Systembolaget

Systembolaget

Systembolaget logo
Company type	Government enterprise
Industry	Liquor
Founded	1955
Headquarters	Sweden
Key people	Cecilia Schelin Seidegård, Chairman Magdalena Gerger, CEO
Products	Alcoholic beverages
Revenue	18,083 million SEK (2005)
Operating income	512 million SEK (2005)
Number of employees	4,397 (2005)
Website	www.systembolaget.se

Systembolaget (; colloquially known as systemet "the system" or bolaget "the company"; literal English translation: the System Company) is a government owned chain of liquor stores in Sweden. It is the only retail store allowed to sell alcoholic beverages that contain more than 3.5% (by volume) alcohol. Systembolaget also sells alcohol-free beverages. To buy alcoholic beverages at Systembolaget one has to be 20 years of age or older. At Swedish restaurants and bars the legal age to buy alcoholic beverages is 18.

Governing laws

There are several laws and rules governing how Systembolaget stores operate, such as:

• All products, including beer cans and bottles (but excepting products that aren't kept in stock and have to be pre-ordered), are sold individually. Pre-ordered products may sometimes only be sold in quantities corresponding with the minimum order accepted by the manufacturer.
• Discounts, such as "Buy 1, get 1 free" and "One can 1.50, two cans 2.50" type deals are prohibited.
• No product may be favored, which in effect means that the beers are not refrigerated, since otherwise all beer would have to be refrigerated which is too expensive.
• The minimum age to purchase beverages above 3.5 % alcohol is 20 years of age. A main reason to have Systembolaget as a monopoly is to enforce this age limit. Several tests have shown that food shops often sell 3.5 % beer to people below the minimum legal of age of 18.
• Systembolaget is not allowed to sell any alcohol to drunk people, or to people that they have reason to believe are buying it for someone else (implicitly: someone under the legal drinking age).

In June 2007, a panel of EU judges commented that restrictions on the private import of alcohol were unjustified, and not in the interest of the free movement of goods. This was regarding private import of alcohol by postal package. Still Sweden is able to levy taxes on the receiver of alcohol sent in postal packages. The retail monopolies in Sweden and Finland are accepted by the EU.

Domestic and international market

Serving a market of 9 million Swedes, Systembolaget is one of the world's largest buyer of wine and spirits from producers around the world.

Taxation and pricing

As with other government-owned monopolies within free trade areas, there are several aspects that govern the operation. All product selections and displays must be based on customer preferences, and every producer and distributor must be handled the same way. All marketing activities must be for the company itself and its own services, never for an individual product. This is also the reason why all products are taxed on alcohol content, not on price, and that all products are sold with the same profit margin. This explains why a cheap vodka can be seen as expensive, while an exclusive single-malt whisky can be seen as cheap, compared to international prices.

Beer is not so highly taxed anymore in order to protect Swedish breweries (and its employment opportunities) against purchase during travel abroad. It is (as of 2008) 1.47 SEK per % alcohol and litre, which means 3.67 SEK for a 5% beer can (50 cl). Such a can usually costs about 10 SEK (1.05 EUR) at Systembolaget. For wine the tax follows a table. For 12% wine the tax is 22.08 SEK per litre. For distilled products the tax is 5.01 per % and litre.

The traditional layout of a Systembolaget store, with counters where customers place their orders. Today the vast majority of stores use supermarket-style self-service.

History

In 1766 the Swedish king, Adolf Frederick, decided, after several unsuccessful attempts at regulating alcohol consumption, to abolish all restrictions. This led to virtually every household making and selling alcohol. At the beginning of the 1800s, the Swedish people were drinking a lot of alcohol, from 175,000 distillers (most of them for household-production only), using tremendous amounts of grain and potatoes that otherwise would have been consumed as food, and it was later said that most men in Sweden abused alcohol. Women rarely drank alcohol, since it was considered inappropriate.

In 1830, the first moderate drinking society was started in Stockholm. A few decades later, the first fully-fledged temperance organisation was formed. Private gain from selling alcohol was strongly criticised by these groups, and this opinion was embraced by doctors and members of the Church of Sweden. In 1850, alcohol began to be regulated by the state. In the city of Falun, a state organisation was created whose job it was to regulate all alcohol sales in the city and make sure it was being done responsibly.

In 1860, a bar was opened in Gothenburg where the state had handpicked the employees and decided how the bar should be run. Anti-social or intoxicated people were to be excluded. This was where people both bought and drank their alcohol. This was also the year it became illegal to sell to people under the age of 18. Similar state-regulated bars and stores began to open in other towns across the country, and they were hugely successful. Originally the profits were kept privately by the owners, but in 1870 the state decided all profits should go to the state.

A self-service Systembolaget in Södertälje, Sweden. This is the normal layout of the Systembolaget stores since the 1990s.

During the First World War, alcohol was strictly rationed. The state bars and stores started registering purchases. People were allowed only two litres of liquor every three months, and beer was banned. After the war, the rationing continued. Gender, income, wealth and social status decided how much alcohol you were allowed to buy. Unemployed people and married women were not allowed to buy anything at all. A referendum on prohibition in 1922 advised government not to issue total prohibition. The rationing system was very unpopular. When even the temperance movement protested against it (they felt it encouraged consumption), the government decided a new policy was needed.

In 1955 the rationing system was abolished, and people were allowed to start buying as much alcohol as they wanted from Systembolaget stores (as long as they are sober). This led to increased consumption, so the government increased taxes heavily and made it compulsory that everyone had to show ID to get served. There was also an age limit of 21, which in 1969 was changed to 20. In 1965 it became legal for privately run stores to sell beer up to 4.5% with an age limit of 18. 12 years later, after alcohol consumption – especially that of light beers – rose dramatically, the limit was lowered to 3.5%.

In 1990, Systembolaget gradually introduced self service in shop after shop over a ten year period. The older system, where the customers had to ask the shop attendant for products they wanted to buy, is still used in some small and more remote shops. The older method was justified by the assumption that desk service would avoid tempting people to buy more than planned.

In 2003, a free quota (for personal use) was allowed when travelling into Sweden (from another EU country), resulting in lower sales for Systembolaget, especially in Scania, which borders Denmark.

Corruption controversy

The corruption scandal first gained widespread media attention in the autumn of 2003, with Systembolaget issuing its first press release regarding the preliminary investigations on 7 November 2003. On 11 February 2005, 77 managers of Systembolaget stores were charged with receiving bribes from suppliers, and one of the largest trials in modern Swedish history followed. 18 managers were found guilty on December 19, and then on February 23 another 15 managers were found guilty.

In January 2009 allegations were aimed against Fondberg & Co, the second largest supplier of wine to Systembolaget with a market share of 8.5%, concerning large payments made to the Gibraltar firm Bodegas, and are under investigation by the Swedish Tax Agency.

Advertisements

Systembolaget makes advertisements focused on the side effects of drinking, and the encouragement of drinking moderately. Many of their ads are focused at stopping teenagers from obtaining alcohol, and to press on people under 25 showing identification. During November 2008, Systembolaget launched a campaign where people under 25 would get a free pack of chewing gum saying "Thank you for showing ID" when showing their ID to the cashier before they were asked to.

Systembolaget is not allowed to advertise its products to increase its sales. However since 2005 the producers are allowed to advertise their products in Sweden.

Other alcoholic monopolies

• Alko — Finland
• Vinmonopolet — Norway
• Vínbúð — Iceland
• Provincial Liquor Crown Companies — Canada
  • Liquor Control Board of Ontario — Ontario
  • Nova Scotia Liquor Corporation
  • Société des alcools du Québec — Quebec
• National Alcohol Beverage Control Association — United States
  • Pennsylvania Liquor Control Board — Pennsylvania
• Rúsdrekkasøla Landsins - Faroe Islands

See also

• Alcohol in Sweden
• Temperance movement
• State store

External links

• Systembolaget - Official site
• Systembolaget Demystified - The Scandinavian Insider Magazine
• Systembolaget to pay SEK 40 million - The Scandinavian Insider Magazine