EU-Membership and the Border Trade in Alcohol in Southern Sweden

Abstract

When Sweden joined the European Union on January 1, 1995, the personal import quotas for wine and strong beer were raised. This meant increased possibilities for Swedish consumers to buy alcohol at a lower price, mainly in Denmark and on the Continent. In this article the effects of the higher quotas on retail trade in the southern part of Sweden have been studied. These effects are considered to reflect the minimum increase in cross-border shopping for alcohol in the southern part of the country after the EU-membership. The decrease in retail sales, affected by the increased cross-border shopping, between 1994 and 1996 was equivalent to 2.7% of the total sales of alcohol officially registered in Sweden. Between 1995 and 1996, cross-border shopping seems to have increased to the same extent as it did between 1994 and 1995. The increase in cross-border shopping mainly affected the sale of strong beer, followed by sales of ordinary-strength beer, wine and spirits, in this order. Even citizens living 300–400 kilometres from the southernmost tip of Sweden seem to have increased their purchase of alcohol in Denmark and on the Continent.

This article also gives estimates of the consumers' reaction to price changes in alcoholic beverages sold by the state-owned monopoly stores during 1986–1995, both in Sweden as a whole and in the southern regions. It appears that consumers will buy more wine and strong beer if the prices are reduced. Considering the fact that the higher import quotas at least to some extent can be viewed as a price reduction in the southern part of the country, it is very likely that cross-border consumers will buy more alcohol abroad than they will if they stay in Sweden. Against this background it is safe to assume that since Sweden joined the EU, cross-border shopping has increased by more than an amount equivalent to 2.7% of the total, officially registered alcohol sales in Sweden.