Estonians set to become the world's biggest spenders on booze

By bne IntelliNews May 29, 2014

bne -

 

Estonians spent a larger percentage of their shopping budgets on alcohol than any other country last year, according to a new report, although their neighbours also rank highly, and likely affected the outcome. Still, Estonia is now set to become world leader in per capita consumer expenditure on alcohol, says Euromonitor International. 

According to the report, globally Estonians allocated the highest proportion of consumer expenditure to alcoholic drinks, at 6.5%, in 2013, compared to an average of 1.5%. Other countries with a high share of consumer expenditure devoted to alcoholic drinks in the same year were Russia (5.8%), Belarus (5.5%), Peru (5.4%), and Latvia and Lithuania (both on 5.3%).

While the neighbours on that list regularly rank in the world top ten for alcohol consumption - Belarus came top in the latest World Health Organization report with over 17 litres of pure alcohol per person in 2008-10, with Lithuania third - Estonia saw a large drop in the latest consumption survey. Yet the tiny Baltic state is still set to become world leader in per capita spending on alcohol by 2021, says Euromonitor. 

But it's not necessarily that Estonians are drinking more. In 2013, Finland had the world's highest level of per capita spending on booze, at US$844. That was followed by Switzerland (US$788.8), Norway (US$788.4), and New Zealand (US$744.2). Estonia's US$663.1 - which put it fifth last year - is set to rise thanks to rising sales to the neighbours, rising taxes, and recovery from the crisis.

The ferry lines linking Tallinn with Finland are notorious for drunken behaviour as Finns head over the short stretch of the Baltic Sea to stock up on booze at prices far below those they can find at home. Although Finns were the highest per capita spenders on alcohol in 2013, that was largely thanks to a pricing boost on the back of yet another tax hike on drink the previous year. Sales volumes in Finland actually dropped, which follows a long term trend. It seems unlikely that Finns are simply stopping drinking in such large numbers. 

As well as the rising numbers of Finns effectively exporting Estonian booze then, the rising trend in Estonian alcohol spending was also impacted by the ongoing recovery from the crisis, as well as its own rising taxes. "In some categories consumers began to trade up to premium categories again," the Euromonitor report notes, "which showed that Estonian purchasing power is steadily beginning to recover from the economic crisis and consumers are spending more money on non-essential products, such as alcoholic drinks."

At the same time, Euromonitor notes that "increases in alcoholic drinks excise tax somewhat increased unit prices in all categories in 2012 in Estonia." Government plans include a 5% hike in alcohol excise tax each year from 2013 to 2016, which may well explain why Estonian per capita spending is set to take global top spot.

"Overall volume sales are not expected to decline due to the increasing prices as the improving purchasing power of consumers is set to support sales," the analysts conclude.

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