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Retail Profiles |
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| February 7th 2007 |
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| System Systembolaget |
by Andreas Larsson
Systembolaget was founded in 1850 as a not-for-profit body, whose aim was to reduce the problems associated with alcohol consumption. For years, the state-owned Vin & Sprit was Sweden’s only alcohol importer, and thus the only distributor to the...
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...monopoly. When the monopoly on imports ceased in 1995, there were 169 licensed importers, a number that today has grown to around 450. Unlike some monopolies, the Swedish model allows the on-trade to buy freely from any licensed importer, which allows upscale restaurants to assemble lists of fine wines that are unavailable in shops.
People wanting to drink at home, however, have to use the 400 or so increasingly self-service Systembolaget shops. Despite the latter’s claim to offer “the greatest assortment in the world”, there is a big difference between the quality of the wine on offer from the importers and the monopoly. Most shops have around 430 wines, but three – in Stockholm, Malmö, and Gothenburg – offer ranges of 2,900 wines. However, throughout the chain, wines are often out of stock. When it comes to fine wine, I believe the Norwegian monopoly has a much better assortment and a higher degree of service.
In 2002, scandal surrounded the monopoly when five store managers were found to have received “bonuses” from importers for pushing particular wines. An investigation followed in which 50 people were convicted of corruption and bribery. Apart from suspending its own staff, the Systembolaget took sanctions against the importers and terminated agreements. The scandal hurt the monopoly and led to increased calls for its abolition, but its supporters point out that it is legal under European law and has 73% support among Swedish alcohol buyers.
Systembolaget works for a “healthy drinking culture in which everyone can enjoy the beverages they sell without doing harm to themselves or others”. It ostensibly does not attempt to maximise profit, and is brand-neutral – it cannot discriminate between suppliers or products. Much effort goes into spreading knowledge on subjects such as food-and-wine matching and alcohol and health, as well as into opting for quality rather than quantity. This last aspect is, however, contra-dicted by the fact that 54% of wine sales are bag-in-box and 9% are in Tetra Pak.
In Sweden, companies combine the roles of importer and distributor, and range from one-man-band hobbyists and specialists to the huge Vin & Sprit. The larger distributors include international groups like Pernod Ricard and Rémy Martin, and Nordic groups like Bibendum and Philipson & Söderberg, which belongs to the Finish Altia group, as well as local firms such as Fondberg and Oenoforos. All have products listed with the monopoly and good distribution to the on-trade.
According to the Systembolaget, the purchasing process begins with an “annual launch strategy” based on “a comprehensive analysis of sales and market trends in Sweden, and of trends and developments internationally”. Tenders – of which, in 2005, Systembolaget received 17,773 and sampled 11,859 – are then invited from licensed importers. These might be for a “red |
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Retail Profiles |
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Page 2 of 2 |
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2005 Côtes-du-Rhône with good primary fruit but without oak influence in a 75cl bottle to retail for SEK69”, or a “modern white grape blend from Argentina in a 75cl bottle to retail for maximum SEK89”. Samples are blind-tasted by an experienced panel, who rate the wine partly on a value-for-money basis. Though smaller quantities of fine wine may skip this process, wines that have been selected are then submitted for a laboratory analysis.
As of January 2006 the duty for wine between 8.5–15% alcohol is SEK22.08 per litre, to which VAT of 25% will be added. Importers’ normal margins vary between 15–50 %, depending on the price range and availability, but can be as little as SEK1 per bottle in the case of wines sold in big quantities to the monopoly. The monopoly adds a sales margin of 25.5%, so that a wine that sells for €1–2 ex-cellar might – after shipping, importers’ margins, tax, VAT, and Systembolaget margins – end up at anything between SEK55–85 (€6–9.50). Fixed duty rates mean that while bottles retailing for SEK50 (€5.50)might be subject to 53.1% tax, the percentage on one selling for SEK500 (€55) would be 23.3%. Thus, compared to southern and continental European pricing, cheap wines are fairly expensive. Expensive wines are more comptetively prices. A bottle of spirit that retails for SEK220, however, is taxed at 83.8 %.
The monopoly’s range is broken down into the “fixed product” range, updated twice annually, with the least-popular items being delisted; the “temporary listings”, updated nine times a year with smaller quantities of limited-production; and seasonal wines – sold as long as stocks last. Then there is the “order” range, which contains wines that the importers have in stock and that can be ordered via the Systembolaget, a process that can take anywhere from just a few days to as much as a few weeks. In 2005, Systembolaget carried 2,361 brands with an additional 3,882 in the order range.
In 2005 Systembolaget, sold 143 million litres of table wine, excluding fortified wines, mostly from Spain and France, which are the leaders in volume and value, respectively, followed by Italy. But New World countries such as South Africa are growing in importance, albeit more slowly than elsewhere. Red wine (83 million litres) sells better than white (46 million litres).
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