DIFFICULT BREWERY ENVIRONMENT

The Finnish beverage company Hartwall announced on the 18th of March that it cuts 110 jobs following the conclusion of co-determination talks. Hartwall said that job cuts are necessary because of the worsening brewery environment in Finland. Taxes on alcohol and soft drinks have increased, alcohol imports from Estonia by private individuals have grown and the rules controlling alcohol advertising are stricter. (Yle 2014.)

The announcement of Hartwall was one among many others. Co-determinations are rather the rule than the exception in today´s business. It´s clear that most companies have difficulties in competing in the market today. Especially the brewing industry has lots of difficulties because prices are much lower in Estonia than in Finland.

The Federation of the Brewing and Soft Drinks Industry (Panimoliitto) has published the following picture of alcohol rally which describes the private alcohol import (Picture 1):

Picture 1. Viinaralli 2013. Panimoliitto.

Picture 1. Viinaralli 2013. Panimoliitto.

Pekka Lindroos, director legal affairs at Hartwall says in the Journal of stakeholders of Hartwall that alcohol imports from Estonia have risen enormously. The amount of imported alcohol already exceeds the amount of alcohol sold in the restaurants. Lindroos thinks that the growing private import has increased so quickly that it can be called “the Finnish way”. Between September 2012 and August 2013 the private import increased by 11.5 %. The rise was so high that the government decided to raise the tax only by half of the planned. Still, the rise was significant. (Pynnönen 2014, 20.)

Lindroos mentions that The Federation of the Brewing and Soft Drinks Industry (Panimoliitto) and National Institute for health and welfare (THL) have had different opinions about the amount of the private alcohol import (Pynnönen 2014, 20). THL has collected research on alcohol harm reduction and it has published books based on the research. I read one of them called Alcohol in Finland (Alkoholi Suomessa). It revealed that the best way to influence the level of alcohol consumption and the risk consumption is the tax and price policy and restricting the availability of alcohol. It also mentioned that alcohol harm reduction should be based on high alcohol taxes and prudent tax increases as well as retail monopoly maintenance in the future. Restricting advertising and marketing are also effective ways to reduce the drinking of young people. (Karlsson & Kotovirta & Tigerstedt & Warpenius 2013, 63.)

As we can notice it is not easy to run brewing business in Finland. I don´t see that tax increases and bans on advertising would reduce drinking among Finnish. We should find the right keys how to change our culture closer to the European one. If alcohol prices stay as high as today, it´s definitely sure consumers bring alcohol from Estonia. The government actions don´t help Finnish companies. Indirect costs are huge. Restaurants go bankrupt, breweries have to compete harder and the employment has been threatened. Especially small breweries are in trouble.

A member of government Jaana Pelkonen mentioned in the Journal of stakeholders of Hartwall that one possible solution could be reduction of restaurant prices through tax cuts. The main question is how to turn binge and harmful alcohol culture into moderate consumption. By growing the restaurant consumption in controlled areas could reduce unwanted home consumption. (Pynnönen 2014, 20.)

The book called Pääasiana alkoholi written by Teuvo Peltoniemi tells about the use of alcohol, disadvantages, treatments now and 2040. There are interesting views by influential people in Finland. Pekka Puska, the former director of National Institute for health and welfare, sees that globalization will increasingly affect the development of the Finnish culture. EU and WHO have their own strategy and their actions will have a global effect. Puska says that it´s very difficult to say which direction the consumption of alcohol goes in the long term. He thinks we are in the conflicting demands for commercial pressures and global health concerns. He believes that health facts will effect strongly in the long term because the awareness of the “hard” health facts and highlighting them to people begins to influence on people. (Peltoniemi 2013, 225.)

There was another interesting article in Hartwall´s journal. To give an example, a new way to approach the prevention of alcohol related harm was initiated in Great Britain. A Responsibility Deal program supervised by the Ministry of Health was started. This alcohol network includes members of the state, authorities and commercial operators. Network has a common goal: Responsible behavior including for example consumer information about alcohol amount and also the age limit control for the sale of alcohol. British Beer & Pub Association´s CEO Brigid Simmons says that the most significant achievement has been public promises which has made by 90 members of the network. They think that their responsible operating is everyone’s benefit. (Eskola 2014, 24.)

Could we learn something from the British? Should we turn a new page in Finland and work together? Please watch the video below “Viron viinaralli 30 laatikkoa alkoholia” from MTV3 news published on 1 October, 2013 in YouTube.

Finnish breweries work actively with the local community and want to develop a responsible and positive drinking culture. Let´s hope the brewing industry has a future in Finland and a common goal with Finnish decision makers will be found. Taxes can´t be so high because it drives people to Estonia. It´s everyone´s benefit that money stays in Finland. Companies have problems and the tax money which could be used for example for education goes to our neighbor. And what comes for advertising? I think that well planned advertising would influence in a positive way among people. The Federation of the Brewing and Soft Drinks (Panimoliitto) sums the facts up well in the next YouTube video published on September 5, 2013.

Sources:

Eskola, Meri 2014. Yhteistyöllä maaliin. Point 2014 (1), 23-24.

Karlsson, Thomas & Kotovirta, Elina & Tigerstedt, Christoffer & Warpenius, Katariina 2013. Alkoholi Suomessa. Kulutus, haitat ja politiikkatoimet. Terveyden ja hyvinvoinnin laitos, Helsinki.

Peltoniemi, Teuvo 2013. Pääasiana alkoholi. Käyttö, haitat, hoito, politiikka nyt ja 2040. Oy H. Lundbeck Ab, Turku.

Pynnönen, Linda 2014. Viinarallin viemää. Point 2014 (1), 19-22.

Yle. Http://yle.fi/uutiset/hartwall_turns_off_110_jobs_sanoma_in_job_cut_talks/7141973. Read 16.4.2014.

 

 

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3 Responses to DIFFICULT BREWERY ENVIRONMENT

  1. harza123 says:

    Nice article.

    I think it is said that Estonia is Europe’s most entrepreneurial country and it is doing quite well economically also and has even lower unemployment rate now than in Finland. So Estonians seems to doing smarter things that to drink too much cheap alcohol and beer. And I think you can still buy strong alcohol from grocery store in Tallinn?

    I think it is absolute stupidity to put Finns on boats to go to Tallinn to buy lots of cheap beer and other alcohol drinks. I think it is waste of productive time, instead to spend one hour to go to Alko or some grocery store to buy beer you have to spend whole day to go to Tallinn to buy beer.

    Big mistake our current tax policy and “belief” that people drink less beer and other alcohol when we made it expensive by tax policies. And it is not a good thing either when good jobs are lost in restaurants, brewery and beverage business etc., maybe there are risk and consequence that we have more unemployed people who start to consume too much alcohol when they do not have job anymore and then go to Tallinn to shop alcohol. So we got just the opposite what is aimed by alcohol tax policy.

    In market economy our politicians and other decision makers cannot ignore the fact that people usually shop things where they are cheaper. World would be better place without alcohol. but because it cannot removed from the world, responsible drinking is a very good idea.

    I think responsible alcohol drinking works best in country, where economy is healthy, unemployment rate is low, as many people as possible has meaningful and well paid job and we have good education system and schools.

  2. 1tiina says:

    This is sad but true. It is unbelievable how strong affect this taxation has, when we are thinking about economy in Finland. High taxation won´t eliminate alcoholism in Finland, as beautiful thought it would be. Let´s hope that Finnish decision makers would understand and admit that.

  3. tarjal says:

    It is true that too many Finns want to use the chance to bring cheaper drinks from i. e. Estonia. Especially now when it has been enlargened also to the soft drinks. No wonder the State wants to get rid of Altia, and let’s hope that not all the breweries begin to be historical monuments without action in them. One way might be to cheapen the prices of the drinks in the restaurants, but let’s face it, many Finns enjoy to have their drinks in peace in the countryside atmosphere and don’t necessarily go to the restaurants. Hence, bringing the drinks from elsewhere.

    Article was nicely written and held many good points that all of us should consider next time we want to buy goods from outside Finland. Unfortunately, taxes are needed to have our level of living, and it is understandable that the government wants to tax alcohol and sugar (since they are considered unhealthy). But maybe they need to be aimed better.

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