Cheap Swedish beer gives Norway a headache

Cheaper Swedish alcohol, as well as an increase in beer brought illegally across the border, is giving Norwegian vendors a headache, as manufacturers continue to see a drop in sales.

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Recently, beer sales in Norwegian region Östfold, near the Swedish border, has taken a beating and has reportedly dropped by 5 per cent in the last year, compared to 3 percent for the country as a whole.

"It is the proximity to the border and the fact that the shopping centres are getting better on the other side. The motorway also makes it easier to bring wares home. It must be added, though, that there is a huge amount of smuggling going on," said Hansa Borg brewery's CEO Lars Midtgaard to Norwegian TV network NRK.

Midtgaard, along with many in the industry, blame this on the increase of tax on alcohol, which was raised by 7 percent over 2011 and 2 per cent at the beginning of 2012.

"At the same time the fees have been stable in our neighbouring country," Midtgaard told NRK.

And the cheaper prices in Sweden may well be the reason many choose to do their shopping across the border.

A study carried out by HUI research in Sweden from 2010, showed that 60 percent of Norwegians living near the Swedish border had visited the country to shop in the first six months of the year.

But despite this, the Norwegian customs are seizing large consignments of foreign alcohol at its borders, and the illegal trade may well be what is having the largest impact on sales in Norway.

"The difference in price between us and foreign countries are increasing and it becomes increasingly more profitable to smuggle beer into the country," said Midtgaard to NRK.

However, customs officers at Svinesund are doing their best to keep the illegal alcohol smuggling at bay.

It is estimated that as much as 415,000 litres of illegal beer brought in from other countries was confiscated in Norway during last year, according to NRK.

Swedish politicians have been concerned about the persistent problem of Swedish alcohol smuggling to Norway since the warning signals started coming in from industry members last year.

Erika Nylander, Director General at Swedish Association of Alcohol Export and Import, said in a statement in November that 60 per cent of the Swedish Parliament were in favour of an investigation to map the alcohol smuggling.

"That indicates that this issue is one of the biggest problems our community is facing,” she said at the time.