What’s happning here – A flabbergasted Monopoly!

There’s a battle brewing, blood is slowly boiling – we might be on the verge on a monoploy war. A few days ago the internet wine shops of Sweden started a trade association. This caused Systembolaget, the Swedish monopoly, to issue a press release where they state that they are flabbergasted that they have formed a trade association.

I would say that if the monopoly is flabbergasted they don’t do any business intelligence at all.

In many ways this war is old. The last big battle was fought in the EU-courts and rendered the Rosengren judgment (C-170/04) in 2007, which changed the landscape of Swedish imports of alcoholic beverages. It opened up the door for legal internet shops, most of them are wine shops. To simplify it all the internet shops has their storage in another EU country until the beverage is sold, then they deliver it to the Swedish buyer (sounds easy, but it really isn’t); you need to be registered by the Swedish tax office, have a license for international trading, pay taxes etc. etc. and fight the monopoly and in part the media.

The monopoly obviously disagrees with the interpretation made by the internet retailers and consider thier business illegal. Further more it seems that the monopoly are beginning to feel threatened by the internet shops and describe their sole existence as threatening the Swedish alcohol policy.

In the Systembolaget’s press release they claims to be very surprised that the internet wine shops creates a trade association – I wonder on what planet the monopoly is operating if they are surprised?

In the press release the monopoly highlights that there is considerable uncertainty as to the legality of the various inter-mediation activities that occur on the Swedish market – I feel that that alone is a reason good enough for the e-sellers to position themselves. Add to this the fact that the Swedish government has a commission working on a study with proposals to ensure effective supervision in the areas of marketing and e- trade of alcoholic beverages and the Retail Institute (HUI Res) recently published report has assessed the potential of e-commerce with alcohol, the last one funded by Systembolaget. In this report they claim that internet seller might have up to 30% of the market within a 10 year period.

Add to this that one of the biggest internet retailers (Australienska vin klubben – the Australian wine club) have had big tax problems, and another, the South African wine club, had big financial problems and couldn’t deliver to their costumers.

IOGT (Swedish temperance movement) have done lots of test purchases at online retailers and have made a reported about 10 stores to the police for crimes against the laws of sales of alcohol, none of which these have yet been prosecuted etc.

All these are reasons enough to understand why the internet retailers have started a trade association – to create common guidelines and to improve, I see this as evidence that the industry are becoming part of a more mature market.

One of the reasons the government of Sweden gives for holding on to the monopoly is for public health concerns, this is also stated in this press release – though this can be discussed. In today’s monopoly stores you mainly find lots of low priced alcohol beverages or beverages that clearly are marked towards young buyers such as sweet ciders that are closer to be soft drinks with alcohol, soft drinks with alcohol, cheap bag-in-box wines and lots of cheap beers – non of these can be said to be improving public health. Today more than 60% of the wine sold is Bag-in box wine. There is of course also quality wine, beer and liquers sold.

My personal opinion is that if the Monopoly truly sees the internet shops as illegal they are required to submit a report this to the police, especially as it is a state owned enterprise, and not act as judge or a lobby organization doing politics – leave that to our political parties.

Let’s see if this is the beginning of the next battle in the Monopoly wars!

The newly formed trade association press release is here (in Swedish)

The Monopoly press release is here (in Swedish)

Magnus Reuterdahl

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