Wine, Gas, and Swimming Pool Prices Rise

Laugardalslaug geothermal swimming pool in Reykjavík

With the new year, changes to public price structures all over Iceland come into effect. Municipalities have upped the fees for some of the services they offer, while the 2024 budget, recently approved by Alþingi, heralds new taxes and adjustments to the existing ones.

Tax rates on alcohol and tobacco go up by 3.5 percent, Morgunblaðið reports. As does the licensing fee for public broadcasting and the tax on gasoline. The litre will cost an extra ISK 4.20 [$0.03, €0.03], while the litre of diesel goes up by ISK 3.70 [$0.03, €0.02]. The vehicle tax on lighter automobiles rises by 30 percent as well, while owners of electric cars will need to pay a new fee per kilometre, which for the average driver will amount to ISK 90,000 [$666, €599] per year.

Trash and tickets pricier

Municipalities have also announced higher prices for trash collection, as a new system for sorting refuse is being implemented in the capital area. The biggest increase is in Reykjavík, where the price for two bins goes from ISK 52,600 [$389, €350] to ISK 73,500 [$544, €489]. The highest fee remains in the more affluent neighbouring municipality of Seltjarnarnes and amounts to ISK 75,000 [$555, €499].

In Reykjavík, the prices for trips to the swimming pool, museum tickets and petting zoo admissions have also gone up. A single adult ticket to a public pool goes up by 6 percent and will now cost ISK 1,330 [$10, €9]. Yearly tickets go up by 5.5 percent, while prices for towel and swimming trunk rentals also rise. A hike in bus fare prices has also been announced. They will rise by an average of 11 percent.

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.

2023 Budget to Include 7.7% Hike on Alcohol

At a bar in Reykjavík Iceland, drinking beer.

In the latest draft of the 2023 budget, a 7.7% increase in alcohol tax is proposed.

Iceland already has some of the highest alcohol taxes in the world, and critics within the restaurant industry claim that the latest tax hikes will make Iceland less attractive as a tourist destination, and put unnecessary stress on an already-struggling industry.

In a report by the Icelandic Federation of Trade, it is stated that under the new tax structure, a common box of wine will increase on average by ISK 600, a bottle of liquor by some ISK 700, and a six-pack of beer some ISK 150.

Especially affected will be alcohol sales in Duty Free, which are currently taxed at the lower rate of 10%. Under the new structure, alcohol taxes will be raised to 25%, a 150% increase. In Duty Free, the same box of wine will increase by ISK 1,800, a bottle of liquor by ISK 2,300, and a six-pack of beer by ISK 240.

In an editorial on Vísir, Aðalgeir Ásvaldsson, director of the Association of Companies in the Restaurant Industry (SVEIT), states that the increased taxes will have to be built into prices, which will in turn contribute to high inflation. Aðalgeir critiqued the new budget plan, saying that high public fees and COVID restrictions have been extremely damaging to the industry which is so important to tourism. “The restaurant industry wants to contribute to society,” Aðalgeir stated. “We offer good food and drinks, create thousands of jobs and play an important role in shaping the culture of the country. We have had to endure much recently, but now enough is enough.”

Currently, 92% of the price of a bottle of liquor comes from state taxes, compared to 73% of the price of a bottle of wine, and 61% of the price of a can of beer.

As the budget draft currently stands, the tax hike on alcohol would represent an increase in ISK 1.64 billion to the treasury, and total income from alcohol tax for 2023 is projected to sit around ISK 25 billion.

The 2023 budget proposal has also come under recent critique for new taxes and fees levied on fuel, road tolls, vehicle imports, and other costs of owning a vehicle in Iceland. The increased taxes will represent a 36% increase in state revenues from transportation, but critics say that the increased prices will hurt the lowest-income Icelanders, with no accompanying expansion of public transportation. Despite the tax increases, however, the budget is still expected to yield a deficit of some ISK 89 billion, an improvement over the previous year’s ISK 169 billion deficit.

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.”

Almost Half Of Icelanders Want Alcohol In Supermarkets

alcohol in iceland

About half of Icelanders want to buy wine and beer alongside their other groceries, while fewer would support the sale of strong alcohol outside of government-run stores, Vísir reports.

The perennial debate about breaking the state’s monopoly on alcohol sales rages on, with polling showing steady support for permitting the sale of alcohol in private stores. A survey conducted in February by Maskína for Vísir suggests that 47.6% of Icelanders support the sale of wine and beer in grocery stores, up from 43.4% in 2021.

Meanwhile, just 22.4% of respondents are in favour of strong alcohol being sold in private stores, up from 19.1% last year.

Those aged 30 to 39 are most in favour of selling alcohol in private stores, with 65.8% in this age group supporting the sale of beer and wine outside of Vínbúð locations. Icelanders over 60 are least supportive of breaking the state monopoly, with just 25.8% in favour of wine and beer sales in grocery stores.

Plan on drinking? Plan ahead

The lack of alcoholic beverages in Icelandic grocery stores catches many visitors to the country by surprise. Tourists are often advised to “do as the locals do” and make full use of their duty-free alcohol allowance when entering the country, should they plan in imbibing. The state-run alcohol stores, Vínbúð, are expensive, and opening hours can be sporadic during holidays and in more rural parts of the country. Vínbúð stores are always closed on Sunday.

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.

Icelandic Whisky Seeks Protected Status

FLóki Whisky

Icelandic distillery Eimverk has applied for protected status for the product name “Icelandic whisky.” Bændablaðið reports that the application was received by Iceland’s Food and Veterinary Authority (MAST) in September and is being processed. If granted, the designation would limit which products could be labelled “Icelandic whisky,” reserving the term only for those produced in Iceland with local ingredients.

Eimverk distillery, founded in 2009, produces Icelandic liquors from local ingredients. Their single-malt Flóki whisky is produced locally in small batches using only Icelandic barley and Icelandic spring water.

Read more on Eimverk distillery’s Flóki whisky production

In December 2014, the Icelandic parliament enacted the Product Names Protection Act, which allows for the protection of product names on the basis of origin, territory, or traditional uniqueness. Such laws, often manifested as Designation of Origin, are widespread in Europe, where they are often applied to artisanal products such as French champagne and Spanish ham.

If it received protected status, Icelandic whisky would be the third product to do so. Icelandic traditional sweaters, known as lopapeysur, received that status earlier this year and Icelandic lamb was granted the distinction in 2019.

Local Distributor Flouts Prohibitions on Home Beer Delivery

A new Icelandic beer distributor has begun delivering craft beer directly to customers’ homes in contravention of laws on alcohol sales to individuals, RÚV reports. “We’re challenging things a bit,” remarked Þórgnýr Thoroddsen, one of the owners behind Bjórland (‘Beerland’). “But really, we’re doing it because to us, it’s the most reasonable thing in the world.”

Bjorland.is went live on March 1. Initially, it only delivered beer to restaurants with licenses to sell alcohol. The COVID-19 pandemic immediately took a huge toll on the fledgeling company’s profits, however, which is how the owners came to the idea of experimenting with home delivery to individual customers. Reception has been very positive thus far.

“In short, we believe that we’re selling products that are on par with any other,” said Þórgnýr, pointing to inconsistencies within existing laws. “It’s already possible to get [alcoholic] beverages of this kind, in the same quantities, delivered to your home from abroad.”

Asked if he was concerned about incurring penalties for breaking current laws on domestic sales and deliveries of beer to customers at home, Þórgnýr said yes, but not immediately. He believes this is the only way to see how online alcohol sales to individuals in Iceland will be handled going forward.

Þórgnýr also said that his company was in a better position to challenge existing distribution and sales laws than small local breweries. “We’re taking one for the industry as a whole because small breweries generally don’t do so well against large ones,” he said. Small breweries have to invest a lot of energy into marketing and have a much smaller market share than their larger counterparts. Bjórland, concluded Þórgnýr, is in a much better position to make this challenge; small breweries have more to lose.