Norway at the border of EU crossborder. shopping and its implications. Research report. Introduction

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1 RANDI LAVIK STURLA NORDLUND Research report Norway at the border of EU cross-border shopping and its implications Introduction One of the EU s fundamental principles is that taxes and excise duties should be paid in the country where a product is bought, and that you should not pay further taxes if you bring the product to another EU-country. Since taxes and excise duties vary from one country to another, cross-border shopping is an obvious consequence of this principle. Within the internal market, cross-border shopping has not been regarded as a problem. On the contrary, it has been encouraged through the removal of customs barriers, the dismantling of border control and the extension of duty-free allowances on the products that are still taxed. Thus, cross-border shopping is explicitly used as a means to even out ( harmonise ) taxes and excise duties, and thus prices, within the internal market. With regard to alcohol, there are still certain indicative allowances, but these are so generous that under normal circumstances they cannot be considered restrictive. This has resulted in considerable tax cuts in Denmark and Finland, and to a certain extent also in Sweden, in order to protect national production and trade. A B S T R A C T R. Lavik & S. Nordlund: Norway at the border of EU crossborder shopping and its implications Cross-border shopping has for many years been an issue in the political debate in Norway, and it remains so. The focus of the media is mostly on alcohol and tobacco shopping, but shopping for other goods such as meat and other groceries are at least as important. AIM The aim of this article is to present estimates of the total cross-border shopping, especially from Sweden, with a special focus on alcohol and tobacco. DATA Data are collected from different sources, mainly from the two research institutes SIFO and SIRUS. RESULTS The total private import by travelers to Norway has increased, and so has special cross-border shopping from Sweden. An obvious reason is the price differences on alcohol, tobacco and meat in particular, which have been increasing since the neighbouring countries Sweden and Finland became members of the EU in Another reason is the general increase in travelling, especially by airplanes, during later years. People living near the border are, not surprisingly, much more often border-shoppers than people living far away. Border-shopping also has an illegal side, since some people violate the quite restrictive Norwegian NORDIC STUDIES ON ALCOHOL AND DRUGS VOL

2 quotas on travelers import e.g. of alcohol and tobacco. Around 2 per cent of the of the Norwegian travellers see such small-scale smuggling of spirits as a serious crime, and 25 percent had brought too much alcohol. The total private import by travelers, legal as well as illegal, represents a considerable revenue loss to Norway. KEYWORDS Border-shopping, alcohol, tobacco, meat, small-scale smuggling, taxation, quotas, quotas, Norway Norway is not a member of the EU, but it is subject to many EU laws and regulations through the European Economic Area (EEA) agreement. Before the agreement was signed, there was some public debate on how strongly it would influence, e.g., Norwegian alcohol policy (Ugland 22). The agreement was not explicit on this point, but its provisions on equal treatment of Norwegian goods and goods imported from EU countries would lead to quite significant changes in Norwegian alcohol policy, almost to the same extent as in the neighbouring countries that are members of the EU (Nordlund 27). This is especially true for the alcohol monopolies. In all the Nordic countries (except in Denmark, where there is no monopoly), the monopolies were reduced to chain stores with a monopoly on retail sales of alcoholic beverages only, whereas earlier they also had a monopoly on the production, import, export and wholesale, as well as on the service of spirits in Norway and all alcohol in Finland. However, taxes and duties are not covered by the EEA agreement, which among other things means that Norway can decide its own excise duties and travellers allowances. However, taxes and duties may have a significant impact on cross-border shopping by pushing Norwegians to do their shopping abroad. Cross-border shopping can thus be analysed in terms of push and pull factors. Push factors are forces that make people leave their home country, whereas pull factors are external forces that draw people to a place (Di Matteo & Di Matteo 1996). Higher prices in one country, due to taxes, excise duties, customs barriers and the lack of choice, when compared to lower prices in another country, are examples of push factors, whereas alternative shopping facilities (e.g. big malls and shops that are open on Sunday in Sweden) and favourable currency rates are examples of pull factors. In this article we will address the following questions. What goods are the most important drivers of cross-border shopping? Are travellers allowances a sufficient measure to limit travellers import of alcohol and tobacco? How do people feel about this limitation and to what extent do they comply with the quotas? However, the overriding issue is the consequences of the Norwegian tax policy for the crossborder trade drain to our neighbouring countries. 26 NORDIC STUDIES ON ALCOHOL AND DRUGS VOL

3 Points of departure It appears from the introductory chapter of this issue that it is not altogether easy to define what we mean by the term crossborder shopping. In this article, however, we will take a more pragmatic approach to the term cross-border shopping, in the sense that we will use different types of data where the term is used differently. By cross-border shopping we generally refer to all trade by Norwegians in regular stores in our neighbouring countries (i.e. particularly Sweden, but also Denmark, Finland and Russia), where duties are paid and the goods are transported across the border to Norway (regardless of the purpose of the journey). By travellers import in general we mean both cross-border shopping and all other import by travellers in connection with their trips, i.e., all duty-free import (also from our closest neighbouring countries) and all import of goods that Norwegian travellers have bought in a regular manner in other countries and brought into Norway. In practice we will study all private import of alcohol and tobacco, and for comparative purposes even other types of products, by travellers. Moreover, the cross-border shopping from Sweden will be studied as an important special case. The factors that influence cross-border trade also affect all other private import of similar goods in connection with travels, i.e. also the duty-free trade. The differences in prices of goods are of course a significant factor in this import, too. Since travelling, especially by plane, has increased significantly in recent years (see Figure 1), it is clear that large quantities of goods can be imported duty free, even though allowances are limited. Cross-border trade makes up a significant share of this import, but the total private travel import is significantly larger. Consequently, Norway cannot just blame the EU for the import of cheap alcohol and tobacco. In fact, prices were lower in many EU countries earlier, but at that time travelling in general was more limited. The increase in travelling is thus another significant contributing factor that explains the increase in travellers import. Millions Total Regular traffic Charter Figure 1. International traffic at Norvegian airports. Number (the numbers include both Norwegian and foreign residents) of passengers arriving and departing NORDIC STUDIES ON ALCOHOL AND DRUGS V O L

4 With regard to cross-border trade (in neighbouring countries), the most important means of transportation are private cars, buses and trains (especially to and from Sweden), as well as ferries (especially to and from Denmark). New airport security provisions from June 11, 26 have made it more difficult to transport on airplanes alcohol bought abroad. Duty-free trade is especially important in connection with air travel and has become more convenient with the introduction of dutyfree sale of alcohol and tobacco on arrival in Norway. Oslo Airport, Gardermoen was the first to have this arrangement (from July 1, 25), but other major airports have followed suit. Through this move the politicians managed to curb what used to be a partly unwanted form of import. Goods that were once bought abroad became a profitable business in Norway. Even if the state misses out on tax revenues (NOU 23), at least it creates Norwegian work places and revenues for the state-owned Avinor, which operates the airports in Norway. Cross border shopping by Norwegians has existed for a long time, has been focused on by both politicians and the media, and has been studied as a research question. A survey from 1956 seems to be the first attempt to estimate Norwegians cross-border shopping for alcohol from Sweden (Nordlund 23). The total cross-border shopping from Sweden was estimated at 66 million NOK in 1979 (298 million in 25-NOK). In 1992 the cross-border shopping had increased to 285 million NOK (278 million in 25- NOK) (HSH 1994). After Norway said no to joining the EU, the price differences between Norway and their neighbours have increased and so has the cross-border shopping (Lavik 23; Lavik 26). Some politicians tried to deprecate cross border shoppers by calling them Harry, which was meant to be a disparaging term. Storstad (23) argued, however, from her studies that the cross-border shoppers were economically oriented, they deleted the travel costs by tour-arguments and some of them shopped as a political protest against the Norwegian duty policy. Data and method There are several different data sources on cross-border trade. In this article we will present various types of data, including data from other published reports. In such cases we will just state the source and type of data in question, without discussing methodology. The authors have analysed two types of original data collected by the Norwegian Institute for Alcohol and Drug Research (SIRUS) and the National Institute for Consumer Research (SIFO), respectively. Data from SIRUS have mainly been collected through a series of national interview surveys that have been conducted since 1956 with slightly varying regularity, though lately in five year intervals, which seems likely to become the prevailing standard. These are major surveys with a broad thematic span that cover alcohol and tobacco, as well as narcotic drugs. Travellers import, including import from our neighbouring countries (cross-border shopping), is one of several issues that are examined in these surveys. However, travellers private import of alcohol and tobacco has been a particularly burning issue in recent years, especially since Sweden and Finland joined the EU. After a prolonged 28 NORDIC STUDIES ON ALCOHOL AND DRUGS V O L

5 period of escalation of travellers import quotas, Sweden and Finland had to adopt EU rules from January 1st 24, which implied total abolishment of these quotas, provided the alcohol was meant for personal use. Both the media and politicians have been very interested in the issue, and SIRUS has therefore conducted a couple of additional studies that only concern travellers import, one in 22 and one in 27. These additional studies have been conducted with the exact same methodology as the larger studies, and the results are therefore comparable, even though the number of respondents is lower. All these studies, including the special studies, have been conducted by personal (face-to-face) interviews of a representative sample of the population aged 15 years and older. The samples in the main studies have been approximately 2 respondents, but in the last study (24) it was extended to 3191 respondents. The samples in the special studies on travellers import (in 22 and 27) comprise 147 and 11 respondents, respectively. The respondents were selected by a standard procedure that the commercial operators who carried out the fieldwork (TNS Gallup, MMI/Synovate) use in all similar surveys (Tamsfoss 1999). The method is a three step stratified procedure 1. The same procedure has been used in all the surveys in the SIRUS series. When data from these surveys are presented, we will indicate this by referring to the SIRUS studies. The data in SIFO s studies have been collected in the form of telephone interviews (CATI Computer Assisted Telephone Interviews). National representative surveys used in this article were carried out in 1999, 23 and 26. In 1999, there were 996 people interviewed, in 23 the number of respondents was 939, and in 26 the sample consisted of 1 respondents. The age group was 18 8 years in each survey. The surveys are weighted with regard to gender, age and region. TNS Gallup carried out all the surveys. The first question was a filter question. Have you or someone in your household during the last 6 months shopped groceries in Sweden to bring back home? Those who answered yes were then asked questions about cross-border shopping, how often they had shopped, how much they had spent, what they had bought, etc. (Lavik 26). Additionally, in this article we have used data from Forbruker & Media 24 25, carried out by TNS Gallup. This was a large postal survey that was answered by 1.89 respondents 15 years and older. The data material is weighted with regard to gender, age and region, in order to make it representative for the Norwegian population. The data we will present are from studies over many years by both SIRUS and SIFO, as well as from other sources. The method used in the article is descriptive univariate and bivariate analysis. Norway and Europe Norway still has strict quotas for travellers import of alcohol and tobacco. With regard to alcohol, there was a slight increase in the wine quota from June 1, 26. Current quotas are either 1 litre of alcoholic beverages with a strength of 22 6 per cent by volume ( spirits ) and 1.5 litres (previously 1 litre) of alcoholic beverages with an alcohol strength of per cent ( wine ) and 2 litres of beer with a strength of NORDIC STUDIES ON ALCOHOL AND DRUGS V O L

6 per cent, or 3 litres (2 litres before June 1 26) of alcoholic beverages with a strength of per cent and 2 litres of beer ( per cent). Apart from the adjustment of the wine quota, these quotas have been unchanged since December 1, 1982, when the spirits quota was raised from.75 litres to 1 litre. From January 1, 23 the terms spirits and wine were removed, and the definition of the quotas was based on alcohol strength, as quoted above. With the new rules, it is therefore legal to import 5 litres of beer (2 litres must be below 4.75 per cent) if no other alcohol is imported. The duty-free quota for the import of tobacco into Norway is 2 cigarettes or 25 grams of other tobacco products, as well as 2 sheets of cigarette paper. In order to import tobacco and alcohol with strengths up to 22 per cent by volume, you have to be at least 18 years old. In order to import alcohol with an alcohol strength of 22 6 per cent by volume, you have to be at least 2 years old. The Norwegian import quotas for meat and other foodstuffs from other EEA (including EU countries) countries are 1 kilos (it is illegal to bring meat- and dairy products in your luggage from countries outside of the EEA). Within the EU there are no restrictions on these products, except in special cases (animal diseases, etc.). In addition there is a value limit for import into Norway of 3 NOK if you have been abroad for less than 24 hours and 6 NOK otherwise. Within the EU there is no value limit. However, there are limits on duty-free import into EU countries if you come from a non-eu country. For travellers coming from Norway to Denmark or Sweden, the quota is, for instance, 1 litre of spirits and 2 litres of wine. You may bring as much beer as you like duty-free, but the value cannot be more than DKK 135 or SEK 17 ( The fact that Norway compared to the EU places such strict limitations on private import of alcohol and other goods in connection with travel makes it easier to maintain high taxes on these goods. Österberg and Karlsson (This issue, Figure 1) shows the taxation situation for alcoholic beverages in Norway compared to the neighbouring countries. The Figure shows the situation after Denmark cut taxes on spirits by 45 per cent from October 1, 23 and after Finland reduced the tax on all alcoholic beverages (44 per cent on spirits, 4 per cent on intermediate products, 1 per cent on regular wine and 32 per cent on beer) from March 1, 24. Even after Norway cut spirit taxes by 15 per cent from January 1, 22 and an additional 9 per cent from January 1 the following year, Norway still stands out among European countries. Compared to most other countries, Norway probably stood out earlier too, perhaps to an even greater extent, but back then Norway was accompanied by Sweden and Finland. The European low-price market has thus advanced all the way to the Norwegian border, and this is true not only for alcohol products. Particularly tobacco, but also meat, various other groceries, leather goods and many other products are often considerably cheaper abroad. In Figure 2 we see how the prices in our neighbouring countries, Denmark, Finland, Sweden and Germany, relate to Norwegian prices from 1995 to 27, and compare to Estonia from The other countries have 21 NORDIC STUDIES ON ALCOHOL AND DRUGS V O L

7 1 Alcoholic beverages Norway Denmark Germany Finland Sweden Estonia Tobacco Meat 1 Food and non-alcoholic beverages Source: Eurostat, ppp, price levels indices Figure 2. Price level indices for alcoholic beverages, tobacco, meat and food and nonalcoholic beverages for Denmark, Germany, Estonia, Finland, Sweden and Norway. (Norway=1) significantly lower prices than Norway on all the four product groups in the Figures. However, alcohol is the one product category where prices vary the most among the countries. Estonia and Germany, which have the lowest prices compared to Norway, are then followed by Denmark, Sweden and Finland. This pattern has been relatively stable since 1995, with the exception of Finland and Sweden, where the differences in alcohol prices compared to Norway seem to have grown. From 1995 and a few years onwards, tobacco prices varied between the countries too, and they were not much lower than in Norway. But, since 23 and onwards, prices in Sweden, Denmark, Germany and Finland have become considerably lower compared to Norway. However, in the case of Sweden, there was a shift in 27. On January 1, 27 and January 1, 28, Sweden greatly increased taxes on tobacco products ( consumer price index) 2. This means that Sweden no longer harmonises taxes on tobacco products with the EU. Instead, Sweden NORDIC STUDIES ON ALCOHOL AND DRUGS V O L

8 increasingly approaches the Norwegian price level on tobacco. If this development continues in Sweden, it may influence the cross-border trade between Sweden and the other EU countries, as well as the border trade from Norway. Estonia, a former Eastern-bloc country, has by far the lowest price level of the countries we have studied here, but it has had some increases in alcohol duties in 28 and increasing tobacco taxes. The biggest price differences are found for tobacco and alcohol, but meat prices are also considerably lower in our neighbouring countries than in Norway. The differences between Norwegian and Swedish prices are particularly significant for cross-border shopping, since a large share of the population lives along the border, especially in south-eastern Norway. The differences between Swedish and Norwegian prices are big, and often bigger than the differences between Norway and other countries for all types of products, also food and non-alcoholic beverages. Whereas the high price level of alcohol and tobacco products in Norway to a large degree is due to high excise duties, other factors explain the price differences on other products. For example, the price level of meat is so high in Norway compared to other countries, due to a number of factors such as long distances, high costs, climatic and topographic conditions. However, the most important factor is Norwegian agricultural policy, which is closely linked to regional policy, and which ensures substantial tariff barriers on a number of imported agricultural products. Even though alcohol prices are significantly lower in countries like Germany and Estonia than in Norway, prices in Sweden are considerably lower, too. This is one of the reasons why Sweden is an attractive country for Norwegians to shop in. However, it is important to be aware that price differences for spirits are very small. Wine and fortified wine is cheaper in Sweden than in Norway, and the price differences on beer are particularly big (Lavik 24a). In 24 beer prices were approximately 6 per cent lower in Sweden than in Norway, an identical selection of wine brands was 31 per cent cheaper in Sweden than in Norway, whereas the price on an identical selection of spirit brands was only 12 per cent lower in Sweden than in Norway. However, it is important to remember that the price level in Figure 2 shows comparisons between countries from 1995 to 27 and does not measure price developments within each country (the price level is adjusted to changes in currency exchange rates). It is therefore difficult to pinpoint the exact reason why differences in price levels between countries vary over time. For instance, we cannot observe how the reduction in value added tax (VAT) from 24 to 12 per cent on foodstuffs in Norway in 21 resulted in reduced price differences on meat, food and non-alcoholic beverages during this period, compared to the other countries in the Figure. This reduction in VAT was indeed an attempt to curb cross-border shopping. During the same period NOK became stronger and thus caused little changes in price levels between, for instance, Norway and Sweden. The price differences between Norway and the other countries became somewhat smaller in 23 and 24, due to a weaker NOK in this period (Lavik 23; Lavik 24a). 212 NORDIC STUDIES ON ALCOHOL AND DRUGS V O L

9 Better quality Better service Different products Open on Sundays More products to choose between Availability Short distance Source: Oddveig Storstad (23). Rapport 3/3 Bygdeforskning (Centre for Rural Research). Nice to take a trip Lower prices Figure 3. Norwegians reasons for shopping in Sweden 22. Average mean on a scale from 1 to 7. Price differences between Norway and the other Nordic countries are significant. For almost half of the population, this attractive low-price market is just a couple hours drive away. Even though the alcohol quotas are small compared to those within the EU, there are no limitations on how often you can cross the border, apart from the fact that you cannot bring the quota more than once every 24 hours. Everything is thus set for an extensive crossborder trade. In this way the EU s own conscious dismantling of excise duties ( harmonisation ) also works beyond the borders of the internal market. It also affects Norway, which has high taxes on harmful products such as alcohol and tobacco as their primary policy. A survey (postal survey) from Bygdeforskning (Centre for Rural Research) (Storstad 23) showed that lower price was by far the most important reason for cross-border shopping in Sweden (Strömstad). On a scale from 1 to 7 the alternative lower prices scored an average of 6.7 among the 387 respondents (see Figure 3). All other alternatives, such as short distance, more products to choose between, better quality or nice to take a trip, scored between 3 and 4, i.e. generally closer to unimportant than important. The same result is evident in a study from Norsk Landbrukssamvirke (The Federation of Norwegian Agricultural Co-operatives). Figure 4 shows that prices on different products are a far more important reason for shopping in Sweden than the social aspects of the trip and the quality of the foodstuffs. When it comes to other private import in connection with travels (duty-free or shopping in non-neighbouring countries), the price difference will probably also be the most important factor. Yet, these travels usually have a purpose other than shopping per se, and in those cases, other reasons for shopping will probably play a bigger role (e.g. availability, opportunity, etc.) Norway and the other Nordic countries In 24 25, 51 per cent of the Norwegian population above 15 years of age had cross-border shopped during the last 12 months. As already mentioned, Sweden is the most important cross-bordershopping country for Norwegians (TNS NORDIC STUDIES ON ALCOHOL AND DRUGS V O L

10 Lower price Beverages Sweets Alcohol Snuff and tobacco Food Social trip Source: Mat og måltider (27) Better quality on food products Figure 4. What is the most important reason for shopping in Sweden? (N=542.) Gallup 24 25). Among those who cross-border shopped, 76 per cent had mostly shopped in Sweden, 17 percent had shopped in Denmark and 4 percent in Finland. For Finland the figures are very small, since we are looking at all of Norway. If we look only at the share who travelled from Finnmark county to Finland in order to shop, the figures are completely different. Figures from TNS Gallup s Forbruker & Media show that 66 percent of the people in Finnmark travelled abroad in order to shop during the last 12 months (compared to 51 percent in the country as a whole). Among those from Finnmark who cross-border shopped, 99 percent said that they mostly travelled to Finland (TNS Gallup, Forbruker og Media 24 25). In Finnmark there are several border crossings that enable the inhabitants to cross-border shop by car. In other respects, the cross-border shopping in Northern Norway is somewhat special. In Finnmark there are many Sami people who have different concepts of national borders than the rest of the population. They describe themselves as a people without borders. The current borders go through former Sami areas and have interfered with traditional pasture systems and family relations. Cross-border shopping, and thus smuggling, is not a big issue. They almost take it for granted that they can bring as much as they like as long as it is for their own use. When a Sami person crosses the national border, he or she only moves within Sami country. To Sami Sweden 76 Denmark from Finmark did cross border shopping, among these; 99 had shopped in Finland Finland Other countries Source: TNS Gallup Forbruker & Media Figure 5. When you go abroad in order to shop, to which country do you usually go? ( N=535.) 214 NORDIC STUDIES ON ALCOHOL AND DRUGS V O L

11 1 Sweden Denmark Finland Meat Other groceries Tobacco/ snuff Beer/ beverages Wine/ spirits Clothes Figure 6. Proportion of type of products bought by Norwegians, respectively in Sweden (383), Denmark (832) and Finland (188) during people the national border is not a cognitive border (Døving 23). There are also some differences in what Norwegians buy in these countries. In Sweden people buy meat and other groceries, in addition to alcohol and tobacco products. In Finland they generally buy the same products as in Sweden, but slightly less groceries other than meat. In Denmark, on the other hand, alcohol (wine and spirits) is the most frequently purchased product, groceries somewhat less, but more clothing compared to the two other countries. This indicates that Finland and Sweden are, to a greater extent, used for ordinary grocery shopping, whereas Denmark is more characterised by tourism, where people buy alcohol and clothing. A trip to Denmark is also different from a trip to Sweden or Finland. People generally go to Denmark by boat, often to big cities, stay overnight and shop duty-free. People usually go to Sweden and Finland by car, travel to a shopping area that is not necessarily a city and go back the same day. Duty-free shopping is not an option. The share who buys tobacco products is the same for all three countries. As we have already mentioned, tobacco products are much more expensive in Norway than in other countries, and the high excise duties in Norway are thus an important push factor. If a person smokes, the probability for cross-border shopping is higher than if he or she does not smoke (Lavik 26). Since Sweden increased taxes on tobacco products in both 27 and 28, this picture may change. The extent of cross-border shopping When price differences are as big as they are between Norway and other countries, especially on alcohol and tobacco products, this naturally acts as a powerful stimulus to private import in connection with travelling, and particularly crossborder shopping in neighbouring countries. As expected, Figure 7 shows that NORDIC STUDIES ON ALCOHOL AND DRUGS V O L

12 Greece this trade and import of goods in general (i.e. also when it comes to products other than alcohol and tobacco) is greater among Norwegians than among people in other European countries. Of the 2 European countries in the Figure, Norway is the country where the biggest share (51 percent) say that, during the last 12 months, they have been abroad primarily to shop. When such a country, on the outskirts of Europe and with a considerable share of the population living several hours by car from the nearest foreign country, so clearly tops the statistics on cross-border shopping, it must be said to be surprising and a testimony to the importance of price differences. As opposed to Norway, however, most other countries have both crossborder shopping from other countries and cross-border shopping in other countries. In Denmark, for instance, the trade drain to the south (Germany) is compensated by cross-border shoppers from both Sweden and Norway (Lavik 24b). Spain Estonia Latvia Lithuania Portugal Poland Poland United Kingdom Ireland France Sweden The Netherlands Finland Germany Denmark Belgium With regard to private import of alcohol in connection with travels, we have data for a longer period of time (Figure 8). The figures are based on data from the SIRUSsurveys. In the Figure below, the year of the different surveys is indicated on the horizontal axis. As we can see, the private import has increased all along, with a peak in 22. Measured in litres of pure alcohol, it was 13 times higher in 27 than in Austria Luxembourg Norway Source: Special Eurobarometer 252/Wave 65.1 TNS Opinion & Social: Consumer protection in the Internal Market. Figure 7. An overview over cross-border shopping in some selected European Countries, aged 15 years and over. 26. Systembolaget, the Swedish Alcohol Retail Monopoly, has also estimated the cross-border shopping of alcohol from Sweden. They have calculated sales to Norwegians by comparing sales statistics from outlets near the Norwegian border to outlets far from it. Figure 9 shows these added sales for the different types of products. Numbers are in product litres. Beer and wine seem to have increased the most, but it appears as if cross-border shopping has levelled off somewhat since 22, even if there has been a slight increase in beer and wine sales since 24. If we look at 216 NORDIC STUDIES ON ALCOHOL AND DRUGS V O L

13 Centilitres of pure alcohol/ inhabitant 15 years and older 1 8 Total Source: SIRUS Spirits Table wine Beer Fortified wine Figure 8. Average amount of spirits, wine and beer imported to Norway by travellers (taxfree and border trade) (Data is only for the years indicated on the horizontal axis) Centilitres of pure alcohol per inhabitant 15 years and older. cross-border shopping in Sweden in general (all products), Figure 1 shows that it too has increased since 24, measured in both Norwegian and Swedish currency. Figure 11 shows the areas in Sweden in which most cross-border shopping occurs. Strømstad, which has good connections with the populous south-eastern part of Norway, is clearly on top in terms of the scale of cross-border shopping. However, there does not seem to have been any increase in shopping in Strömstad since 24. In cross-border shopping in Strömstad seems to have decreased somewhat. The statistics for Norwegians shopping at Systembolaget (Figure 9) confirms this. This may be due to the rebuilding of the Nordby shopping centre, the significant road works on E6 and the building of the new bridge at Svinesund border station. In addition, the Norwegian currency was not as strong against the Swedish currency as it had been before. However, cross-border shopping has picked up again. In particular, shopping in Charlottenberg has almost doubled from 24 to Beer 4 or stronger Wine/fortified wine Spirits Cider / ready-made drinks Source: The Swedish Alcohol Retail Monopoly (Systembolaget)/VBF (Vin- og brennevinleverandørenes forening) Figure 9. Cross border shopping alcohol at the Swedish Retail Monopoly ( Systembolaget ) by Norwegians. (Per 1 litres.) NORDIC STUDIES ON ALCOHOL AND DRUGS V O L

14 Million crowns NOK SEK Source: Statistics Norway Figure 1. Cross Border Shopping by Norwegians in Sweden (Million NOK, SEK) 26, and Töckfors has had the same increase in one year from 26. Both of these developments are to a large extent due to the fact that the Norwegian Olav Thon has opened big shopping centres with near access to Systembolaget outlets in these towns in recent years. The pull factors, which were weaker for a while, have once again been strengthened. In 27, private imports from Sweden to Norway seem to be at nearly SEK 1 mrd (billion) in total (see Figure 1). Whether this is a significant number is probably a matter of debate, but it nonetheless amounts to significant revenue losses and losses for Norwegian shops near the Swedish border. In addition to price differences, the distance to the border is a significant factor for cross-border shopping. Figure 12 shows how cross-border shopping is distributed between Eastern and Western Norway. A 22 study of Norwegian shoppers in Strömstad municipality (including Svinesund) showed that the frequency of cross-border shopping decreased linearly with distance, while the amount spent on the last shopping trip increased linearly (Storstad 23). When the distance was less than 3 km the average cross-border shopping frequency was 29 trips in the last 12 months, compared to 7 trips if the distance was more than 1 km (each way). The average amount spent was NOK 93 when the distance was less than 3 km, while it was NOK 2187 on average when the distance was over 1 km (Storstad 23, 51). Several other studies show Million NOK Strømstad Charlottenberg Töcksfors Sweden other Source: Statistics Norway Figure 11. Cross Border Shopping by Norwegians in Strømstad, Charlottenberg, Töcksfors, other places in Sweden (Million NOK) 218 NORDIC STUDIES ON ALCOHOL AND DRUGS V O L

15 similar results. The distance to the border is clearly and unsurprisingly very significant for the scale of cross-border shopping in an area (Beatty et al. 27; Asplund et al. 27; Norström 2). In general people behave rationally and calculate transaction costs when they estimate the gains of the lower prices. In the cases of long distances, it is necessary to purchase quite a lot if the shopping trip is to pay off. In addition, it is necessary to be price conscious since prices vary a lot both in Norway and in Sweden. If one makes purchases for NOK 1, the savings will be minimal if, for instance, one has travelled 1 km each way by car and spent all day on it, perhaps without checking price differences within Sweden. Estimating the profitability of such a crossborder shopping project requires that you also consider transaction costs (Døving & Lavik 26a, 156). From East of Norway From the "rest" of Norway Source: Proportion of Norwegians who has shopped for groceries in Lavik: Grensehandelen 26 Figure 12. Proportion of Norwegians who has shopped for groceries in Sweden during the last 6 months. Border control and smuggling When price differences between neighbouring countries are large or if products in demand are illegal, smuggling occurs. Smuggling is the illegal import of goods and occurs with some frequency in Norway. The Directorate of Customs and Excise (28) has estimated the revenue loss from smuggled alcohol and tobacco to be between NOK 2.6 and NOK 3.9 mrd (billion) for small-scale smugglers. Of those who travelled abroad in the last 12 months, 32 percent brought more than the allowed tax-free quota on their most recent journey. To a high degree, this is alcohol and tobacco. Further, the Directorate of Customs and Excise assume that organised smuggling is larger in total volume than private smallscale smuggling. Small-scale smuggling may also be an expression of political protest. Smuggling as political protest is different from what we otherwise recognise as consumer-political protest acts such as boycotts, demonstrations or demand for eco-products. The legitimisation of small-scale smuggling consists mainly of its pointing to unduly high taxes (Døving & Lavik 26b). Q Alcohol Norwegian Customs is responsible for overseeing that cross-border shopping is done in accordance with rules and regulations. This is primarily done by making random checks at border crossings, and, in larger cases, through close cooperation with police and customs authorities in other countries. The chances that private consumers will be stopped at border crossings are relatively small, but nonetheless present. In a country-wide survey conducted by SIRUS in 27, 7 percent NORDIC STUDIES ON ALCOHOL AND DRUGS V O L

16 of a nationally representative sample of Norwegians answered that they had been checked by border control once or more in the last 12 months. Of those who had been abroad during the last 12 months, 1.5 percent had been checked by border control once or more. This group had been abroad on average 4.3 times in this period, which means that the chance of being checked by border control on arrival in Norway is around 2.5 percent on every trip abroad (Table 1). It is also interesting to see that there is no (significant) difference in the chance of being checked by border control between those who have brought alcohol and those who have not. This means that the border checks are completely random, which they are probably meant to be. Among those who have imported more than the legal quota of spirits 8.4 percent were checked by border control. These persons are thus apprehended for attempted smuggling, and in accordance with the regulations, they have at least been presented with a fine. However, this group has a higher average number of trips abroad than others, so the chance of being controlled may seem to be smaller per trip than for other travellers. However, one should be careful when drawing such conclusions. First, the group that imported too much liquor is relatively small in this sample (85 persons), which makes the uncertainty in the estimates large (no significant differences in the estimates of the percentage of controls per trip). Second, this group has a higher average of trips than the others, and there is consequently a greater chance that some of them have been controlled more than once (we do not have information about the number of times the respondents have been checked by border control). A distinction is made judicially in so far as small-scale smuggling is seen as a misdemeanour, while professional smuggling is seen as a crime. This distinction is reflected in people s attitudes toward the two different kinds of activity. In three separate studies the same questions were asked, whether one thinks it is a serious crime to bring a little more than the legal quota of spirits and to smuggle spirits for sale respectively. The description a little is used to indicate one bottle or two, but not more, and only for personal Table 1. Customs inspections on arrival in Norway and average number of trips for subgroups. Inspected by customs on arrival in Norway, last 12 months All who have been abroad Those who brought alcohol Those who did not bring alcohol Those who have imported too much spirits - by car, bus, train or boat 1) 6,4 6,7 5,4 1,4 - by plane 4,9 5, 4,7 7,1 Controlled at all 1,5 11,1 8,9 8,4 Average number of trips 4,3 4,4 3,7 4,9 Percentage controlled per trip 2,5 2,5 2,4 1,7 N ) By a mistake boat was not included in the questionnaire 22 NORDIC STUDIES ON ALCOHOL AND DRUGS V O L

17 use. Table 2 shows the results from these three studies. Even if there are methodological problems associated with comparing these studies (see footnotes), the results are fairly clear. On the one hand, only around 2 percent regard bringing a little more than the legal quota as a serious crime. Between 8 and 9 percent, on the other hand, regard the smuggling of spirits for resale as a serious crime. It is evident that people draw a clear line between such smallscale smuggling and the more organised smuggling intended for sale. Due to the methodological differences, it is difficult to draw a conclusion in regards to any trend in the development of the attitudes towards these activities. As only around 2 percent see it as a serious crime to bring a little more than the legal quota of spirits, meaning that around 8 percent do not see it as a serious crime, one would assume that relatively many would do it. Table 3 shows how many of Table 2. The share of the respondents who think it is a serious crime to bring a little more than the legal quota of spirits, and to smuggle spirits for sale. bring a little more than the quota It is a crime to: smuggle spirits for sale 199/91 1) ) ) ) Data from Forbruker & Media Survey 1991, which was conducted by Norsk Gallup Institutt between August 199 and July The higher results may be due to the sampling methods. Answers are given in postal questionnaires after a preceding telephone interview. Results are taken from Saglie (1994). 2) Results are taken from Aas (1994). The data were collected from a combination of home interviews, telephone interviews and postal questionnaires. 3) Data collected from home interviews (SIRUS survey 27). N those, who had been abroad in the last 12 months, had brought a little more than the allowable quota of spirits once, twice, or more times respectively. The table shows that only 12 percent in fact did bring more than the legal quota of spirits on their return to the country during the last 12 months, in 27. This number is well below the 8 percent who think it is not a serious crime to do so. In other words, people seem to generally follow the rules and regulations even if they do not consider it to be a serious matter if they deviate a little. Small-scale smuggling seems to have peaked in 22 and decreased since then. This decrease may be due to constantly stricter controls and security measures which were implemented from early 2 and onwards, particularly at airports. Moreover, the decrease in 27 may be connected with the fact that duty-free alcohol at this time could be bought on arrival at several of the larger airports. In the 27 SIRUS survey, 12 percent of those who had been abroad during the last 12 months had smuggled spirits. In the survey conducted on commission from the Directorate of Customs and Excise 13 percent of the respondents who had been abroad during the last 12 months had smuggled spirits on their last trip abroad (Customs and Excise 28). Around 25 percent had brought more than the legal quota of alcohol (beer, wine and/or spirits) on their return to Norway during their last journey abroad. 1 Among those who had imported alcohol, around 33 percent had brought more than the legal quota of alcohol. 11 This survey was web-based, which meant that the respondents were selected from a random base by TNS Gal- NORDIC STUDIES ON ALCOHOL AND DRUGS V O L

18 Table 3. Share of those who had been abroad during the last 12 months in 1994, 22, 24 and 27, who brought more than the legal quota of spirits. Percentage of sample Imported more than the legal quota Customs and excise: Several times One or two times SIRUS: Once or more N lup, and they answered electronically via . Respondents were aged The SIRUS survey was based on face-to-face interviews. In the SIRUS survey the question is whether they have brought more than the legal quota once or more during the last 12 months, while the Customs and Excise survey asked about the last trip abroad. This difference in questions should have yielded a larger likelihood that more would answer that they had smuggled spirits in the SIRUS survey than in the Customs and Excise survey. However, the percentages correspond very well (see Table 3). This result may be caused by the fact that different sources of error and differences in methodology pull in different directions, so that the results are more or less the same even if the data collection methods and the calculation methods are slightly different. As we have seen, relatively few bring more than the legal quota of spirits even if most respondents do not think that it is a serious crime. There is, however, still a clear connection between attitudes and behaviour in this area as in most other areas. Among those who had brought more than the legal quota there were only 7 percent who thought that this was a serious crime (see Table 4), while 31 percent in the group who had been abroad without bringing alcohol thought that it was a serious crime. When it comes to smuggling for sale, there was greater agreement. A clear majority in all groups said it was a serious crime, even if those who had brought a little more than the legal quota were slightly more lenient than the others also with regard to this activity. Some of the differences between the groups may be explained by socio-demographic factors. For example, those under 2 years of age had to a smaller extent imported spirits to the country (partly because of the age limit). At the same time, they also have a relatively strict view on small-scale smuggling and the more professional smuggling of spirits for sale. Moreover, women have a stricter view on both types of smuggling and constitute only one third of those who had brought more than the legal quota of spirits. In addition, so-called cognitive dissonance may explain the co-variations between attitudes toward small-scale smuggling and one s own behavior in this area (see Døving & Lavik 26b). At the same time, it is relatively easy to distinguish one s own small-scale smuggling from ideas of large-scale professional smuggling for sale, and thus distance oneself from such activities as something wholly different from what one has done. Large-scale smuggling of spirits is not considered cross-border shopping. In one 222 NORDIC STUDIES ON ALCOHOL AND DRUGS V O L

19 Table 4. Share of the 27 selection who thinks it is a serious crime to bring a little more spirits than the legal quota and to smuggle spirits for sale. It is a serious crime to: - bring a little more spirits than the quota allows Brought more than the quota Not more than the quota Not abroad the last 12 months Abroad but no alcohol Total smugle spirits for sale N sense it is only a quantitative difference, but there is also a qualitative difference in so far as the professional smuggling of spirits is aimed at sale in Norway. The professional smuggling of spirits has decreased sharply since 22 23, when there were 18 deaths associated with a shipment of spirits with a high content of methanol. According to the SIRUS surveys, the average quantity of smuggled spirits that was bought dropped from.34 to.17 bottles per person aged 15 years and over in the period from 1999 to 24. These surveys did not distinguish clearly between spirits and brand liquor. The sale of smuggled spirits, usually by the can, has presumably dropped, whereas the sale of more or less original brand liquors may have increased. The confiscation statistics from Norwegian Customs illustrate this trend more clearly (see Figure 13). Spirits by the can have more or less disappeared, while wine and in particular beer has shown a very strong increase. Seizures of brand liquors (e.g. brandy/vodka/liqueurs) have increased significantly. Increased seizures may be a sign of both increased smuggling and increased crossborder shopping. Increased seizures may also be a sign of more frequent border checks by the customs authorities. After the reorganisation of Norwegian Customs in 24, border checks increased. More and bigger mobile control units were established. More mobile x-ray scanners were also put into operation (Norwegian Customs annual report 23; 24). But if we assume that increased cross-border shopping for alcohol also leads to increased smuggling, some of the explanation for this increase may be found in the harmonisation of the EU quotas, which has lead to a situation of virtually duty-free imports of alcohol within the EU, provided it is for private consumption. Norway still has very limited import quotas. As mentioned earlier, Norwegians, too, are subject to restrictions on the amount of alcohol they can bring tax-free and duty-free from Norway when they travel to EU countries. However, only when they cross the Norwegian border from abroad with too much alcohol is there a danger of being caught smuggling. There are many entry points. One can go by ferry from Norway to both Denmark and Sweden, shop virtually without restrictions in duty-free shops, at least on some crossings, bring this illegally into Denmark or Sweden, and then risk crossing the border to Norway by car. This is an example of how EU decisions have consequences in Norway and act as a pull factor for Norwegian cross-border shoppers. NORDIC STUDIES ON ALCOHOL AND DRUGS V O L

20 Litres 25 Brandy/liquor Spirits (more than 6) Wine Beer Source: Figure 13. Smuggling into Norway (seizures) from 21 to 27. Q Tobacco As shown in Figure 2 the price difference on tobacco is very large between Norway and the neighbouring countries. At the same time it shows that the prices in the neighbouring countries have become more or less equal after they all became members of the EU. The exception is Sweden, however, which, in both 27 and 28, increased tobacco taxes significantly. This price difference naturally makes tobacco an important pull factor in cross-border shopping. In 26, 48 percent of households with smokers had been in Sweden to shop (in the last 6 months), compared to 31 percent in households without smokers (Lavik 26). Since Sweden later increased tobacco taxes, one may expect this to affect cross-border shopping between Norway and Sweden. In the 24 SIRUS survey respondents were asked about tobacco imports. No distinction is made here between crossborder shopping and duty-free shopping. Around 66 percent of the adult population (15+) had been abroad this year, and more than half of these (35 percent) had brought tobacco products (snuff, rolling tobacco or cigarettes) back to Norway. Table 5 shows that the average import of snuff and rolling tobacco is at 1 roll (5 boxes of snuff) and 1 bundle (5 packages) of rolling tobacco per Norwegian adult (15 years+) per year. The average import of cigarettes is at 2.2 cartons of 2 cigarettes each per year. The estimates in Table 5 mean that travellers in 24 on average brought 442 cigarettes per adult inhabitant (aged 15+). In the same period sales in Norway amounted to 639 cigarettes per adult inhabitant (Lund & Lindbak 27). If these numbers are correct, this means that around 4 percent of the cigarettes smoked in Norway are purchased abroad. An even higher percentage of rolling tobacco (45 percent) and of snuff (51 percent) was purchased abroad. When estimating these numbers, we have used official statistics for tobacco consumption and estimated a package of rolling tobacco to be 5 grams, a box of snuff to contain 37 grams (a weighted average of portion snuff (normally around 224 NORDIC STUDIES ON ALCOHOL AND DRUGS V O L

21 Table 5. Average amount of snuff, rolling tobacco and cigarettes brought to Norway in the last 12 months (24) among all respondents (aged 15+) among those who had been abroad and among those who had had one or more tobacco products (snuff, rolling tobacco or cigarettes) on their return ( importers ). Weighted. All Been abroad Importers Number of rolls (5 boxes) of snuff Number of bundles (5 packages) rolling tobacco Number of cartons (2 cigarettes) cigarettes N grams) and ordinary snuff (5 grams), weighted based on the domestic market consumption average of 5 5). A cigarette is estimated to weigh 1 gram. The estimate for the percentage of cigarettes bought abroad corresponds well with an estimate from the Norwegian tobacco use survey, also from 24, where 39 percent of the cigarettes which had been smoked in the last 24 hours had been bought abroad (Lund & Lindbak 27). In the same survey we find that 36 percent of all snuff had been purchased abroad, which is well below the result from the 24 SI- RUS survey (51 percent). Not all of this tobacco import is legal. Evidently, many bring much more than the legal quota from trips abroad. Around 11 percent of all respondents admit that they have brought more than the legal quota of tobacco home at least once in the last 12 months. Among those who brought tobacco home ( importers ), almost one third (31 percent) brought more than the legal quota, and 11 percent had done that 3 or more times in the last 12 months (see Table 6). To a certain degree, one can check these figures for consistency. Of all those who say that they have not brought too much tobacco into the country, almost one in four (24.3 percent) say that in the last 12 months they have brought more legal tobacco units (one legal unit is either 2 cigarettes, 5 packages of rolling tobacco or 5 boxes of snuff) than the total number of trips they have had abroad. If they have answered correctly, they must have brought more tobacco than the quota allows on at least one of their trips, but have nevertheless answered that they had not done so. If we add these cases to the estimate of the percentage that have brought more than their legal quota of tobacco into the coun- Table 6. Share of respondents who have brought more than the legal quota of tobacco products 3 or more times, 1 2 times or never in the last 12 months (24), among all respondents, among those who had been abroad and among those who had brought one or more tobacco products home ( importers ). Weighted. All Been abroad Importers No more than legal quota More than legal quota 1 2 times More than legal quota 3 times or more Total NORDIC STUDIES ON ALCOHOL AND DRUGS V O L

22 try, the share (of all respondents) increases from 11 to 17 percent. Some of this inconsistency may be caused by respondents giving too low estimates on the number of trips abroad or too high estimates on the amount of tobacco, but there is still reason to believe that the share of small-scale smugglers is somewhat higher than the self-reported numbers in Table 6 indicates. In the Customs and Excise survey (28), of those who have imported products on their last trip abroad (27) 33 percent say that they have smuggled cigarettes, 38 percent rolling tobacco, and 62 percent snuff. The largest import category is cigarettes. In total, around half of those who travelled abroad had brought tobacco products, a percentage which corresponds well with other surveys (see Figure 6). Among those who have imported tobacco products, 43 per cent had imported more than the legal quota. 12 SIRUS surveys have a little lower estimate, namely 31 percent (of those who have imported the product). This can be explained by differences in wording of the questions: Customs and Excise ask for the last trip abroad, while SIRUS asks those who have been abroad if they have smuggled during the last 12 months. Recalling smuggling may be easier when asked about the last trip than when asked about trips made during the whole year. In addition, the data was collected in different ways. We can, nevertheless, say that smuggling is quite extensive, even if the amounts per traveller are not very large. In total, it constitutes a large revenue loss for Norway. Summary and conclusion Cross-border shopping in Norway is different from both the EU and the rest of the Nordic countries because of big price differences. Sweden is the major destination. That is due to the long border with Sweden, and the fact that a large part of the Norwegian population lives close to this border. There is also a large group that travels from Finnmark to Finland to shop, but since there are so few people in Finnmark, this group constitutes only a small part of the total. Denmark, too, is an appealing country for cross-border shopping, but since trips are usually done by boat it has more the character of tourism than in the case of Finland and Sweden. Norway also stands out by having only a one-way shopping drain. Very few travel to Norway to shop. Price is unquestionably the most important motive for crossborder shopping. Food products, meat in particular, are the most important products that crossborder shoppers buy in Sweden and Finland, while alcohol is the product that most people buy when they go to Denmark. Many people buy tobacco products. There is no difference among the countries in this regard. Tobacco is a very important cross-border-shopping article for smokers. There is a far greater share of smokers among cross-border shoppers than in the general population. Cross-border shopping has increased and private imports have increased. Some of this is due to a general increase in travel. In addition, price differences have grown, particularly since Sweden and Finland became members of the EU. In Sweden meat prices dropped after 1995, among other things, because VAT on food was reduced 226 NORDIC STUDIES ON ALCOHOL AND DRUGS V O L

23 from 25 to 12 percent. Sweden has reduced wine and beer taxes as well in this period. Similarly, Finland has reduced taxes on alcohol considerably, and Denmark reduced liquor taxes significantly in 23. At the end of the 199s, Sweden reduced taxes on tobacco substantially, but had a strong increase in taxes both in 27 and in 28. Except for the tax increase on tobacco in Sweden in 27 and 28, all of these are examples of pull factors. The general harmonisation with the EU leads to strengthened pull factors, and the result is increased cross-border shopping from Norway. Due to currency adjustments tax reductions are not fully reflected in the price differences between Norway and the other Nordic countries. Policies in Norway have in many ways been the opposite of the other Nordic countries. Taxes on alcohol and tobacco have generally increased and contributed towards increasing the push factors. Conversely, the authorities tried to reduce the push factors by cutting the VAT on food and non-alcoholic beverages by half in 21 (from 24 to 12 percent), and by reducing liquor taxes significantly in 22 and 23, partly in order to reduce crossborder shopping. This move was intended to reduce price differences, particularly compared to Sweden, but in the same period the Norwegian Krone (NOK) was strengthened against the Swedish Krone (SEK), and therefore the effect of the move was limited. Due to public health considerations, the extremely high tax level on products in Norway necessitates strong import barriers in the form of import quotas. This becomes a push factor that results in smuggling, which is quite extensive in Norway. In addition the other Nordic EU countries have partly harmonised the customs quotas to EU levels, which in practice means that they may import duty-free for private consumption. Smuggling by private consumers in these countries is virtually nonexistent, since only import for sale is considered smuggling. In practice a lot of what is imported for private consumption is resold anyway, which makes the activity smuggling. But since private consumption is defined by the wide indicative EU quotas, it is difficult to enforce the rules as long as the products are brought into the country legally. This policy may have indirect consequences for Norwegians, who for instance may travel by car to Sweden or by ferry to Denmark, shop for large quantities of cheaper alcohol and tobacco, and then take the car back home, hoping that customs officials will not stop them. In this scenario the harmonisation within the EU will act as a pull factor. Pull factors such as tax reductions in other countries and harmonisation of customs quotas are unintentional and not meant to lure non-eu citizens to increased cross-border shopping. However, other pull factors, such as when shops expand along the border on the Swedish side, are intentional. Established shopping centres are upgraded and new ones built. The competition for Norwegian customers is strong, and it is not without reason that the price differences between Norway and Sweden are greater as one comes closer to the border on the Swedish side. Not only do tax differences contribute to price differences. Food in Norway is expensive compared to other countries, even if it is not expensive for Norwegians in Norway (due to high living standards). NORDIC STUDIES ON ALCOHOL AND DRUGS V O L

24 This is caused, among other things, by Norwegian agricultural policies with high protective tariffs, the high cost level, a decentralised, long and narrow country, particular climatic conditions and difficult topography. This makes food in Norway much more expensive than in other countries. Agricultural policies are the main reason for the large price differences on food, meat in particular. This is also an important reason why Norway is not an EU member. Nonetheless, this becomes a significant push factor for extensive crossborder shopping. The price differences on food are the main motivation for cross-border shopping, even if the price differences are smaller than for alcohol and tobacco. The conclusion is that the combination of increased pull and push factors, which are intentional measures in the economic policies of the EU, but which for the most parts are unintentional in relation to crossborder shopping in Norway, have lead to a significant increase in cross-border shopping in the form of both legal and illegal import. The revenue loss as a result of this is considerable. This is one of the costs for the society of being on the border of the EU. On the other hand, many Norwegian consumers enjoy being able to visit the low-price market, which is the EU, and benefit from our neighbours low prices. Randi Lavik, Senior Researcher SIFO, National Institute for Consumer Research PB 4682 Nydalen, 45 Oslo, Norway [email protected] Sturla Nordlund, Senior Researcher SIRUS, Norwegian Institute for Alcohol and Drug Research PB 565 Sentrum, 15 Oslo, Norway [email protected] NOTES 1) The first step is to draw a stratified Master Sample of municipalities. The stratification depends on geographic location, type of municipality and practical considerations (which means that small municipalities are merged in groups). The municipalities in the Master Sample are drawn with a probability that is proportional to the number of households in the municipality. Step two is to draw households, which is done by drawing start addresses from the phone book. The interviewers start from there to 4 new addresses based on a specified procedure, and try to get one interview for each of these addresses. The start address is not visited, and addresses where they do not get an interview are not visited again. Instead, after visiting 4 addresses, the interviewers go to a new start address and repeat the procedure until the desired number of interviews has been achieved. Step three is to randomly select the person in the household who should be interviewed. This is done by asking for the person who most recently had his or her birthday. By estimation the answers in the sample are weighted both with regard to characteristics of the household and of the individuals, which should result in unbiased estimates. The response rate is thus regarded to be irrelevant and is not provided. A response rate would be difficult to estimate in any case, since it would be a combination of the response in the households (no-one home, the person who opens refuses etc.), and the response of the person in the household who most recently had his or her birthday (this person refuses, the parents refuse (if the person concerned is under 18 years), etc.) 228 NORDIC STUDIES ON ALCOHOL AND DRUGS V O L

25 2) The figures above show the prices in different countries compared percentagewise to the Norwegian price. For example, the product group alcohol was 6 in Denmark in This indicates that, in 1995, alcohol prices in Denmark were 6 percent of the prices in Norway, i.e., a 4 percent lower price in Denmark than in Norway. 3) For instance, taxes on smoking tobacco increased from 77 SEK per kilo in 26 to 975 SEK in 27, and then to 156 SEK per kilo in 28. 4) The tax increases are reflected in price developments within Sweden, where prices on tobacco products increased by 1 percent from December 26 to January 27, and an additional 1 percent from December 27 to January 28. 5) A post survey with 387 respondents among Norwegians shopping in Strømstad 22. The question: Several reasons for shopping in Sweden are listed. Could you please mark for each reason how important they are? The scale is from 1 (not important) to 7 (very important). 6) During the last 3 months, have you been in Sweden primarily for shopping? Yes (18 percent), No 82 percent). N=31. 7) Source: TNS Gallup. Forbruker & Media ) 26 Cross-border shopping: In the last 12 months, have you made a trip to another European country, primarily for shopping (trips made for this purpose, for purchasing clothes, electronics, etc.) (Yes, several times, yes, but only once, No, DK) 9) Number of respondents: Greece 1, Spain 19, Estonia 19, Latvia 116, Lithuania 14, Italy 13, Portugal 111, Poland 111, United Kingdom 1322, Ireland 1, France 122, Sweden 11, The Netherlands 162, Finland 14, Germany 1526, Denmark 12, Belgium 12, Austria 141, Luxembourg 52. The interviews were conducted face-to-face, in their own homes and own language. Non-response or DK included (very few, varies from to 1 percent) 1) Norway is not included in the Eurobarometer, but TNS Gallup has asked a similar question in Forbruker & Media in 24 and 25, where 51 percent answered positively. The question was: How many times during the last 12 months have you travelled abroad primarily for shopping? (Hvor mange ganger I løpet av de siste 12 måneder har du reist til utlandet for å handle?) Forbruker & Media 24-25, TNS Gallup. No=189 (Postal survey). The difference in methodology between the EU-countries and Norway may of course influence the comparisons. However, different methodology in data collection (face-to-face and postal survey) and different way of asking the question (In the last 12 months, have you. and How many times during the last 12 months ) should not be able to produce such big differences in the answers. Both questions deal with travel abroad primarily for shopping and both deals with the same period, the last 12 months. 11) The figures may be adjusted compared to earlier results presented. That is because the immediate results presented by the Swedish Alcohol Retail Monopoly could be subject to corrections later. These figures are based on added sales along the border when ordinary Swedish sales per-capita is deducted. 12) Question: Have you or someone in your household during the last 6 months shopped groceries in Sweden to bring back home? (Yes, No) 13) The reference is to the data material for Customs and Excise from TNS Gallup percent had imported alcohol on the last visit abroad, 25 percent of all travelers had brought in too much, that is; 33 percent among the importers had smuggled alcohol. 53 percent of all travelers had imported tobacco products at the last visit abroad, 23 percent of all travelers had taken too much, that is; 43 percent of the importers had smuggled tobacco products. NORDIC STUDIES ON ALCOHOL AND DRUGS V O L

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