Blog: Absolut alternative
Chris Brook-Carter | 19 November 2004
I had an excellent lunch yesterday with the new CEO of Vin & Sprit, the Swedish state-run alcohol producer that owns Absolut. It is always interesting to meet and chat with executives from V&S. Perhaps because it is a state-run business, I often find them more candid than their counterparts at publicly-owned PLCs, but they also have a slightly different view of the beverage market, coming from it as they do from a slightly different perspective.
As we are hoping to publish a full interview with Bengt Baron in the next few weeks I won’t give too much away, but needless to say the issues that dominated the discussion - Absolut aside - were alcohol taxation, public health and privatisation.
It was good to get the perspective of a producer in Sweden on the issue of taxation and cross border shopping. I listened to the leading wine buyer for Systembolaget speak at last year’s LIWSF on the subject. Her fears were that a fall in tax would bring with it a rise in alcohol abuse – a view point backed up in some ways by the Danish experience.
However, as Baron pointed out, given the massive numbers of Swedes shopping abroad for alcohol, the reduced taxation rate was a market reality already. And because these routes to market were not controlled by the state, the likelihood of them being abused was far greater.
I also quizzed him about privatisation – was it inevitable, would it improve the V&S business by lifting some of the constraints associated with the public sector? Again his thoughts were enlightening.
The potential privatisation of V&S is a huge political issue in Sweden that cuts across party lines and no one can be sure whether or not it will ever come about. However, Baron did point out that rather then being a bind, being state-owned had distinct advantages. Indeed he went so far as to say that the phenomenum that was Absolut would never have taken place if V&S had been a publicly-traded group that could only look ahead as far as its next quarterly results.
The vodka market, consolidation, RTDs and the private life of Sven Goran Eriksson also came under scrutiny, but I’ll leave those for another time.
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