Q&A on the comprehensive reform of the Alcohol Act
On 14 September 2017 the Government submitted to Parliament a government proposal for a comprehensive reform of the Alcohol Act. Parliament will discuss the proposal during the autumn session.
Below you will find a number of frequently asked questions and with their answers.
Why is the Alcohol Act being reformed?
Finland’s alcohol legislation consists of the Alcohol Act from 1994 and 13 Decrees issued under the Act. The reform would integrate the Act and the Decrees it into a single Act as comprehensively as possible.
The reform is also part of the Government’s deregulation project. The current Alcohol Act contains some outdated and rigid regulations from previous acts (Alcohol Act of 1969 and the Spirits Act (Väkiviinalaki) of 1932).
What is the basis for the reform?
The reform aims to find a balance between the reduction of public health harms caused by alcohol use and the needs of Finnish business and industries.
The main principle would still be the prevention of negative effects of alcohol. Alko’s current retail monopoly and the licencing system for retail sale and serving of alcoholic beverages would be maintained.
Any unnecessary, obsolete or rigid regulations in the current legislation would be removed to ease the burden on the restaurant sector, especially. Provisions on alcohol serving hours and customer service in restaurants would be softened.
How has the Government overseen preparation of the comprehensive reform of the Alcohol Act?
The political work on the comprehensive Alcohol Act reform began in February 2016 by Prime Minister Juha Sipilä’s Government, when Minister of Family Affairs and Social Services Juha Rehula presented his preliminary proposal to the ministerial working group on health and wellbeing. The preliminary proposal sought a balance between reducing the negative effects of alcohol and taking into account the needs of the industry.
Next, the parliamentary groups of the government parties discussed the preliminary proposal, and certain key policies regarding the reform were outlined in further negotiations between the group representatives on 19 May 2016. The Ministry of Social Affairs and Health continued its work on the reform based on these policies.
The draft government proposal was first discussed in the ministerial working group on health and wellbeing in November 2016 and then circulated for comment to all the relevant stakeholders from 22 November 2016 to 16 January 2017. A summary of the comments was completed in March 2017.
The proposal was finalised in the Ministry of Social Affairs and Health. During the spring and summer the government proposal was discussed in the Finnish Council of Regulatory Impact Analysis (FCRIA), the European Commission and the Advisory Committee on Local Government Finances and Administration, among other bodies. It was also discussed in the ministerial working group on health and wellbeing during the summer.
The government proposal on a new Alcohol Act was submitted to Parliament on 14 September 2017. What is the timetable for the parliamentary discussions?
The timetable depends on decisions reached in Parliament. In Parliament the government proposal is sent to the Social Affairs and Health Committee, which will discuss the proposal and draw up a report. It is likely that even other committees will discuss the proposal and issue their statement.
How has the reform been prepared?
The reform has been prepared by the Ministry of Social Affairs and Health in close cooperation with the National Supervisory Authority for Welfare and Health (Valvira) and the National Institute for Health and Welfare (THL). Expert assistance has been provided by other ministries, particularly the Ministry of Justice, the Ministry of the Interior, the Ministry of Economic Affairs and Employment and the Ministry of Finance.
The Ministry of Social Affairs and Health has also organised meetings with the administrative bodies, membership working groups and key persons in the Federation of the Brewing and Soft Drinks Industry, Finnish Microbreweries’ Association, Tilaviiniyrittäjät (fruit wine producers), Alcoholic Beverages Industries Association, Association of Finnish Alcoholic Beverage Suppliers, Majoitus- ja ravitsemispalvelut MaRa ry (hospitality management services), Finnish Grocery Trade Association (PTY), and Finnish Association for Substance Abuse Prevention (EHYT).
How are the impacts of the reform being assessed?
Estimates of the economic and health impacts of the reform were included in the draft government proposal.
Allowing grocery stores, kiosks and petrol stations to sell stronger alcoholic beverages would generate the biggest economic and health impacts, according to estimates. It is likely that most of the economic benefits will be reaped by the beverage producers and sellers. However, it is also likely that the increase in total alcohol consumption resulting from having stronger alcoholic beverages available in retail stores will also increase the negative social, health and economic effects of alcohol.
What will be the most significant change to the retail sale of alcoholic beverages?
At present, the sale of alcoholic beverages by retail stores is limited to beverages produced by fermentation and containing no more than 4.7% by volume of ethyl alcohol. The reform would raise this upper limit to 5.5% by volume of ethyl alcohol and remove the requirement for production by fermentation. This would mean that grocery stores, kiosks and petrol stations would be able to begin selling stronger beers and ciders and long drink beverages produced by adding distilled alcohol.
What will happen to Alko’s monopoly status?
Alko Ltd. will still have its current retail monopoly. Alko, a state-owned limited liability company, currently holds the exclusive right to sell alcoholic beverages produced by fermentation and containing greater than 4.7% by volume of ethyl alcohol. The current exceptions to this are fruit wines and sahti sold directly at the place of production.
Under the new Alcohol Act, Alko would have the exclusive right to sell alcoholic beverages containing greater than 5.5% by volume of ethyl alcohol, with the exceptions of fruit wine, sahti and craft beers.
What will the reform mean for the sale of small-scale fruit wine, sahti and beer?
The producers of fruit wine and sahti would retain their right to sell their products directly at the place of production. Fruit wine would refer to alcoholic beverages produced from berries, fruit and other parts of plants (excluding grain products and grapes) by fermentation and containing no more than 13% by volume of ethyl alcohol.
The new Alcohol Act would introduce the concept of craft beer which the producers could sell directly at the place of production. Microbrewery products, or craft beers, would refer to alcoholic beverages produced primarily from malt by fermentation and containing no more than 12% by volume of ethyl alcohol. Craft beer could also refer to gluten-free corn beers or similar and beers produced by adding other parts of plants or spices during fermentation. Sahti would refer to traditional unfiltered and unpasteurised labour-intensive beers containing no more than 12% by volume of ethyl alcohol.
The upper limit for the production of fruit wine would remain at the current 100,000 litres a year per producer. Microbreweries, on the other hand, could produce up to 500,000 litres a year. Another condition would be that the producers are independent.
The restrictions to the production volumes and the requirement of independence aim to limit the extent of the exceptions to Alko’s retail monopoly. The exceptions would be limited in nature, and they would concern traditional and craft production. The aim is to ensure that the small-scale sales by Finnish producers do not discriminate against wine and beer producers in other EU Member States. This is based on a ruling by the EU Court of Justice (C-198/14 Visnapuu) which addressed, among other issues, the exceptions regarding the retail sale of fruit wine.
Will it be possible to buy alcohol from restaurants and bars to consume away from the premises?
Licensed premises would be able to sell alcohol to consumers for consumption off the premises, just like retail stores, in accordance with the normal retail sales rules. This would mean that only alcoholic beverages containing no more than 5.5% by volume of ethyl alcohol can be sold for off-premise consumption and only during the regular hours for retail sale of alcohol (from 9 to 21).
Will foreign online traders be allowed to sell alcoholic beverages to Finnish consumers?
The current regulations are ambiguous with regard to foreign online sale of alcoholic beverages (cross-border distance sales), and they have been interpreted by the European Court of Justice in the case C-198/2014 Visnapuu. The Court ruled that the current ban in the Finnish Alcohol Act concerning cross-border distance sales of alcoholic beverages complies with EU law under certain conditions. However, a national court of law must examine these conditions closer and issue its final ruling in the case. Helsinki Court of Appeal dealt with the case in spring 2017, but since the court’s ruling was appealed to the Supreme Court, the final, legally valid ruling in the case depends on the Supreme Court.
The reform does not introduce any amendments to the current regulation banning cross-border distance sales of alcoholic beverages. However, the regulation will be amended in the light of the Supreme Court’s ruling, if necessary.
Will consumers still be able to buy alcoholic beverages from abroad?
The case law of the EU Court of Justice has even before stated that a Member State cannot prohibit consumers from importing alcoholic beverages for personal consumption. According to the EU Court of Justice, import for personal consumption is permitted if the person ordering the goods or a person unconnected to the seller transports the alcoholic beverages.
If Finnish consumers, who order alcoholic beverages from foreign online traders, want to comply with both the Alcohol Act and the Excise Taxation Act, they need to make sure that the foreign online trader does not transport alcoholic beverages to Finland and that either the seller or the buyer pays the Finnish alcohol excise duties.
All other lines of action are in violation of the Alcohol Act or the Excise Taxation Act. It is impossible to give more precise information on the consequences for sellers and buyers until the Supreme Court has issued its ruling on the case mentioned above.
Several foreign online traders are advertising that the alcohol excise duties paid in France or Estonia, for example, are sufficient and that there is no need to pay the Finnish excise duties too. Are the online traders right?
No, they are not. Excise duties on alcoholic beverages, however, fall outside the scope of the Alcohol Act. According to the EU directive, only alcoholic beverages purchased for personal consumption and transported by the consumer are duty-free in this manner. Provisions on alcohol taxation are laid down in the Excise Taxation Act and the Act on Excise Duty on Alcohol and Alcoholic Beverages. These acts are the responsibility of the Ministry of Finance.
Will mobile stores begin selling alcohol now?
The new Alcohol Act would give the existing mobile grocery stores the right to sell alcoholic beverages. It would also allow Alko to sell alcoholic beverages from its own mobile stores. In both cases, the mobile store route would have to serve permanent or seasonal residents and be approved by the licensing authority. This would mean that mobile stores would not be allowed to sell alcoholic beverages on festivals and public events, for example, or make home deliveries.
What will be the biggest changes to licenced serving of alcoholic beverages?
Provisions on the opening hours of restaurants and bars are currently laid down in the Act on Accommodation and Catering Operations. The reform would deregulate the opening hours of restaurants and bars, as was done with store opening hours at the beginning of 2016.
Under the current Alcohol Act the regular serving hours end at 1.30am. Restaurants and bars can apply for a licence for two years from the Regional State Administrative Agencies for extended serving hours until 2.30am or 3.30am, if they have special grounds for the extension. Restaurants and bars must close half an hour after their serving hours have ended.
After the reform the regular serving hours would still end at 1.30am. However, restaurants and bars could continue to serve alcohol until 4.00am by notifying the authorities of the extension. Moreover, restaurants and bars would no longer be obligated to close their doors half an hour after their serving hours have ended. However, they would have to make sure that their customers consume their drinks within one hour of the end of serving. There would no longer be any licensing process. However, restaurants and bars would have more obligations to maintain public order, and the authorities could still restrict or prohibit serving of alcohol in the early hours of the morning to prevent public disturbances.
At present there are three types of licences to serve alcoholic beverages: A, B and C licences. A licence means the right to sell all types of alcoholic beverages, B the right to sell wines, and C the right to sell alcoholic beverages containing no more than 4.7% by volume of ethyl alcohol. The reform would introduce a single serving licence covering all types of alcoholic beverages.
Will there be changes to the requirements for personnel at licensed premises?
Currently, each restaurant and bar must have a ‘responsible manager or substitute’ present, who meets a set of specific training and experience requirements. In the future, there would need to be one designated adult manager present during each shift, but there would no longer be any specific qualification requirements for the manager. These designated managers would need to have a certificate (an ‘alcohol passport’) showing that they know the basics of the Alcohol Act.
At present, restaurant and bar staff must be at least 18 years of age with the exception of waiter students, who must be at least 16. In the future, persons who are 16 years of age could serve alcohol under the supervision of the shift manager.
What changes will be made to alcohol serving areas?
At present restaurants are not allowed to share serving areas. The new Alcohol Act would allow shared serving areas. These serving areas would probably be food courts or similar premises where customers can buy food from many different kinds of food vendors and where there is a common area for dining.
The so-called catering permits would allow restaurants and bars to serve alcoholic beverages in pre-approved business, venue and festival premises after they have submitted notice of this to the relevant Regional State Administrative Agency. As a result, music festivals and other public events would no longer need to reapply every year for a temporary serving licence.
Even in the future, the serving areas would have to be enclosed or clearly marked out.
Will Alko's opening hours be deregulated?
No, they will not. At present, Alko stores are open Monday to Friday at 9–20. It is proposed that on weekdays the opening hours of Alko stores would be extended by an hour to close at 21.
What does it mean that Alko will be able to organise auctions?
Wine auctions refer to events where wines are sold to the highest bidder, as in a regular action. Often the products auctioned off are high-priced vintage wines or other rarities. Unlike Finland, for example Sweden already allows the organisation of wine auctions.
Will there be changes to the alcohol advertising regulations?
The previous amendments to the alcohol advertising regulations came into effect at the beginning of 2015. This time, no major amendments are proposed to the regulations on advertising.
However, the new Alcohol Act would allow happy hour promotions.
Only Alko and other retail stores are at present allowed to publish printed or online price listings of strong alcoholic beverages. In the future, even producers, wholesalers and restaurants and bars could present their products for example in online price listings.
Will consumers be able get rewards or bonuses for buying alcoholic beverages?
No, they will not. Under the new Alcohol Act, it would no longer be possible to offer or pay customers rewards or bonuses for the purchase of alcoholic beverages. A similar ban is already in place for the sale of tobacco products. As a result, alcoholic beverages would be excluded from retail stores’ bonus systems, and customers could not be rewarded with bonuses for buying alcoholic beverages. The ban would also apply to alcoholic beverages purchased abroad or on board ferries; all purchases of alcoholic beverages would be excluded from the bonus systems of Finnish retail stores.
Will there be changes to the regulations concerning the making of home-made wine or beer?
At present, private individuals can make beer and wine at home using a limited variety of raw materials. The new Alcohol Act would impose no restrictions on the raw materials used. However, distilling would still be prohibited.
How about deregulation? Have you really removed unnecessary norms from the Alcohol Act?
In the new Alcohol Act, norms have been removed and new opportunities for operations have been created especially for the restaurant sector. The consolidation of all regulations into one act means that it will be easier for all operators in the alcohol sector, and for the public too, to keep track of the relevant regulations.
Deregulation means, for example, that restaurants and bars could decide opening hours at their own discretion. They would be allowed to serve alcohol until 4.00am by notifying the authorities of the extension, and customers could enjoy their drinks until 5.00am. All restaurants and bars could serve all kinds of alcoholic beverages and even sell them for consumption off the licenced premises on the same conditions that apply to retail stores. Moreover, the restrictions on the serving sizes of alcoholic beverages would be removed. Restaurants and bars would also be allowed to showcase their selection of strong alcoholic beverages on their websites, for example.
The special qualification requirements for responsible managers in restaurants would be removed to facilitate recruiting and shift scheduling especially in seasonal restaurants and restaurants catering for families and tourists.
What are the most significant impacts of the Alcohol Act on businesses in the sector?
The consolidation of all regulations into one act would benefit all businesses in the sector.
Greater selection of alcoholic beverages in retail stores and the right to sell stronger alcoholic beverages would the sales increase especially by breweries and convenience stores. Domestic microbreweries producing craft beers would benefit from their new retail sale rights. Producers of strong alcoholic beverage would have greater opportunities to promote their products in the internet, for example.
Deregulation mostly affects the restaurant sector. Lower qualification requirements for responsible managers in restaurants would facilitate recruiting and shift scheduling in restaurants.
Will neighbours be able to sleep during the night? Can anything be done if a restaurant’s customers keep the neighbours awake at night?
The new Alcohol Act would strengthen people’s right to exert influence over their neighbourhood. The aim is that the extended opening hours of restaurants should not risk the neighbours’ health.
Where necessary, the licencing authorities would have the obligation to request a statement from the municipality and the police regarding serving licence applications. Residents in the neighbouring buildings would have to be notified of any applications concerning outdoors serving or licenced premises with a history of disturbances or excessive noise.
The licensing authorities would have the right to impose restrictions on the serving licence to prevent excessive noise in the neighbourhood, for example. They could impose shorter serving hours or order restaurants to lower their noise level. Municipalities would have a special right to decide on extended serving hours for example in central residential areas to promote the safety of residents. Municipal councils would have the right to prohibit, at their own discretion, the serving of alcoholic beverages in all the restaurants and bars in a certain area after 2am or 3am, for example. They could also restrict the serving hours on weekdays so that the extended serving hours would apply only on weekends.