Lisbet Olsen
Regional Business Manager Europe – KWV
Finland is one of Europe’s most complex and contradictory markets for imported wine. On the one hand the market can be frustrating – Finish legislation regulating the purchase of alcohol is strict, and forbids the sale of beverages with an alcohol level of 4.8% or over in supermarkets. The off-trade is totally dominated by Alko, the government-controlled retailer which has a monopoly on all direct-to-consumer sales, the exception being the ferries between Finland and Sweden/Estonia.
In addition, imported wine is taxed quite heavily in Finland, supposedly to cover the healthcare costs of widespread alcoholism across the country. Taking a weekend vacation to nearby Tallinn [Estonia], where costs are significantly lower, has become a national pastime for Finish consumers. But who can blame them, when almost half of the price of a bottle of KWV wine consists of taxes (45%)? Today, the market is still largely dominated by beer and spirits, although the consumption of spirits is falling as the government repeatedly broadcasts the health message. Interestingly, beverages with an alcohol content of over 22% cannot be advertised publicly, and therefore their prices do not even appear on Alko’s website. Moreover, wine consumption per capita is significantly higher in Sweden and Denmark, and overall still wine consumption has declined over the past two years, while imports of sparkling wine are conversely rising. The market for still wine certainly hasn’t grown as quickly as I had expected, but a lot of that is simply due to the prohibitive cost of buying wine.
Yet Finland offers many opportunities for the patient and diligent. We initially entered the market in 1952, selling one of the first South African brands in Finland – Roodeberg. Today, South Africa is one of Finland’s key exporters and the New World plays a decisive role in Alko’s sales. Our brand Pearly Bay is one of Alko’s top 10 bestselling wines, and the off-trade accounts for over 90% of total wine sales in Finland. Sales are dominated by the under-€10.00 ($10.78) category, and Finns purchase large amounts of bag-in-box wine. That’s the beauty of doing business here – Finnish consumers have no prejudice toward bag-in-box wine, screwcap, or anything else you can think of.
For example, over 70% of all South African wine is sold via bag-in-box, and Finns love innovative vessels – wine pouches and Prosecco in a can is becoming very popular. They’re generally a casual people and would think nothing of buying a premium wine – Chablis, for example – that wasn’t housed in a bottle, secured with cork.
The on-trade, however, tends to be dominated by the Old World. Sommeliers always remark that consumers regard eating out as a special occasion, and feel compelled to splash out on classical regions like Burgundy and Bordeaux.
But there is no monopoly regarding on-trade distribution, and Finland is full of willing importers/distributors who can help you get listings. But, if you’re from, say, Chile or Argentina, don’t expect to necessarily shift much volume.
Off-trade is a different matter – brands can be delisted by Alko if they run out of stock. So building a relationship with a good importer is essential, as they will handle the tendering process with Alko. It’s not like the US or UK, where the importer uses his relationship with the buyer. In Finland, any brand can tender to work with the state monopoly, but it is a long, drawn-out process, and once you’re in, stock management is essential. Alko buyers can be quite demanding, and insist we create new products to satisfy demand. If you want to work with them, you need flexibility, openness, and above all, patience. But the tender system guarantees you’ll sell a minimum volume, and everything is conducted with fairness and transparency in mind.
David Losantos
Europe Sales Director – Codorníu
Codorníu first entered the Finnish market in 1965, at a time when spirits dominated the majority of alcohol sales in off-trade. Today, Finland is one of the few Scandinavian countries in which Cava is leading the sparkling category.
Finnish consumers love high-quality, great-value products, and Cava sales are showing double-digit growth. It is one of the reasons why Finland is such an important market for Codorníu, as Cava is just as popular as Prosecco. All direct-to-consumer sales of Codorníu are channelled via Alko. However, Alko has become more flexible and easier to work with over the years. They have introduced new ordering systems, which makes it much easier to obtain the orders and introduce your products. In terms of consumer trends, the popularity of low-alcohol wine is increasing significantly. Indeed, this represents a potentially lucrative opportunity for brands, as wine with alcohol content below 5% can be sold in supermarkets.
Sales continue to be dominated by Helsinki, and to a lesser extent, Turku – the vast majority of Finland is rural and predisposed to consuming large amounts of vodka. But even in urban Finland, be aware that wine still plays second fiddle to spirits. However, the on-trade segment in Helsinki, while relatively small, is extremely dynamic, open, and willing to help.
Ultimately though, the secret to cracking the Finnish market is patience, and a good commercial plan. Your choice of partner will play a decisive role, as they will guide you through the complex tender process with Alko, and the mountains of paperwork. Like all markets, working with a good distributor is important, if not crucial to your success.
Konstanze Kugler
Finnish market analyst – IWSR
Finland is still recovering from a severe economic recession. Its economy depended a lot on the fortunes of Nokia, and close ties to Russia did not help economic developments, either. So any positive development in the Finnish alcohol market is a surprise, to be honest. The still wine market in Finland is in decline while sparkling volumes are on the up. There is a shift from red to whites and rosé; lighter styles are very much on trend. I would not be surprised if reds will be overtaken by whites by the end of 2017.
This is the great paradox in a nation historically associated with alcoholism – Finnish consumers are increasingly health-conscious and are becoming connoisseurs, knowing a lot more about categories and brands. Premiumisation is definitely happening, although most Finns are quite traditionally Scandinavian and prefer red bag-in-box wines. Nonetheless, consumers are following the trend of ‘less but better’. This has helped Old World wines to gain some volume last year. Chile remains the clear leader in both red and whites, which is probably due to its price point, but it is declining in both segments. Italy and Portugal saw excellent volume gains in 2016 in the red wine segment.
Whites from Germany, Australia and Spain grew last year in the Finnish off-trade. Smaller countries of origin, such as New Zealand, are of interest for consumers who love searching for new and exciting products. Wine writers remain a huge influence in the market as advertising is restricted.
Brands must also be aware that alcohol is very expensive in Finland due to extremely high taxes. Home consumption therefore prevails. Private imports from Estonia have been troubling the local alcohol market for years, as taxes there are much lower. Many Finns take the ferry across as a day trip and bring back unbelievable amounts of alcohol and sell it on to their friends and family. It is an actual business for many people. Moreover, the on-trade also suffered badly during the recession but is slowly picking up again. However, consumers have cut back on the amount they drink in the on-trade due to extremely high costs, so they want to make their on-trade visit special.
Out of all the monopoly markets, Finland is probably the most restricted one, and it is hard for importers and distributors to get detailed information on their own brand’s performances. Which is why a good partner is essential, as they can steer you through working with Alko. Indeed, any brand already in Finland will tell you the same thing – the tenders in the monopoly and performance times can be very frustrating as it is so difficult to get into the shops in the first place, and if sales do not reach a certain level, the brand is kicked out again. Advertising is also restricted so it is hard to launch new products.
Overall, I’m not very optimistic about the future of the Finnish wine market. I do believe, though, that it needs to bottom out at some point, as it has been declining for so long. Premium wines should perform well as entertaining guests at home has replaced many on-trade visits and consumers are looking for better products to serve guests. But my final advice to brands is this – you need to have a unique proposition to gain consumers’ attention in this tough trading environment. Finns travel a lot, so a great international reputation helps products to perform well in the Finnish market.
