Vintner fails to milk Sweden’s sacred cow
By David Ibison
Published: February 16 2009 17:47 | Last updated: February 16 2009 17:47
Mark Majzner is a laid back 42-year-old Australian who up until now barely had a political bone in his body. But this all changed after he signed a deal that allowed his modest company to compete with one of Sweden’s largest and most entrenched state-owned monopolies, Systembolaget.
The government-owned alcohol retailer has a presence on every high street and is known by the nickname “The System”. Swedes cannot buy alcohol from any other retailer and most of its stores keep bottles behind locked glass doors, bringing an element of pre-1989 eastern Europe to Sweden’s otherwise 21st century shopping streets.
Sweden joined the European Union in 1995 and EU regulations state there must be free movement of goods and services. The country’s state monopolies – which cover areas ranging from medicine to gambling – therefore do not sit prettily with the EU and in judgments the European Court of Justice has called on Sweden to open the door to competition.
An ECJ ruling allowing Systembolaget to keep its retail monopoly but permitting Swedes to buy alcohol online prompted Mr Majzner to set up his company, Antipodes Premium Wines. Registered in Malta, it buys pricier wine from around the world, warehouses it in Germany, pays Swedish taxes on behalf of customers and delivers the wine to their door. It has grown rapidly and has 27,000 members.
The Financial Times originally met Mr Majzner last summer and in an article argued that his business indicated that “after decades of state control, ‘The System’ is starting to crack”. But according to Mr Majzner, subsequent events make that claim appear optimistic. Mr Majzner signed a deal with the Swedish Co-operative Union (KF), which runs a nationwide chain of food stores, that allowed its 3m members to buy wine from Mr Majzner’s company using a KF website. Though the resulting sales volumes were expected to be tiny, the move meant that for the first time there would be a rival to Systembolaget on the Swedish high street.
But three days before the new service was due to go live, Mr Majzner was summoned to a meeting with a senior KF executive and told the deal was off even though the two companies had been working for months on the launch.
Posten, the state-owned Swedish postal service, also suddenly refused to deliver his wine, in spite of having done so happily for six months.
Armed with his contract, Mr Majzner considered suing and was told by his lawyers he had a watertight case. But then his law firm suffered a last-minute change of mind and said it could no longer represent him.
KF says the deal was terminated because it did not want to undermine Sweden’s policy of responsible drinking. A Systembolaget spokesman said it was surprised to see KF countering the country’s sensible drinking policy.
Posten said it decided not to deliver his wine, as it could not verify the age of the person collecting it – even though Posten is based in small local shops that ask for ID when cigarettes are sold and could do the same for wine.
Mr Majzner argues that he simply wants to use European competition law to offer Swedes premium wines, wines rarely drunk by alcohol abusers. He sees a more political explanation for the blow. He claims his joint venture with KF and Posten represented a competitive threat to Systembolaget and thus broke an unspoken bond that binds Sweden’s most powerful leftwing organisations.
Maria Rankka, the head of Timbro, a right-leaning Swedish think-tank, has little doubt this is what happened. “There are very strong power structures in place, as we can see in this case,” she said.
It is easy to forget the depth and breadth of Sweden’s leftwing heritage, but the fact remains that it has been ruled for most of the past 70 years by the Social Democrats, who set up most of the state-run monopolies. The country’s right-leaning government is a rare exception to the rule.
KF, for example, is “the union of the country’s 51 consumer co-operative societies” and traces its roots to Sweden’s folkrörelsen, or popular movement, which is regarded as the cornerstone of Swedish social democracy. Moreover, many of its 3m members are also members of LO, the main labour union, which uses its fees to finance the Social Democrats.
Given these links, Mr Majzner believes it was impossible for KF to go into competition with a state-run monopoly, although oddly KF only seems to have realised this only after newspaper articles started pointing it out.
Mr Majzner says Sweden is a transparent and business-friendly country, but every once in a while its socialist heritage can loom up out of the gloom and fight back. As an editorial in a national newspaper on the whole affair asked: “There is a cost in challenging the most sacred cow of Social Democracy. But it can’t be impossible, can it?”
