“Bizarre” profit requirements for alcohol sales

Publicly owned alcohol monopoly Rúsdrekkasøla landsins – commonly known as ‘Rúsan’ – has since it opened in 1992 been given a fixed annual profit target by the government.

This target, which is partly meant to finance the fight against alcohol abuse, has now gone up from DKK 16 million to DKK 18.5 million.

It may be difficult to reach this new target as Rúsan’s 2020 annual report states that the alcohol monopoly only barely managed to reach the DKK 16 million target for 2020.

Rúsan’s managing director Rógvi Andrias Fossádal has declined to be interviewed on the matter, but he says in a short statement that it would take a lot of restructuring to meet the new profit target.

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With fewer people travelling abroad due to Covid restrictions, more people are buying their alcohol in Rúsan than in duty-free outlets, which may go some way toward reaching the new target, he says.

Lowering Rúsan’s discount rate to hotels and restaurants would also help.

He declined to comment on whether Rúsan will increase its prices to reach the new profit target, but he conceded that it would make much more sense to impose higher taxes on alcohol than to demand higher profits.

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This corresponds with Rúsan’s 2020 report:

“Rúsdrekkasølan has persistently been calling on the government to drop the fixed profit target and replace it with product taxes so that the profits match the sales. This would render Rusdrekkasølan’s operations less vulnerable to economic fluctuations.”

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The report continues:

[…] "fewer litres of pure alcohol are being sold now, making it increasingly difficult for Rúsdrekkasølan to meet its profit targets.

There is a clear contradiction in Rúsdrekkasølan’s mission to help limit alcohol use while still being forced to reach increasing profit targets.

This could result in the bizarre scenario in which Rúsdrekkasølan may need to request an additional grant from the very same authority that sets the profit targets.“

Read the Faroese version of this article here.

More Faroese News in English.