HELSINKI -- The tax-free store on the ferry from Estonia's capital Tallinn to Helsinki is packed with crates of beer and spirits, and it is hard to tell whether it is the Baltic swell or the booze that makes the passengers stagger.
Many of the Finns on board load up with the maximum ration of drink allowed, getting a bargain compared to the hefty prices in the stores of the national monopoly Alko.
But now that Finland has slashed its alcohol tax and Estonia is about to join the European Union, a squeeze is on the multi-billion-euro shipping industry that has long reaped the benefits of prohibitive liquor policies in the Nordic countries.
"The income from tax-free sales is extremely important for the firms that run the passenger traffic in the Baltic Sea," said Tapio Karvonen, a researcher with the Center for Maritime Studies at Finland's University of Turku. "The shipping companies' profit margin per bottle will become smaller and that has to be compensated in some way."
All major firms sailing the Baltic Sea have cut their liquor prices from 25 percent to 45 percent in the wake of the new tax rate, looking to keep their stretch of sea one of the busiest in the world. Over 15.7 million passengers sailed to and from Finland in 2002.
"The most important reason for this is probably the high prices of alcohol in Finland and Sweden, having made the tax-free sales on the boats so attractive," Karvonen said.
In the Nordic nations, except for Denmark, citizens can buy strong liquor only from state-run stores and taxes have been punitive for decades.
In anticipation of neighboring Estonia joining the European Union on May 1, when import restrictions on alcohol are lifted, Finland has cut its liquor tax by up to 44 percent, trying to avoid a flood of cheap booze from the Baltic state.
Estonia's EU membership also means that tax-free sales on boats between the two countries will disappear.
On Silja Line's GTS Finnjet from Tallinn, returning on a Friday morning from an overnight cruise, the party is already in full swing. Next to the busy dance floor sits a pale-faced couple, sipping some coffee.
"I had a bit too much yesterday," said Jari Koski from Helsinki, there with his wife Teija. "We went on this trip to get away from the kids, get some time on our own."
Finland's Silja Line, a subsidiary of Bermuda-based Sea Containers, is fighting a cut-throat battle in the Baltic Sea with main competitors Viking Line and privately owned Tallink, to get the attention of people like the Koskis who are looking for a mini-holiday.
The firms entice customers for routes crisscrossing the sea with ships almost 200 meters long that hold several nightclubs and restaurants, as well as spa areas and casinos.
A cruise may cost less than 20 euros ($24.40), the night life is known to be rowdy and many of the passengers don't bother leaving the boat at its destination.
"I don't like their culture, I only go for the beer. No culture, no museums, only beer," said Teemu Hyytio, a prison officer from Hameenlinna, north of Helsinki.
Silja Line said it may hike ticket prices after the Finnish alcohol taxes are cut, but that it expects traveling between Finland and Estonia to increase this year.
"The expansion of the EU has two different dimensions for the industry. On the one hand, traveling becomes easier and more attractive, but the fact that tax-free sales on board will disappear means our margins come under pressure," said Antti Pankakoski, the company's chief executive.
"We'll have to review the entire package, the balance of prices on board and ticket prices. It's quite possible that the ticket prices have to rise in order to compensate."
His firm, which shipped some five million passengers in 2002, is part of a cluster of Finnish maritime companies with annual revenues of over 11 billion euros ($13.42 billion), according to a study from the Center for Maritime Studies.
Viking Line, headquartered on the Aland Islands between Sweden and Finland, also expects to be hit by the imminent changes in the market environment.
"What we need to think about now is that the tax-free sales are a finished chapter on Tallinn-Helsinki from May 1, and we have no idea how that will affect us. The competition on that route is fierce," said Harri Winter, the firm's chief operating officer.
Many of the Finns on board load up with the maximum ration of drink allowed, getting a bargain compared to the hefty prices in the stores of the national monopoly Alko.
But now that Finland has slashed its alcohol tax and Estonia is about to join the European Union, a squeeze is on the multi-billion-euro shipping industry that has long reaped the benefits of prohibitive liquor policies in the Nordic countries.
"The income from tax-free sales is extremely important for the firms that run the passenger traffic in the Baltic Sea," said Tapio Karvonen, a researcher with the Center for Maritime Studies at Finland's University of Turku. "The shipping companies' profit margin per bottle will become smaller and that has to be compensated in some way."
All major firms sailing the Baltic Sea have cut their liquor prices from 25 percent to 45 percent in the wake of the new tax rate, looking to keep their stretch of sea one of the busiest in the world. Over 15.7 million passengers sailed to and from Finland in 2002.
"The most important reason for this is probably the high prices of alcohol in Finland and Sweden, having made the tax-free sales on the boats so attractive," Karvonen said.
In the Nordic nations, except for Denmark, citizens can buy strong liquor only from state-run stores and taxes have been punitive for decades.
In anticipation of neighboring Estonia joining the European Union on May 1, when import restrictions on alcohol are lifted, Finland has cut its liquor tax by up to 44 percent, trying to avoid a flood of cheap booze from the Baltic state.
Estonia's EU membership also means that tax-free sales on boats between the two countries will disappear.
On Silja Line's GTS Finnjet from Tallinn, returning on a Friday morning from an overnight cruise, the party is already in full swing. Next to the busy dance floor sits a pale-faced couple, sipping some coffee.
"I had a bit too much yesterday," said Jari Koski from Helsinki, there with his wife Teija. "We went on this trip to get away from the kids, get some time on our own."
Finland's Silja Line, a subsidiary of Bermuda-based Sea Containers, is fighting a cut-throat battle in the Baltic Sea with main competitors Viking Line and privately owned Tallink, to get the attention of people like the Koskis who are looking for a mini-holiday.
The firms entice customers for routes crisscrossing the sea with ships almost 200 meters long that hold several nightclubs and restaurants, as well as spa areas and casinos.
A cruise may cost less than 20 euros ($24.40), the night life is known to be rowdy and many of the passengers don't bother leaving the boat at its destination.
"I don't like their culture, I only go for the beer. No culture, no museums, only beer," said Teemu Hyytio, a prison officer from Hameenlinna, north of Helsinki.
Silja Line said it may hike ticket prices after the Finnish alcohol taxes are cut, but that it expects traveling between Finland and Estonia to increase this year.
"The expansion of the EU has two different dimensions for the industry. On the one hand, traveling becomes easier and more attractive, but the fact that tax-free sales on board will disappear means our margins come under pressure," said Antti Pankakoski, the company's chief executive.
"We'll have to review the entire package, the balance of prices on board and ticket prices. It's quite possible that the ticket prices have to rise in order to compensate."
His firm, which shipped some five million passengers in 2002, is part of a cluster of Finnish maritime companies with annual revenues of over 11 billion euros ($13.42 billion), according to a study from the Center for Maritime Studies.
Viking Line, headquartered on the Aland Islands between Sweden and Finland, also expects to be hit by the imminent changes in the market environment.
"What we need to think about now is that the tax-free sales are a finished chapter on Tallinn-Helsinki from May 1, and we have no idea how that will affect us. The competition on that route is fierce," said Harri Winter, the firm's chief operating officer.
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