Booze-Buyer Turns Himself in to Police

beer cans

Árni Guðmundsson, an adjunct teacher at the University Iceland, turned himself in to the police on December 21 for the crime of buying 16 cans of beer from two online sellers. Police registered the charge and confiscated the alcohol, Vísir reports.

The act was something of a stunt, as Árni leads a group of parents against the advertisement of alcohol. By reporting his own crime he wished to highlight the contradictory state of alcohol policy in Iceland.

“The police have probably filed my report formally as is standard procedure,” Árni told Vísir. “They are probably investigating this crime and the operations of the two online sellers who delivered goods from a domestic warehouse. I sent a copy to the the district public prosecutor and the public prosecutor.”

“International orders” from local stock

In Iceland, retail of alcohol is a near-monopoly of the state liquor store, Vínbúðin, and advertisements of alcoholic products are prohibited. Despite this, a number of online stores have begun selling alcohol using a loophole. By establishing a foreign-based company, they can accept “international orders” while delivering quickly from stock held locally in Iceland.

Árni says his purchase of the alcohol was easier than ordering a pizza. He bought Icelandic beer that arrived half an hour after he placed the order. In his view, the beer should have travelled from the brewery in the north of Iceland to the capital area, been flown out of the country, back into it, gone through customs and then to the two young delivery men in order to comply with the law. He argues that this is illegal retail of alcohol.

Alcohol is also taxed at a high rate in Iceland, which should in theory discourage buyers. Árni argues that it is important for public health that alcohol access remain limited and says that only business interests are pushing for liberalisation of the law. “There is an effort to commercialise sale of alcohol in defiance of the ruling policy and law,” Árni’s group wrote in a letter to the Alþingi Ombudsman. “There has been a solid societal consensus about the law and mode of alcohol sales as they take into account both public health and welfare points of view (not least for children and youths) and business interests.”

Vínbúðin Could Open on Sundays

vínbúðin austurstræti

State liquor store Vínbúðin could be open on Sundays, with a proposal to expand the opening hours of the alcohol retailer having been submitted to Alþingi.

Progressive Party MP Hafdís Hrönn Hafsteinsdóttir stated to Vísir that although there is no general will to sell alcohol in grocery stores, expanding Vínbúðin’s opening hours could be a possibility.

In Focus: Relaxing Legislation on Alcohol Sales

The bill proposes removing the legal ban on selling alcohol on certain days. The proposed change comes in response to the recent expansion of limited private alcohol sales, including home delivery through online ordering. According to Hafdís, it’s preferable for individuals to be able to purchase their alcohol at Vínbúðin, instead of navigating other ways. For Hafdís, the proposed change is a way that Vínbúðín can accommodate the needs of its customers.

“We are submitting this now in order to answer a demand […] We are facing changes in the spirit of the times and want consumers to have a choice. That they can buy alcohol, for example, on Sundays,” Hafdís stated to Vísir.

She continued: “This will include authorization that Vínbúðin can be open on Sundays. This would not be mandatory and would be left to the stores to evaluate in what way they use their new freedom.”

Hafdís recognised that although there may be more pressing tasks on the docket, the proposed legislation could be an instance of practical cooperation between both progressive and conservative factions in Alþingi.

 

In Focus: Relaxing Legislation on Alcohol Sales

iceland alcohol sales

Visitors to Iceland are often surprised to find that beer and wine are not available for sale in Icelandic grocery stores. For the past century, alcohol has exclusively been available for purchase through the state liquor store, Vínbúðin. The state’s near-monopoly on retail alcohol sales came to an end earlier this year, however: legislation passed on June 15, 2022 allows Icelandic breweries to sell their products directly to customers. Several retailers have begun selling alcohol online as well, and despite the fact it remains illegal, authorities have not stepped in to stop them.

Iceland’s government appears poised to relax legislation on alcohol sales even further, and according to recent polls, a majority of the nation is in favour of the development. The following is a closer look at Iceland’s changing legislation on the sale of alcohol and its potential social and economic impact.

History of liquor sale laws

In the early 20th century, the general opinion in Iceland grew that excessive alcohol consumption was the root of many social ills. The country held a referendum on whether to ban all production, consumption, and import of alcohol and the nation voted in favour. The ban was implemented in 1912 and stayed in place until 1922 when it was partially lifted to allow Iceland to trade salt fish for Spanish wine. (Spanish sailors had complained when their Icelandic counterparts had stopped buying their product in exchange for bacalao.)

That same year, the state liquor store ÁVR was established. The acronym stands for Áfengisverslun ríkisins, or “The State Alcohol Store,” and to this day Icelanders often say they’re on their way to “The State” to pick up some booze. Between 1935 and 1992, ÁVR was not just the only retailer but also the only producer of alcohol in Iceland. From 1922, the alcohol ban was lifted in stages, but beer remained illegal in Iceland until March 1, 1989 – for 74 years in total. Until December 1, 1995, ÁTVR (the T stands for tobacco, which was consolidated with ÁVR in 1961) even had a monopoly on the import and wholesale of alcohol, but from that date importers, producers, and wholesalers holding a special licence issued by the National Commissioner of the Icelandic Police were permitted to resell alcohol.

Vínbúðin

From 1922 until very recently, alcoholic beverages in Iceland were only sold through the state-run liquor store Vínbúðin, operated by the State Alcohol and Tobacco Company of Iceland, ÁTVR. There are 50 Vínbúðin stores located across the country, 13 of them in the capital area. They are always closed on Sundays, as well as on most holidays, and the store’s countryside locations often have limited opening hours. The Vínbúðin store in Kirkjubæjarklaustur, Southeast Iceland, for example, is open between 2:00 and 6:00 PM most weekdays and for only two hours on Saturdays.

Advertising alcohol is illegal in Iceland, but producers occasionally skirt these laws by advertising low-alcohol versions of their products.

Other legislation governing alcohol sales and consumption is stricter in Iceland than in much of Europe. The legal drinking age in Iceland, for example, is 20. Advertising of alcoholic products is prohibited, though producers do skirt these laws occasionally by advertising the low-alcohol versions of their products.

Online sales begin

In 2020, online craft beer retailer Bjórland, which had been selling wholesale to businesses, began selling craft beer directly to customers. The sales were technically illegal, but the company had found a loophole in the legislation that even MPs had previously pointed out: foreign-based retailers could legally sell alcohol directly to Icelandic customers although Icelandic companies could not. All Bjórland had to do was establish a foreign-based company through which their beers were sold, and the sales became perfectly legal. The following year, Santewines SAS started online sale of wine directly to consumers through a company based in France and other retailers have followed suit, including grocery delivery company Heimkaup, the first grocery chain of sorts to sell alcohol in Iceland.

In response to these developments, ÁTVR called on the Reykjavík District Court to halt online retailers’ sales, asserting that they broke the law that granted the state a monopoly on alcohol sales and had led to financial losses. The court did not comply, and sales have continued. Icelandic authorities have not stepped in to stop them.

In some ways, retailers’ move to sell alcohol online was in direct response to developments in Iceland’s Parliament, where MPs have been drafting bills to legalise online sales of alcohol since at least 2019. The Icelandic government is not able to ban foreign-based retailers from selling their alcoholic wares to Icelandic customers and realised it made little sense to forbid local retailers from doing so as well. In fact, it was joining the EEA that compelled Iceland to privatise its import, export, wholesale, and production monopolies for alcoholic beverages in the 1990s – in an increasingly connected world, Iceland’s government has lessening jurisdiction to maintain protective legislation such as that governing alcohol sales. Iceland’s legislators have been introducing bills aiming to relax alcohol sales since at least 2003, normally suggesting small steps, such as permitting the sale of alcoholic beverages under 22% in stores or permitting private retail of alcohol in specially-licenced stores.

Breweries can sell to customers

Despite remaining in a legal grey area, online sales of alcohol are booming in Iceland. Regulations in other areas have already been relaxed: from July 1, new legislation permitted Icelandic breweries to sell directly to consumers. Ólafur Stephensen, CEO of the Icelandic Federation of Trade, celebrated the change, saying he hoped to see legislation concerning alcohol sales relaxed even further. That particular bill was intended to boost tourism-related business in the countryside but excluded some larger breweries due to their size, as well as distilleries of spirits, which Ólafur believes have just as much a right to sell their product directly to consumers as smaller breweries. 

While business owners and many others in Iceland celebrate the relaxation of legislation governing alcohol sales, dissenting voices have also been heard. Opponents to relaxing the state monopoly on alcohol sales say that making alcohol more easily available will increase rates of alcohol consumption as well as problem drinking, negatively impacting public health and society.

Iceland’s legal drinking age is 20.

Control and consumption

But are there data that show a link between control and consumption? Studies conducted in Canada and the United States have found a correlation between partial or full privatisation of alcohol sales and increased rates of alcohol consumption. In high-income countries like Iceland, where alcohol is a leading risk factor for disease (second only to tobacco), increased consumption would inevitably mean worse public health and higher healthcare expenditure, not to mention social impacts. Besides disease rates, some studies have found relaxed control of alcohol sales and increased alcohol consumption to correlate with increased instances of assault, suicide, and traffic accidents. Other studies have shown that private retailers are less likely to have well-trained staff and less incentive to prevent sales to minors than state-run retailers.

Data are not yet available on whether alcohol consumption has increased in Iceland since online retailers started selling alcoholic beverages. Past data could give some clues: an Icelandic study from the early 2000s showed that adding late-night trading hours was associated with alcohol-related problems. The year the beer ban was lifted, alcohol consumption per capita spiked from 4.5 litres per person (aged 15 and older) to 5.5. However, over the following four years, it dropped steadily and took nine years to rise above 5.5 litres again. The impact on public health over time is not clear, but fears that the ready availability of beer would cause a complete societal breakdown were not realised.

iceland alcohol sales

Do Icelanders have a drinking problem?

While Icelanders themselves will often joke that the nation drinks a lot, the numbers disagree. Data from the European Health Interview Survey published in 2017 showed people in Iceland drank less frequently than their counterparts in other Nordic countries. In a survey of 29 European countries, Iceland had the seventh lowest proportion of people who drink at least once per week, just over 20%. The UK, for comparison, had the highest rate at 52.5% and Denmark came in third place at just over 51%. Iceland also had the fourth lowest rate of heavy episodic drinking (defined as consuming 60 grammes of ethanol on a single occasion).

These figures do not mean that alcoholism and alcohol abuse are a non-issue in Iceland. In a recent interview, Anna Hildar Guðmundsdóttir, director of non-profit addiction resources centre SÁÁ stated that around 20% of the nation struggle with alcohol use. She called the developments in relaxing laws on alcohol sales a “huge change of direction from the government,” implying that it would increase rates of problem drinking and questioned what the government would do to support those who struggle with their alcohol use. Iceland’s chronically underfunded and understaffed healthcare system, where waiting lists for admission to rehab centres are the norm, is ill-equipped to handle additional strain.

The cost of drinking

The question is whether partial privatisation of alcohol sales would in fact increase rates of alcoholism in Iceland. One study linked with the World Health Organisation suggested disincentive alcohol pricing had the widest impact and strongest empirical support among more than 30 policies intended to reduce alcohol consumption. It not only lowered drinking rates, but led to reductions in trauma, social problems, and chronic disease associated with alcohol use. 

 

When buying alcoholic beverages online, customers must use an electronic ID to confirm they are of legal age.

Alcohol prices are certainly a strong disincentive for imbibing in Iceland. According to Eurostat figures from 2020, alcoholic products in Iceland cost more than 2.5 times the EU average. Much of this difference can be attributed to high taxation: according to 2019 figures from Spirits Europe, Icelandic taxes on alcohol were anywhere between 33% and 200% higher than in the EU countries with the highest rates (Finland and Sweden). Partial privatisation of alcohol sales is likely to lower alcohol prices. Santewines’ website already boasts that their prices are as much as 20% lower than Vínbúðin’s. 

Why now? 

Iceland’s government has been discussing abolishing the state monopoly on alcohol sales for years, and even discussing relaxing legislation governing alcohol advertisements. Some of these changes are clearly spurred by the globalised retail environment, which provides Icelanders with access to alcohol from abroad and exposes them to advertisements through foreign media. In such a world, privatised sales of alcohol and legal – though strongly regulated – advertisements could prove a financial boon for the state treasury, now emptier than usual after a two-year pandemic. The question is whether the increased revenue and the economic boost would be offset by higher healthcare and social costs.

Smiðjan Brewery First to Sell Directly to Customers

icelandic beer

Smiðjan Brewery in Vík was the first to sell alcohol directly to customers when it officially got its license on Wednesday, July 13.

In a statement to Morgunblaðið, Sveinn Sigurðsson, one of the founders of Smiðjan, stated that it was important for the brewery to finally be able to sell directly. A majority of the customers that visit the brewery are foreign tourists and beer enthusiasts, and now they will be able to take beer home with them more easily.

At the moment, Smiðjan just has a restaurant and bar, but they are planning to significantly increase their production to meet the rising demand of direct sales.

Smiðjan has been offering brewery tours but expressed frustration that up until now, they were not allowed to sell alcohol directly to their customers after these tours. Smiðjan has also been frustrated that getting their product onto Vínbúðin shelves also takes several weeks, meaning that customers are not getting the freshest product possible.

Iceland has, up until now, had a state monopoly on alcohol. All alcohol must be purchased at Vínbúðin, the state alcohol distributor, except for some light beer which is available in grocery stores. Alþingi recently relaxed these restrictions, leading to a boom in online alcohol sales by private retailers.

 

 

Icelandic Breweries Can Now Sell Directly to Customers

Kaldi beer brewery

Starting tomorrow, July 1, breweries in Iceland will be permitted to sell their alcoholic products directly to customers. The change is thanks to a parliamentary bill passed on June 15 that somewhat relaxes the state monopoly on alcohol sales. While some say it’s high time alcohol was available for sale outside of state-run stores, others are wary increased availability will lead to higher rates of alcoholism.

The changes are long overdue, according to Ólafur Stephensen, CEO of the Icelandic Federation of Trade. He told RÚV that he hopes to see legislation concerning alcohol sales relaxed even further.

See Also: Business Booming for Online Alcohol Retailers

“The goal of the bill was, among other things, to strengthen culture-related tourism around breweries in the countryside. The result is that one or two breweries are excluded, both in Eyjafjörður [North Iceland]. And one producer of spirits in Borgarnes. There is no logic to that,” Ólafur stated, adding that there is no reason producers of spirits shouldn’t also be allowed to sell their products on site.

“These are companies that have the same criteria and have been building up tourism around their operations and production. These breweries produce too much and are therefore too big to fall under these legal amendments.”

The lack of alcoholic beverages in Icelandic grocery stores catches many foreign tourists by surprise. The state-run liquor store, Vínbúðin, is expensive, and opening hours can be sporadic during holidays and in more rural parts of the country. Vínbúðin stores are always closed on Sundays. While some have argued that increased access to alcohol will lead to increased alcohol abuse, a recent survey shows that almost half of Icelanders want beer and wine to be available in supermarkets.

Business Booming for Online Alcohol Retailers, Even Though Online Sales Aren’t Legal

Alþingi has yet to vote on whether private Icelandic retailers will be allowed to sell alcohol online, but RÚV reports that business is already booming for sellers willing to risk wading into this lucrative market before online sales are legalized.

Starting July 1, craft breweries will be allowed to sell alcohol on their premises. Alþingi voted in favour of this change on Wednesday. The bill to allow private retailers to sell alcohol online, however, was not voted on before the end of parliament’s session. But this hasn’t stopped Elías Blöndal Guðjónsson, co-owner of the online alcohol retailer Santewines SAS, from cashing in this holiday weekend. And not just this weekend, either: Like a small number of fellow sellers willing to take the risk before online sales are legalized, Santewines has been selling alcohol online for over a year and sales are increasing all the time.

See Also: Local Distributor Flouts Prohibitions on Home Beer Delivery

June 17th is Iceland’s National Day, so while people would normally be queuing in Vínbúð locations around the country to stock up on bevvies for the weekend, such wasn’t possible on Friday, when all state-run liquor store locations were closed. So many of these would-be customers hopped over to Elías’ website instead.

Elías said he isn’t worried about his operation being shut down, even though online alcohol sales haven’t been legalized yet. “We have all our ducks in a row and everything’s in order. We have a French company that is handling the online shop and legal products and we’re no more afraid than Amazon or EBay,” he remarked.

“I don’t actually think there are many people who have it out for the business,” Elías concluded. “Maybe ÁTVR [the State Alcohol and Tobacco Company, which runs Iceland’s Vínbúð stores], and maybe some Progressive Party MPs. […] The police were actually out here the other day, but they were just picking up an order.”

Government Approves Measures to Counteract Inflation, Overheating Economy

Minister of Finance Bjarni Benediktsson

In lieu of raising interest rates, the government will be implementing various measures intended to counteract inflation and an overheating economy as well as reducing the treasury deficit. Vísir reports that among the changes proposed by Minister of Finance Bjarni Benediktsson are a reduction to discounts on alcohol and tobacco products sold in airport Duty Free stores and the introduction of tariffs that will offset the current lack of revenue from vehicle and fuel taxation.

The scope of the proposed measures is roughly 0.7% of the GDP, or ISK 26 billion [$1.98 million; €1.88 million]. This amount should hopefully put the treasury in good stead to decrease the deficit without needing to increase interest rates. The proposals will be elaborated in full in the 2023 budget proposal.

Measures intended to increase the state’s revenue

One of the biggest changes is the introduction of tariffs that are meant to offset revenue that the government has lost from vehicle and fuel taxation. This drop in revenue is attributed in part to an increase in environmentally friendly cars. As more environmentally friendly cars become the norm, it is expected that the revenue streams that the government used to enjoy from gasoline and vehicle taxes will continue to decline. As such, a simpler and more efficient revenue collection system is being developed, which corresponds to the need for continued governmental expenditure on new construction, maintenance, and operation of Icelandic roadways.

Another major change will be a reduction in the tax discount on alcohol and tobacco products in Duty Free stores. Both are currently tax-free (in specific, limited quantities) when purchased, for instance, at the Keflavík airport upon entering or exiting the country. There will be a new diversion airport fee and the structure and scope of aquaculture-related VAT will be under review as well.

Measures intended to cut state costs

Current reductions of state-related travel expenses are to be made permanent. The leeway that exists for expenditures in the current budget will be suspended and leeway for general expenditures in policy-related areas will be almost cut in half. There will also be a reduction in contributions to political organizations.

Skál! New Bill Would Allow Breweries to Sell Beer On-Site

A new bill would make it legal for small-scale breweries to sell alcohol on site. Vísir reports that the bill, presented by Minister of Justice Jón Gunnarsson, would allow breweries to sell bottled or can beer to visitors without having to resort to complicated and expensive workarounds, like applying for a liquor license and opening an on-site bar.

A similar bill was presented by former Minister of Justice Áslaug Arna Sigurbjörnsdóttir, but was met with protest from the state liquor authority (ÁTVR), which argued that the proposed changes would undermine state-run liquor stores.

See Also: Local Distributor Flouts Prohibitions on Home Beer Delivery

ÁTVR recently faced a setback in a similar attempt to quash alcohol retail on the open market. Just last week, the Reykjavík District Court ruled against the authority in its case against Sante ehf., Santewine SAS, and Bjórland, retail outlets that have begun selling alcohol outside of the state monopoly. In its case, ÁTVR demanded that these companies cease operations because ÁTVR holds the exclusive right to sell alcohol in Iceland.

ÁTVR has decided to appeal the recent ruling, but Minister of Finance Bjarni Benediktsson, whose ministry oversees ÁTVR, would like to see the current bill go even further, saying he’d like to see traditional online alcohol retail permitted in Iceland.