How Systembolaget subsidises luxury wines
From time to time a few bottles of Romanée Conti, Domaine de la Romanée Conti (DRC), arrive in Sweden. This Thursday Systembolaget will launch this wine in a “new” vintage (2010). There will be in total four bottles available of Romanee Conti in Systembolaget’s “web launch” (wines only sold on the internet) on June 13. Each bottle costs 34,850 crowns (ca 4000 euro). A standard 75-cl bottle.
It is one of the world’s most expensive wines, possibly the world’s most expensive, depending on how you count.
The most expensive, but cheap, cheap
On the world market, this wine costs around two to three times as much. It is to some extent difficult to know the exact price, because this is bottles that are rarely found on a standard wine list in a wine shop.
In Sweden the price of this wine is therefore only a fraction of what you pay in other countries. Why? Well, probably it is because Systembolaget’s pricing is purely mechanical formula based on their purchasing price. It takes no account of the market and what the market is willing to pay. It also does not take into account the international price for the wine. They buy it and add their mechanically calculated margins.
It’s hard to believe that the importer or Systembolaget is under-pricing the wine like this as a service to the community…
Systembolaget’s luxury wine lottery
Although the wine cost almost 35 000 per bottle (4000€), it will certainly be great scramble of buyers at the web launch. There will be lots of people who want to buy this under-priced wine. It becomes a pure lottery who will become the new owner of a bottle. Luck will decide.
It is easy to guess what will happen then. The lucky winner will take his bottle with him on a trip abroad and sell it at normal market prices. Even after the air ticket has been paid for there will be several thousand euros left. A good deal for the one who won at Systembolaget’s lottery!
It is unlikely that any of the bottles of Romanee Conti DRC 2010 will remain in Sweden.
“How good it is with Systembolaget and the monopoly” some may think, “you can buy exclusive wines at really cheap price.” On the contrary, is what I say. How bad it is. Why should we have a monopoly to subsidize luxury wines? Why not take a fair market price for them? Then the price of other wines, wines that are drunk in Sweden, perhaps be slightly lower.
Manna from heaven or subsidies from Systembolaget
To sell something at a loss, under normal market price, is to subsidize the product. The goods is sold at a price below what it should normally cost. It is an indirect subsidy. “Indirect” because no monies is actually given out. “Subsidy” because the product is sold well below market price.
The seller renounces part of the normal sales margin for the product in favour of the customer who will pay a lower price than what is normal for the product.
One might for example compare it to a company that sells a leased car to his employee at a loss. There will be an employment benefit that is taxed (in some countries). Perhaps those who buy the Romanée Contis should pay extra tax for the privilege they had to buy the bottle at less than market price?
Happy are those who win Systembolaget luxury wine lottery and who can enjoy the spoils of Systembolaget’s subsidies!
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