War on Alcohol Unsettles Estonia's Lucrative Booze Cruises

(Bloomberg) -- Estonia’s efforts to curb alcoholism are scaring away its keenest tourists.

Finns, who’ve long hopped on two-hour ferries to Tallinn to stock up on cheap booze, are turning to other destinations after tax hikes pushed up prices for beer and spirits. April registered the steepest fall since 2009 in overnight hotel stays by Finnish visitors and marked an 11th month of decline in the past year, the worst streak since 2007.

The effect of their dwindling visits shouldn’t be underestimated: tourism makes up about 7 percent of Estonia’s gross domestic product and accounts for more than two-fifths of all alcohol purchases. In the year through April, Finnish tourists brought the least amount of alcohol home since records began in 2004, the nation’s National Institute for Health and Welfare said this week. The annual decline amounted to almost a quarter.

Neighboring Latvia has benefited as visitors -- including Estonians -- descend seeking cut-price liquor. As alcohol-excise revenue misses targets, Estonia’s government has responded by halving the size of planned tax increases for this year and canceling them altogether for 2019. The war on alcoholism will have to be fought via other channels.

©2018 Bloomberg L.P.

Bloomberg
Follow The Latest On The Global Economy On BloombergQuint