V&S Group looks ready to close a production site in Sweden as it looks to cut costs throughout its business in the Nordic region.

The Swedish state-owned company, owner of Absolut vodka, is mulling plans to close a plant in Sundsvall.

V&S has yet to make a final decision on the closure but believes the move will save the company around SEK35m (US$5.1m).

A spokesman told just-drinks today (13 December) that V&S is looking to reduce costs throughout the Nordic region by around SEK70m. He added, however, that V&S is not looking to close any of its other production sites.

The plant in Sundsvall, which employs 80 workers, produces traditional Swedish spirits brands, including Skane aquavit. However, output at the site has fallen as demand in Sweden for traditional products has slumped.

The spokesman said spirits sales in Sweden had more than halved in 10 years as consumers flocked to Denmark and Germany to take advantage of the lower tax on alcohol in those countries.

"In 1995, spirits sales in Sweden were 40m cases; now it's 17m," the spokesman said. "Those sales are, of course, through the retail monopoly but we know that spirits consumption in Sweden has not gone down over the last 10 years."

A decision on whether to close the Sundsvall site will come "early next year", the spokesman said. The closure of the site is slated for mid-2008.

Speculation on the future of V&S has grown since a change in government in Sweden in September. The country's new ruling centre-right party is believed to be ready to offload a raft of state-owned assets, including V&S.

The spokesman said there was "no news" on whether the company would be put up for sale. He also insisted the plans to cut costs throughout the Nordic region were drawn up by the company and not forced upon it by Sweden's new government.

"Even though the Swedish state is our owner, we take all the decisions necessary from a competitive perspective," the spokesman said.