Tornio brewery invests as alcohol imports squeeze industry

A new brewery has opened in Tornio despite growing competition from cheaper alcohol brought into Finland from abroad, Yle reports. Prime Minister Petteri Orpo inaugurated the facility but ruled out quick tax cuts, citing the state’s weak finances.

Tourism and restaurant industry association Mara says the sector is in serious difficulty. One in five businesses has payment defaults, bankruptcies are increasing faster than in any other sector, and many businesses close before entering formal liquidation, according to Mara’s chief executive, Timo Lappi.

Mara estimates that as much as 30 per cent of alcohol consumed in Finland is brought in by travellers or bought through online stores. Consumers travel to Haparanda in Sweden for cheaper alcohol, while others buy it in the Baltic countries or on cruises.

Orpo acknowledged that high alcohol taxes are a key reason for the imports but said the government could not afford to reduce them now. Mara estimates that the state loses nearly one billion euros a year in tax revenue from traveller imports and online purchases.

The new Tornio brewery is an exception among small breweries facing difficult conditions, with some having closed. The production facility cost more than two million euros. Its chief executive, Kaj Kostiander, said the tax increases were a problem for Finnish breweries even as tax revenue continued to fall. He said Finland has the highest beer taxes in the EU.

Mara says less than 10 per cent of all alcohol consumed in Finland is now consumed in restaurants, down by more than half since the turn of the 1990s and 2000s. The VAT rate on alcohol served in restaurants is 25.5 per cent, compared with 13.5 per cent for non-alcoholic drinks.

Orpo said the government could consider lowering VAT on alcohol served in restaurants if the public finances improve. He said a tax cut would need to be shown to increase state revenue.