Health Minister Calls for Action on Online Alcohol Sales

Minister of Health Willum Þór Þórsson

With the hypermarket chain Hagkaup planning to launch an online alcohol store, Health Minister Willum Þór Þórsson has expressed his concern about public health impacts. Willum has called for legal action to address the rising online alcohol sales, which he views as undermining government health objectives.

A legal grey area

Legal uncertainty has surrounded the operation of online alcohol retailers in Iceland. As noted in an In Focus article published by Iceland Review, for the past century, alcohol could only be purchased through the state liquor store, Vínbúðin.

In 2020, however, the online craft beer retailer Bjórland began selling craft beer directly to customers, exploiting a legislative loophole that allowed foreign-based retailers to sell alcohol to Icelandic customers (while domestic companies could not). By establishing a foreign-based company, Bjórland’s sales became legal. In 2021, Santewines SAS followed suit by selling wine online through a French-based company.

In response, ÁTVR – the State Alcohol and Tobacco Company of Iceland – initiated legal proceedings to halt this activity, but the case was dismissed by the district court without substantive consideration. In brief, the court concluded that ÁTVR’s demand for Bjórland to cease online alcohol sales was too flawed to be considered. The ruling noted that if the demand were accepted, Bjórland would be unable to operate its online store, which legally sells alcohol to Icelandic consumers for personal use.

The court also found that ÁTVR did not provide sufficient evidence of damages caused by other companies’ online alcohol sales, nor proved that such sales replaced purchases from ÁTVR rather than supplementing them. Consequently, the court ruled that ÁTVR has no legal interest in obtaining a judgement for damages.

Undermines public health objectives

As noted by RÚV, several more online retailers have since opened in recent years, and the Icelandic hypermarket chain Hagkaup has announced plans to launch its own online alcohol store in the coming weeks. Health Minister Willum Þór Þórsson has stated that this undermines the government’s public health objectives and must be addressed. He reiterated this stance during a parliamentary debate on the issue yesterday.

“We are at a certain crossroads, and we can indeed call it a public health threat when we see online sales increasing to this extent and when one of the nation’s largest retail chains has announced the opening of an online store,” Willum Þór stated.

As noted by RÚV, last week, Willum formally requested information from Finance Minister Sigurður Ingi Jóhannsson on whether the legality of these online retailers would be tested in court. Sigurður responded by sending a letter to the metropolitan police yesterday, highlighting that the activities of these online retailers might constitute legal violations.

The letter references a legal opinion commissioned by the ministry on the operations of these retailers and points out that the issue has not been substantively tested in court. It is necessary to specifically determine whether sales through online retailers constitute legitimate alcohol imports or if the registration of these companies abroad is merely nominal.

A house divided

Opinions on this issue have been divided within the government, RÚV notes. Ministers from the Independence Party have supported opening domestic online retail, and the Minister of Justice announced a bill to this effect last winter. However, the bill has not been presented to parliament, partly due to opposition from the Progressive Party and the Left-Green Movement.

Willum asserts that it is essential to test the matter in court: “Based on the legal framework we have established, and the public health policy we have all agreed upon in parliament, it is absolutely necessary to test the legality of online sales and decide the direction we want to take with the nation’s public health,” Willum Þór stated before parliament yesterday.

New Car Sales Rise Despite High Interest Rates, Inflation

driving in reykjavík

The sale of new cars rose during the month of May when compared to sales during the same month last year, RÚV reports. This increase is even more pronounced among individual buyers. A total of 695 new cars were purchased in May, compared to 511 last year: an increase of over 36%.

Up by nearly 15%

As noted in an article on the website of the Icelandic Federation for Motor Trades and Repairs (i.e. Bílgreinasmbandið, an association of employers in the sale of vehicles, products, and services) in early of May, sales of new vehicles in April increased by 16.1% compared to April of last year; a total of 1,629 new were registered compared to 1,403 last year. “Overall, after the first four months of the year, sales of newly registered vehicles have increased by 11%. This year, 5,129 new passenger cars have been sold compared to 4,621 new passenger cars last year,” the articles notes.

This trend has continued in May. Although high interest rates and inflation have a significant impact on those buying vehicles on credit, this is not yet reflected in the figures for car sales in the month of May, María Jóna Magnúsdóttir, Managing Director of the Icelandic Federation for Motor Trades and Repairs, stated in an interview with RÚV.

As noted by RÚV, sales of new cars rose in May, compared to the same month last year, increasing by over 36%. Electric cars account for the most significant part of the increase. “There is a considerable increase, especially among individual buyers. The main reason for that is that in May of last year, the supply of electric cars was small; electric vehicles form a large share of the vehicles sold to individuals this May. Last year there were about 278 electric vehicles sold to individuals, compared to about 500 in May of this year,” María Jóna observed.

Tesla may skew the statistics

Electric cars are by far the most popular type of vehicle, accounting for nearly 40% of all cars sold, with electric, hybrid, and plug-in hybrid cars being 75% of the total of new cars sold. RÚV notes that Toyotas are the most popular of new cars followed by Teslas. As Tesla often delivers more vehicles at once, compared to other manufacturers, this may serve to skew the statistics. “Tesla has become big in the individual market, and when they’re delivering such a number of vehicles at short intervals, it affects the market, which means that it’s good to review the figures over a longer period for more accurate data.”

Starting to have an impact

Car rentals purchase a significant number of vehicles at this time of year. Sales to individual buyers, however, are noteworthy – especially in light of the current conditions, i.e. high inflation and high interest rates. “If we examine the numbers over the whole year, new car sales to individuals are up by about 3.6%.”

When asked if the figures in May had begun to reflect higher interest rates and borrowing fees, María responded thusly: “No, maybe not at this exact moment, but, of course, it’s beginning to have an impact; when car loans are almost in the double digits, it begins to affect buyers who are financing with loans,” María Jóna observed.

In a recent interview on Bankrate, Sarah Foster, senior US economy reporter, explained the effect of inflation on auto loan rates, noting the goal of higher interest rates in layman’s terms: “Higher borrowing costs don’t just disincentivize spending but squeeze people out of being able to afford big-ticket items, causing the economy to slow … the hope is that eventually, those higher rates will crush demand so much that inflation eventually drops.”