia. “The relative importance of those who buy alcohol from Latvia has nearly doubled year-over-year, and a little under one-third of the population has done so either directly or indirectly this year. True, the majority are people who have visited Latvia once or twice and brought alcohol with them,” he said.

Not just beer and vodka

Consumers believe that alcohol brought from Latvia makes up 15 percent of total purchases.

“Growth has been considerable inside the past year. Consumer assessments put the relative importance of Latvia in all purchases at 6 percent in August last. Consumer attitudes suggest cross-border trade will not subside any time soon; rather it is the opposite: in addition to purchases, openness to buying from Latvia is also on the rise,” Voog said.

People living closer to Latvia are predictably the most active. “We can talk about the existence of a so-called segment that specializes in buying from Latvia in border regions: more than half of Southern Estonians have travelled to Latvia to buy alcohol, while one-fifth do it every month. Three-quarters of people who consume alcohol are willing to get it in Latvia,” Voog said.

The weight of drinks brought from Latvia comes to 40 percent in border regions that Voog characterized as a significant indicator.

This kind of tourism results in people buying other things beside alcohol. “Even though alcohol is clearly the number one article in Estonia-Latvia cross-border trade, people, especially those living close to the border, also buy other things. For example, 25 percent of southerners have bought gasoline in Latvia, while 14 percent have bought construction materials this year,” the expert said.

Member of the board of Saku Brewery Jaan Härms said that the study confirms their forecasts, according to which recent excise duty hikes will result in massive border trade that will take both tax euros and trade sector jobs from Estonia.

If politicians say that buying from Latvia is the regular hobby of just a few people, the poll suggests something else and illustrates the true extent of border trade,” he said.

Härms said that the brewery’s calculations suggest trade on the southern border robs the state of approximately €53 million in tax revenue (excise duties and VAT) annually. The Estonian Food Industry Association even puts the figure at €150-170 million.

“Perhaps cars heading for Latvia cannot be seen from the ministry building in Tallinn. However, the study shows that nearly a fifth of the residents of Tallinn, or 60,000 people, have travelled to Latvia for alcohol,” he said.

“Sales to shops on the border exceed our own forecasts. We are still living in the hope that the government will draw its conclusions from all this and reverse the excise duty hike on light alcoholic beverages,” Härms said.

Ministry’s goal set

Despite Härms’ hopes, ministries do not seem interested in reversing decisions. The social ministry’s Deputy Chancellor Maris Jesse said that it is important to contain alcohol consumption and damage to health caused by alcohol.

“Whether the alcohol comes from Estonia, Latvia, or Russia makes no difference in terms of the damage it causes. The public health concern is to reduce total consumption.

Jesse said the ministry measures alcohol damages every year, and that the first half-year’s results should arrive in the coming weeks.

Press representative of the finance ministry Ott Heinapuu said that activity on the southern border has not reflected one for one in receipt of alcohol excise duty. “The state collected €121.9 million in alcohol excise duties in the first half-year. The ministry’s spring economic forecast puts anticipated revenue at €252.6 million for the entire year,” he said.

The tax board said results of the survey match their calculations. “It is our task to make sure major quantities of alcohol purchased in Latvia are not used in business for a competitive edge,” said press representative Rainer Laurits.