The alcohol monopoly

Our discussion of the US’ convoluted three-tier wine industry and how it was born of prohibition caused me to reflect on my time traveling through Scandinavia, when I was surprised to encounter the ‘Vinmonopolet’, the government’s wholesale and retail monopoly on alcohol sales. I thought that folks drank more in cold places, but in countries like Norway, private retailers may only sell beer and ciders (and between certain, limited hours) and all wine and spirits must be sold through government-run retail outfits. One can of course get a drink at a bar or restaurant at almost any time, but average drinks prices are enormously high. As good MBA inventory managers, we wound up stockpiling wine one afternoon in our rental car…

During last week’s case discussion, it was interesting to learn how the extremely piecemeal state of US wine and alcohol policy emerged from the ending of federal alcohol control. Because I’ve lived most of my life in California (and haven’t attempted a whole lot of interstate wine shipping), I was surprised to find that the US also has 17 control or monopoly states (with variance around whether these monopolies are on beer and/or wine and/or spirits, and whether those monopolies are over wholesaling and/or retailing) - and that about a quarter of the US population lives in some kind of a ’control state’. 

What also struck me as I thought about US policy as compared to Scandinavian policy is the tax motivation for alcohol monopolization vs. the cultural motivation. In Norway, there was quite a bit of discourse/explanation (by news outlets as well as by locals) of how the tight alcohol regulations serve the public interest, and how it enables greater health and well being - Norwegian tourist outlets sometimes cite how Norway's population is among the 'happiest' in the world. US policies, however, have no such veneer of really being health or happiness-motivated - while more culturally conservative states do seem to have more restrictive alcohol policies, by and large the design of policy appears to be more a function of controlling tax revenues (which may very well be an equivalently strong motivation in Norway!).