Sweden is more than a monopoly market

Ole Nielsen, CEO, Fine Wine Club International
Ole Nielsen, CEO, Fine Wine Club International

Considering that Sweden’s alcohol monopoly is a government agency whose entire mission is to make sure people drink responsibly, you’d expect it to be housed in a grim building. But its historic curved ceilings, light-filled rooms and friendly staff make it a welcoming place, much like Sweden itself. 

Ask anybody here for details of what they do, and they’ll tell you, because Systembolaget is nothing if not transparent. The same ethos permeates Systembolaget’s stores, which are neatly laid out, with a wide product range that’s easy to navigate. Depending on whose figures you trust, Systembolaget is responsible for up to 79 percent of Swedish alcohol consumption.

Step outside into central Stockholm and there’s a whole other world of wine. Sweden boasts a vibrant restaurant scene, staffed by some of the most knowledgeable sommeliers in the world. A look at the stylish people walking by tells another tale — there are plenty of people able to pay high prices for the wines they like.

While alcohol consumption overall is dropping, wine consumption is rising; it’s currently about 26L per capita. This is a market in growth. But, like all markets, it has its own quirks and ways of doing business.

The monopoly
The Swedish government controls retail sales of alcohol. Systembolaget — literally, the “systems company” — founded in 1955, has the exclusive right to sell alcoholic drinks containing more than 3.5 percent ABV and is legally required to supply the market with a wide range of style and prices. Systembolaget’s 426 stores are each stocked with a core range, plus products that match local preferences. 

There are two different roads into the monopoly. The first is by submitting wines to a Systembolaget tender. If the wine makes it into the fixed, or core, range it has a guaranteed listing time of nine months; if it’s organic, the guaranteed listing time is 12 months. Tenders, which take place four times a year, are not easy to win, not least because buyers will instantly reject any wines that haven’t met the requested criteria.

There are a couple of ways to boost a wine’s chances. One is to come from an obscure country, as Systembolaget is committed to offering wines from around the world. The other is to be certified organic/sustainable, as Systembolaget is actively seeking such wines. In 2013, Systembolaget pledged to have 10 percent of its total assortment certified organic by 2020. It reached that goal in 2016. 

There is another way into Systembolaget — to list wines in the ‘ordering’ assortment. Johan Lidby of Stockholm-based distributor Johan Lidby Vinhandel says: “Any product can be listed in the ordering assortment. But that doesn’t give you any distribution whatsoever unless the demand from the customer grows to a certain amount. If you want to gain distribution you have to outsell the wines that are actually on the shelf.” The only way to do this is by marketing — which explains why Swedish newspapers and magazines are stuffed with wine advertising, while wine media elsewhere struggles. 

Ole Nielsen, CEO of Fine Wine Club International AB, advises producers to think digitally when approaching Swedish consumers. “What you have today are several very clever companies specialising in digital marketing, which know exactly how to reach people,” he says, adding that it costs about 75,000SEK ($8,738) for an email that goes to a wide number of engaged customers. If the email generates enough leads, you “top it up with ads on Facebook or Instagram”, thus generating demand. “People will come into the local monopoly store asking for the wine,” explains Nielsen.

Getting into the system
Regardless of which approach producers take, they must have a distributor in order to enter the Swedish market. At first glance, it looks like there are plenty to choose from, but homework is required. “There are a huge number of importers — something like around 1,000 licences,” says Swedish wine expert Per Karlsson. “In reality, there are something between 100 and 200 importers that have some kind of activity.”

Like importers elsewhere, they are inundated with requests from producers. Assuming the wine on offer is of high quality, price can be one way to attract attention. “Obviously, the lower the better,” says Markus Berg, commercial director for Mondowine, part of Solera Beverage Group. “I would say if we are able to sell the produce at 100SEK ($11.64) or less, that creates opportunity.” 

Lidby says that until recently, the “golden price threshold was 99SEK. If you go over 100SEK you lose a lot of volume”. However, like other distributors, he adds that “we’re seeing that 99SEK is tough to be under, so it’s moving up to 120SEK”. When it comes to the on-trade, “we don’t see many problems between 100SEK and 150SEK without VAT — that’s the business-to-business price. At retail that would be maybe 150SEK and 200SEK. There is a real market there where people are prepared to pay if the wine has a story and personality.”

For Berg, it’s also crucial that wine producers come having done their homework, “to get an idea of what the monopoly is all about, and how the volume is shared between Systembolaget and the on-trade”. He says that 90 percent of the volume is sold through Systembolaget, leaving only 10 percent for the on-trade. 

As to whether to aim exclusively for HoReCa, Berg says it’s possible, though rare. “The factors that we are looking for when we talk to a new producer are, obviously, is there brand recognition? Are there scores? What are the opportunities for responding to tenders?” Other considerations are whether the producer is adaptable. “Can they create specific blends, will they be open to adapt their design and can they source more wine if we need bigger volumes?”

Private label, Berg goes on, “is big. It’s growing a lot”, partly because distributors want a stake in the brand. Having a range of products to offer is also important, because if one doesn’t sell, Berg says it’s vital to be able to switch to another product.

Nielson advises that if a wine is attracting high interest on Vivino, to use that as a sales pitch. “Sweden is no longer an analogue market, but a digital market. Consumers are using apps like Vivino and Wine-Searcher,” he says. If a producer can say, “I see there are 162,000 Swedes looking for our wine, but it’s not available there”, he would definitely be interested.
As for how to approach importers, Nielsen says he prefers an email with three bullet points, explaining why the market needs the wine, what kinds of volumes are available and the price. “There are a lot of people who love their own wine, but who don’t really have a clue if it’s saleable or not. It’s all about sales — it’s a hard world.” There is still a place, however, for the romantic and artisanal. “If you are a wine producer with two horses and you have a long beard and you do everything with no machines, there will be a lot of sommeliers who will get into that.”

For niche wines, or wines of limited quantity, the on-trade is definitely the place to be, not least because many restaurants won’t list wines available in Systembolaget because of the price comparison problem. “You have to find an importer with some good restaurants on the lists,” says Nielsen. The same restaurant may work with multiple suppliers: “Some of the restaurants we work with have 60 suppliers and that is a lot of administration.”

When it comes to attracting the attention of the on-trade, Lidby thinks it’s more about tastings and visits than about marketing. “Seventy percent of restaurant sales are made in a distance of 100km around Stockholm, and you have to call on accounts,” he says, adding that his company has eight full-time employees who do nothing but visit restaurants. “But you can build something reliable, because with Systembolaget, it’s mathematical. If you don’t sell enough you’re out. But with restaurants, you can build a long-term relationship.”

Market trends
As elsewhere, rosé and sparkling wines are rocketing in popularity, as are wines offering freshness and drinkability. “I think New World wines are really struggling in general,” says Berg, unless the wine is intriguing or premium: “South Africa is suffering and Australia isn’t doing fantastically well. There is a clear turn towards the Old World.” Italy is growing rapidly, he says. “They have a bit over 40 percent of the total market.”

Sugar is of concern, to the extent that Systembolaget lists the sugar content of its wines and a cohort of consumers actively seeks red wines with low sugar levels. Paradoxically, many Swedish consumers are partial to rich red wines such as Californian Zinfandels and wines from Valpolicella; so popular are these styles, that some Italian producers bottle Primitivo — another name for Zinfandel — and give it a Californian-style label. 

Screwcaps are widely accepted, as is bag-in-box (BiB): the three litre BiB accounts for 60 per cent of all wine sold in Systembolaget. The image of a wine is not hurt by being packaged in a BiB. “People don’t associate it with the cheapest wine,” says Berg.

The downside of a market that is willing to embrace new styles, innovative packaging and barefoot winemakers is that there is a strong novelty-seeking impulse. Swedes like to try new things and, even if they like a wine, may choose to buy something else next time. Maintaining a place on the shelf is a major challenge faced by all producers.

Lidby has one final piece of advice for producers: “Sweden is nothing like Norway, Denmark or Finland,” he says. “That doesn’t mean the same producer can’t be successful on the three markets, but you need to approach them differently.”
Felicity Carter




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