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25.2.2005

Finnish bars and restaurants hurt by alcohol tax, errr, themselves

Tags: Uncategorized — Author: @ 11:44 am

Last March alcohol taxes were slashed significantly in Finland. 12-packs of beer went from about 12.99€-13.99€ to 6.90€-7.90€ – The prices of spirts dropped by about 1/3rd – one-half in price. All of Finland rejoiced, except for a few stubborn left-wing types and according to this article, bars & restaurants…

Last year sales at licensed restaurants in Finland declined for the first time since the recession of the 1990s, and a poll of bar owners suggests that there is widespread pessimism about the future.

Competition in the field is intense, and sales in the restaurant business have not kept pace with the number of new watering holes opening up. Restaurant sales have not recovered after the recession as well as other sectors of the economy, and increasing numbers of venues are competing for customers.

…although alchol prices in stores dropped, the prices at Finnish bars & restaurants did not. The management of these places did not allow their customers to benefit from the tax breaks, they elected to keep the profits for themselves – and now they done screwed themselves since many Finns would much rather save money and enjoy their Lapin Kulta from home. Hmmmm….goto a skanky, over-priced, smoke-filled bar and drink warm beer -OR- stay in the comfort of my own home and drink cheap beer…..Yeah, I just can’t understand why Finns aren’t going out as much anymore.

The main impact of last year’s tax cut has been an increase in retail sales and drinking at home.

I’m soooo looking forward to the first Socialist Democrat member who says, “We need to rollback these tax-breaks because people are drinking way too much……and not drinking enough in bars and restaraunts!!” :lol:

  • mk

    What do you mean “waiting for”? There have been many whiny comments to that effect already in the parliament.

  • Lauri

    Yep, the question of raising the taxes again will be on the table in the summer.

  • Toby

    Where do you shop for beer if its only 6.99 for twelve? I’ve seen Olvi on sale for around that price but none of the others I don’t think…

  • Phil

    Prisma always has some 12-pack for about 6.80e

  • Lauri

    Just to remind everybody, the cheap 12-packs are reality not because of the tax cut (which wasnt SO significant), but because stores realised that beer is also a good “sis?¤?¤nheittotuote” [(whats the englig word?) = a product that brings _a lot of_ customers when the price is cheap). Traditionally milk has been sold with no profit because people always compare prices of milk.

    Evertyhing changed after Lidl started to sell cheap beer.

  • Phil

    Stores could have just as easily made beer a “sisaanheittotuote” (I don’t know the word either, but I know what you mean) product before the tax cut – but they didn’t. But because of the tax cuts, the prices dropped significanlty.

    Never under estimate the power of tax cuts. :-)

  • Lauri

    The timing of the tax cuts and the price cuts was about the same, but nowadays stores sell beer with zero or negative margins, which was _never_ the case before. You can easily calculate that the prices should not have gone down by 50 per cent, if it was only because of the tax cut.

  • http://fi-lib.blogspot.com Toni

    You gotta remember, high-profit businesses in open markets lure competitors. If you want to enjoy your beer cheap, in a smoke-filled bar, there’s plenty of those places as well :) You just gotta find ‘em.

    Just in my local pub they had a discount last fall, half liters of beer was only 2 e.

  • http://joker.iki.fi Juha

    Yeah. If one only frequents to bars which are in the core Helsinki downtown area (Mannerheimintie, Esplanadi and cross streets), you are paying more than elsewhere. In addition, more than often, you are putting money just to one man’s pockets; Sedu Koskinen soon owns all those places. Not to bash him though; Selling a cheap product with high price isn’t (at least in this case) wrong. It’s the buyer who can choose not to buy.

    The weirdest thing about this tax cut thing is that wines are not getting cheaper. Only beer and strong spirits. This is kinda wrong, I think. (assuming, of course, that you believe that wine is more “healthy” than beer or vodka).

  • Lauri

    Sedus semimonopoly is problem if you like to spend your evenings in downtown (dancing) restaurants. Hopefully the same thing doesnt happen to bars and pubs..

    Juha, the tax cut was not weird at all. The taxes for wines didnt need to be cut because the differences in price levels compared to other countries (Estonia) werent as high as they were with beers and strong spirits.

    Still if you want to maximize the alcohol/eur ratio, you should buy strong wines from Alko.

  • Phil

    Only have I ever heard Finns (not just you Lauri) and poor-ass college students ever talk about “alcohol/euro ratio” :lol: – in the states, the alcohol content on beer for instance is virtually unknown because Americans buy beer for taste (yes, some morons prefer Budweiser) rather than alcohol. But since all Finnish beers taste basically the same, alcohol content is the deciding factor.

  • Lauri

    * alcohol/euro ratio is important to many full-time drunks in Finland, no doubt about it. so its good that drinking wine is the cheapest way to get drunk, if wine really is healthier than other alcohol drinks (i am not sure about this at all)

    * taste in american beers? never heard about something like that. or did you mean that americans buy more expensive foreign beers because of the taste? i thought finnish beers (koff f.ex.) have won numerous inernational (lager) beer awards.

  • Phil

    Lauri, I guess you haven’t tried any other American beers other than Budweiser? :-) Actually American beers are quite good, it’s just the mainstream brands that are crap. Goto Alko and pick up Samuel Adams Boston Ale for a good example of a great American beer.

    Koff winning an award? Don’t believe everything you read on the side of a Koff beer label. :-D (Koff is IMO, the worst Finnish mainstream lager)

  • Antti (the red neck one)

    I think Koff went bad after they moved the production from Hietalahti to Kerava. It used to be better.

  • http://finnpundit.blogspot.com Finnpundit

    I’d always go for a Sierra Nevada in the States.

    By the way, a “sis?¤?¤nheittotuote” would be a “loss leader”.

  • Phil

    One of my favorite brews from back home – Sierra Nevada Pale Ale. Can you believe that you can actually get this stuff in Helsinki? Kaisla – 6 euros a bottle!! …I could get a 6-pack for that price back home.

  • Lauri

    Phil, check out
    http://www.brewingawards.org/

    2004:

    Class 2 : 4.5-5.5% ABV
    GOLD Oy Sinebrychoff Ab Pori, Finland Karhu III
    SILVER Interbrew North America Creston, BC, Canada Kokanee
    BRONZE Oy Sinebrychoff Ab Kerava, Finland Koff IV

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