The major cut in the tax on alcoholic beverages which was enacted at the beginning of March has led to a sharp increase in sales at the outlets of the retail sales monopoly Alko. After nearly two weeks, Alko sales had surged by 72.8% nationwide.

   

Last year the government agreed to an unprecedented 33% cut in Finland's traditionally high tax on alcoholic beverages. The tax cut, which took effect at the beginning of this month, was enacted to forestall a feared surge of personal imports of cheap liquor from Estonia when that country joins the European Union at the beginning of May.

   

"There was some dammed-up demand there, as sales for the previous week were very low", says Maija Salo, head of pricing at Alko.

   

The only thing that was more popular than the cheaper beverages was Alko's new price list; copies of the free brochure ran out in all stores. As if to underscore the discount, the price lists give both the new lower price, as well as the old price for each product.

In the early part of this year, sales of alcoholic beverages grew 6.1% over the same period last year. The increase was 8.1% for strong spirits, and 8.7% for table wines. Sales of beer were lower than normal in anticipation of the upcoming price cut.

   

There were considerable differences in different parts of the country. At one sales outlet in the centre of Helsinki, growth in sales fell below expectations, but in one Tampere store, sales were described as quite brisk.

   

In the Seinäjoki Alko the atmosphere was described as similar to that on the boats to Sweden and Tallinn, and in Tornio, on the Swedish border, sales actually tripled.

Customers from as far as Central Sweden flocked to Tornio to stock up on fairly large quantities of booze. "Swedish krona now account for 60% of our turnover, whereas normally it is just five percent", says Juha Ohtonen, manager of the Tornio Alko.

   

The Tornio Alko was almost sold out on the first Friday of March. The small sales outlets in Southern Ostrobothnia also had to struggle to keep enough bottles in stock on the first Saturday of the lower prices.

   

When some brands did run out in Tornio, many Swedish customers drove on to Keminmaa 20 kilometres away.

Alcohol sales were still twice the normal level in Tornio this week. The Seinäjoki Alko was also busy, but things have grown more quiet in other parts of Finland.

   

Mika-Pekka Miettinen, head of communications in Alko, says that sales had grown in all parts of Finland, and that the increase had been the most moderate in the Helsinki region.

Heikki Lankinen, head of research at the Finnish Hotel and Restaurant Association, is pessimistic. He says that the 33% tax cut is insufficient, and predicts that imports from Estonia will soon get out of control.

   

He predicts that personal imports will grow to five times the amount forcast. The end of import quotas from EU countries at the beginning of the year, combined with the lifting of the 20-hour minimum time limit for personal exports, will add fuel to the fire.

   

Lankinen says that the lifting of the import quotas means that personal imports will increasingly focus on strong spirits. Before this year the quota for distilled spirits was one litre, while the limit for beer was two cases of 24 bottles or cans.

   

Now that the only limiting factor is physical luggage capacity, many passengers will make maximum use of available space, minimising the amount of water they carry. Extra strong Estonian vodka with an alcohol content of 80% is already a favourite souvenir for Finnish travellers to Tallinn.

Official estimates point to 2.5 million litres in personal imports this year. Lankinen predicts that the real figure will be ten million litres higher.

   

"This would reduce sales in Finland by 15% a year", says Lankinen, who is concerned about the impact on employment in Finland.

   

Esa Österberg, special researcher at the Research and Development Centre for Welfare and Health (STAKES), is not so pessimistic. "Imports could double, but they are unlikely to increase fivefold", he says.

   

Österberg bases his calculations on price differences, amounts of passengers, and an estimate on new methods of travel. One moderating factor is the weight limits that shipping companies are planning on luggage for passengers sailing between Finland and Estonia.