Leaving 2020 and all its misery behind, an interesting development has occurred in the Norwegian market related to the population’s alcohol consumption. For the first time in decades, there are accurate numbers covering trends and consumer behaviour.
As one of the few countries in the world with a state-owned-and-governed monopoly on alcoholic beverages above 4.7% ABV, Norway should be in an ideal position to monitor what, and how much, is being consumed by its inhabitants. However, with steadily increasing taxes imposed on all imported and locally-produced alcohol, Norwegians have been known to purchase their alcohol across the border in Sweden where taxes are lower, or at duty-free shops while travelling. Its inability to monitor this activity has long been a frustration for the monopoly. In 2020, all of that changed.
How COVID-19 has given more clarity on consumer behavior
With the arrival of the pandemic, there were dramatic changes in everyone’s lives across the globe. Among these were travel restrictions. The effects of these restrictions gave the monopoly unprecedented insight into how much alcohol Norwegians actually consume and where they buy it. Norwegians living along the long border with Sweden were no longer allowed to buy their wine and spirits in the Swedish shops on the other side. The airports and duty-free shops also closed their doors. The only places to buy alcohol were the local monopoly shops, of which there are 337.
The monopoly’s mandate and sales figures for 2020
It is in the monopoly’s mandate that 97% of the population should either live in a municipality with a monopoly shop or no further than 30 kilometres from a store. At present this has been fulfilled, with 97.7% living within that 30 kilometre-radius and 94.5% living in a municipality with a shop.
In the past 20 years, annual growth in alcohol sales has been marginal at 0 to 4%. However, a comparison of 2019 and 2020 shows an unprecedented 40% increase across the country. This is mainly due to the closed borders and the absence of duty-free sales at airports. This trend is uneven, however, with lower growth on the west coast and a 60% increase close to the Swedish border.
There are several other reasons for this increase. Among these was a two-month national ban on the sales of alcohol in restaurants from the first lockdown on March 12th. A subsequent ban was imposed in the capital, Oslo, from November 9th until the turn of the year. People were restricted to enjoying alcohol in their homes. Norway is also a country where most people own a cottage, either in the mountains or by the sea, with some even having both.
Throughout the year, people who do not specifically need to be at the office have been encouraged to work from home. This led to a large part of the population moving into their cottages for longer periods of time, and shopping for alcohol locally. Monopoly shops in areas with a high density of cottages saw a remarkable increase in sales. As Norwegians were forced to holiday in their own country, in July, the time when a large part of the population would normally be abroad, they bought 59% more alcohol than the previous year.
The monopoly served over 7.5 million more customers in 2020 than in 2019 and saw a 21% increase in visits to the shops, up from 34.5 million. With the current COVID restrictions, there has been an immense effort to increase distance between shoppers and ensure stores are safe for both the employees and customers. There are guards outside the shops during the busiest times of day, and people are lining up and waiting their turn patiently as a maximum number are allowed in the shop at any time. With the introduction of working from home, people are also doing more shopping during off-peak hours. A “traffic light system” has been introduced online, depicting red, yellow and green lights to help people avoid shopping during the busiest times of day.
Even though the figures clearly show a sizeable increase in sales volumes, a survey of 60,000 people conducted in 2020 by Norwegian analysts, Opinion, shows that Norwegians do not seem to have increased their drinking habits during the pandemic. Quite the opposite.
Three out of ten say they are drinking less alcohol and only one out of ten admits to consuming more than before the arrival of the virus. Focusing on December alone, normally a month with high alcohol consumption due to holiday festivities, a mere 8% admitted to drinking more, while 29% say they had reduced their intake. This might be associated with the forced shift to drinking at home rather than in bars and restaurants. Total numbers for the whole period show that only 9% drank more while 19% drank less and the remaining 63% did not change their habits.
The reduction in consumption in the context of increased domestic purchases illustrates how much alcohol was being purchased in Sweden and duty-free shops before the pandemic.
Figures from Statistics Norway show that in the third quarter of 2020 the consumption of wine measured in pure alcohol was the equivalent of 0.76 litres per inhabitant. If one includes beer, spirits and alco-pops as well as wine, per capita consumption was 1.93 litres of pure alcohol.
Norway is a small country with 5.3 million people and red wine has always been the preferred drink by quite a large margin. In the past, this has slowly begun to change with white and sparkling wines both gaining ground. In 2020 though, rosé was the segment to watch, with a 72% increase in sales. This was from a low base, compared to red and white initially, but with the whole population spending the summer in Norway, it shows that this is what consumers prefer to drink in the warm months. Another segment that, in recent years, has not been very popular is fortified wines. However, in 2020, vermouth sales rose by 37%, making it the clear winner in this segment. The vermouth trend that has been evident in Europe for a while has finally reached the far north of Europe. In the spirits segment, gin is clearly the preferred choice with an increase of 71%.
Given the extremely difficult year with therestrictions and complete lockdowns experienced by the hospitality trade, there have not been many new trends to be seen in the on-trade. Natural wines have enjoyed some activity, with several new wine bars having opened their doors in the past couple of years. However, this is a trend that only caters for a niche audience. Norwegians maintain their traditional values when it comes to wine consumption: Italy, Spain and France take top places for reds; Germany, France and Italy for whites; and Italy, France and Spain for sparkling. Rosé, which has had the largest increase in percentage terms, is significantly dominated by France, possibly thanks to the popularity of Provence among Norwegian holidaymakers. Buying these wines at home might have been a small compensation for not being able to enjoy them on the French Riviera.