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Liberalization of alcohol sales in Sweden: The Systembolaget monopoly at risk?

4 mins read
October 16, 2024

A bill presented by the Swedish government proposes to modify the state monopoly on alcohol sales to support small local producers. However, before it can be adopted, this controversial plan, caught between divergent economic and health interests, must receive approval from Brussels and the EU member states.

Systembolaget store in Sweden
A Systembolaget alcohol retail store in Sweden | © Systembolaget

Last June, the Swedish government announced its intention to allow small breweries, distilleries, and winemakers to sell their products, on a small scale, directly to customers starting from June 1, 2025. Swedish representatives hoped to receive the green light from the European Commission on October 8, but they will now have to wait until at least January 8 due to a last-minute objection raised by Portugal.

The measure would mark a significant shift in a country where alcohol sales are controlled by a long-standing state monopoly, known as Systembolaget, which maintains strict control over alcohol sales.

Systembolaget: An exception to EU free movement rules

In Sweden, the sale of alcoholic beverages containing more than 3.5% alcohol by volume is restricted to a chain of state-owned retail stores.

Bars and restaurants are allowed to sell alcohol for on-premise consumption, but bottles must be opened by staff, and customers are not permitted to take their drinks outside the premises.

In a letter addressed to the European Commission, accessed by Newsendip, Portugal’s Ministry of Economy explains that the Systembolaget monopoly in Sweden constitutes a restriction on one of the fundamental principles of the European Union: the free movement of goods between countries.

Sweden and Finland are the only countries granted an exception allowing state-run alcohol monopolies, Systembolaget in Sweden and Alko in Finland, as part of their EU accession in 1995.

A discriminatory proposal against foreign producers, according to Portugal

However, Portugal also argues that the proposed bill on farm sales is incompatible with this exception.

Moreover, the country considers the proposal discriminatory against foreign producers, as alcohol sales would be reserved for Swedish producers. The European professional association of winemakers and groups of Spanish winemakers also voiced their objections to the European Commission.

Indeed, according to them, the proposal does not respect fair competition conditions in the EU market. Specifically, the Swedish proposal would allow Swedish beer, wine, and spirits producers to sell alcohol both through the national alcohol monopoly and directly to consumers. This would be a right not granted to alcohol producers from other EU countries and would thus violate the principle of equal opportunities in the EU market.

The Swedish government, however, claims that the reform’s provisions, including the production volume limits for small independent breweries or distilleries, would apply equally to both Swedish and foreign producers.

When an EU member state raises concerns, Brussels officials are automatically given a three-month period to re-examine the case. “Sweden must take into account the detailed opinion,” said Johanna Bernsel, spokesperson for the European Commission’s internal market department.

The end of Systembolaget?

For its part, the Swedish government has stated in its communication to the European Commission that Sweden does not intend to introduce a new sales channel and that it is merely small-scale sales.

The proposed changes primarily aim to help local producers who, under current Swedish legislation, cannot sell directly to consumers. Local farms, often too small for national distribution, must rely on the nearest Systembolaget store to sell their stock. They would also benefit from lower taxes on alcohol sales, which could be halved for the smallest producers.

Prime Minister Ulf Kristersson, who has supported these reforms since 2023, emphasized the importance of this measure during a recent press conference. “This is a freedom reform. Sweden will look a little more like the rest of Europe, where it is possible to do tourism and shopping at the same time,” he said.

The legal situation, however, remains complex and uncertain, and “there is a risk that the government’s proposal will be deemed incompatible with EU law,” wrote the Swedish Legislative Council in a statement published on October 10.

In an interview with Newsendip, Ponthus Jessmor, political secretary for alcohol and drug issues at the Swedish association IOGT-NTO, explained that these complexities stem from European law. “We find that the arguing from the Swedish government had weak and poorly substantiated arguments and with that they have made a substandard analysis of the EU legal prerequisites,” he stated.

According to the Swedish government, small-scale direct alcohol sales do not constitute “customary retail sales” and would, therefore, not impact the Systembolaget monopoly.

Health and economic interests

While Portugal’s objection to the reform is primarily driven by economic concerns—specifically the limited opportunities for foreign producers—it also resonates with civil society actors advocating for the preservation of the monopoly. They argue that maintaining fair treatment for all producers is essential for the Systembolaget and safeguarding public health.

The introduction of farm sales, in accordance with proposed changes to the Alcohol Act, would effectively abolish Systembolaget’s retail monopoly. The proposal, if enacted, would thus fundamentally alter Swedish alcohol policy, which would likely lead to negative public health outcomes, adds Ponthus Jessmor. The dissolvement of the Swedish alcohol monopoly is estimated to increase alcohol consumption in Sweden by more than 30%, and alcohol-related deaths by 1,000 persons annually.

One key aspect of the monopoly system is that it removes the profit interest from alcohol sales and instead prioritizes the protection of public health. The number of alcohol stores in Sweden is therefore determined from a public health perspective, rather than from a profit-seeking one. Similarly, due to the non-interest in profit maximization, in-store incentives such as sales and advertisement campaigns do not occur,” concludes the IOGT-NTO representative, which advocates for reducing the problems caused by alcohol.

We have many lobbies because there is a lot of money to be made in the alcohol industry, especially from the spirits manufacturers,” said Robert Adrell, sales representative and president of the Systembolaget employee union, interviewed by the Swedish media Accent Magazine.

In 2020, IOGT-NTO denounced the political interference efforts of vodka giant Absolut, a subsidiary of the French group Pernod Ricard, which had just created a “new pressure group” to, according to the association’s information, influence the evolution of Swedish alcohol policy.

Julie Carballo

Julie Carballo is a journalist for Newsendip.

She used to work for the French newspaper Le Figaro and at the Italian bureau of the international press agency AFP.