ICELAND
Government of Iceland
Bjarni Benediktsson's second government took office on April 9, 2024, marking a return to the prime ministerial position for Benediktsson, who previously led the country in 2017. This new cabinet was formed following the resignation of Katrín Jakobsdóttir, leader of the Left-Green Movement, who stepped down to run in Iceland's presidential election. The coalition government brings together three political forces: the Independence Party, the Left-Green Movement, and the Progressive Party, reflecting a broad and diverse political spectrum.
The coalition commands a clear majority in the Icelandic Parliament, holding 38 of the 63 seats, which has enabled it to form a stable government. The twelve-member cabinet is balanced between the coalition partners, with five ministers from the Independence Party, four from the Progressive Party, and three from the Left-Green Movement. This structure highlights the parties' commitment to collaboration despite differing ideological backgrounds, maintaining an equilibrium of power within the government.
This government builds on the foundation of the coalition that was first formed after the 2021 parliamentary elections. At that time, Katrín Jakobsdóttir remained as Prime Minister, even though her party, the Left-Green Movement, was the smallest in the coalition. That election marked a significant moment in Icelandic politics, as it was the first time since the 2008 financial crisis that an incumbent government managed to retain power after an election.
The coalition government's platform places a significant emphasis on public health and wellbeing, which directly intersects with alcohol and drug policies. The government highlights the importance of mental health services, particularly for youth, and stresses the need for preventive care across society. This aligns with Iceland's broader public health goals, focusing on reducing healthcare inequalities and ensuring access to quality services. In terms of alcohol and drug policy, the coalition's focus on prevention and public health is crucial. By enhancing mental health services and promoting healthier lifestyles, the government lays the groundwork for addressing substance abuse issues, aiming to reduce its impact on Icelandic society. Efforts to increase access to leisure activities for youth and the integration of public health into various sectors reflect a holistic approach to tackling these challenges at their root causes, with preventive measures serving as a key strategy.
Prime minister Bjarni Benediktsson
Consumption trends
Alcohol consumption in Iceland has been on a troubling upward trend in recent years, with one in four Icelanders exhibiting harmful drinking patterns in 2022. According to the most recent data, the average annual alcohol consumption per inhabitant aged 15 and older increased to 7.8 liters in 2022. This represents a substantial rise from 7.4 liters in 2020, with men more prone to risky drinking than women—27% of men and 21% of women reported engaging in harmful alcohol consumption. These figures are significant not only because they highlight a societal shift but also due to the alarming health consequences associated with increased alcohol consumption, such as the eightfold increase in cirrhosis over recent decades.
Changes in Icelandic drinking habits have also been noted in terms of frequency. There has been a marked rise in weekday alcohol consumption, signaling a departure from the more traditional weekend-focused drinking patterns. This shift is believed to be influenced by easier access to alcohol and evolving societal attitudes that increasingly normalize alcohol use. Experts like Anna Hildur Guðmundsdóttir of SÁÁ, Iceland’s National Centre of Addiction Medicine, have observed that this normalization contributes to rising demand for addiction treatment services. The trend also correlates with a rise in binge drinking, particularly among younger adults, with two-thirds of men and nearly half of women aged 18-34 reporting getting drunk at least once in the past month.
Despite Iceland’s historical reputation for lower alcohol consumption compared to other European countries, this upward trend in consumption stands in contrast to the broader European picture. While average alcohol consumption in European Union countries decreased by half a liter per person between 2010 and 2020, Iceland saw an increase from 6.8 liters in 2010 to 7.8 liters in 2022. Although Iceland still ranks below the European average, the growing disparity is cause for concern, particularly as these changes suggest a move toward more harmful drinking habits, with significant public health implications.
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Source: Statistics Iceland
Alcohol availability
Key points:
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ÁTVR holds a monopoly on alcohol sales in Iceland, strictly controlling access to reduce alcohol-related harm and protect public health.
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Alcohol products are carefully regulated, with uniform pricing and restrictions on items targeting young people or containing harmful substances like caffeine.
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Iceland enforces some of the most stringent controls on alcohol availability in the Nordic region, including limited operating hours and a higher legal drinking age.
The regulation of alcohol availability in Iceland is built upon principles of public health, social responsibility, and the strict control of alcohol sales through a state monopoly. Iceland’s Act on Trade in Alcohol and Tobacco (No. 86/2011) grants the State Alcohol and Tobacco Company of Iceland (ÁTVR) a monopoly over alcohol retail, designed to limit access to alcohol and mitigate its harmful societal effects. The Act explicitly aims to reduce alcohol consumption, promote social responsibility, and protect vulnerable populations, especially young people. Under this system, ÁTVR operates all liquor stores in the country, enforcing strict regulations such as age verification to prevent sales to individuals under 20 and refusing service to visibly intoxicated customers.
A notable feature of this system is ÁTVR's uniform pricing policy, ensuring that alcohol prices remain consistent across all stores in Iceland. The company's role extends beyond simple retail; it carefully selects the alcohol products offered, rejecting items that target young people, imply health benefits, or contain stimulants like caffeine. This careful regulation of product selection aligns with the government’s broader public health policy, which emphasizes reducing harmful drinking patterns and minimizing alcohol-related risks.
The monopoly and accompanying regulations highlight Iceland's commitment to treating alcohol differently from other consumer goods due to its potential for harm. By controlling availability through limited retail outlets and regulated sales practices, the government seeks to reduce alcohol consumption and its related social costs, adhering to a policy framework that prioritizes public health and social responsibility.
The monopoly system in Iceland not only limits the number of outlets where alcohol can be purchased but also restricts operating hours as a means of controlling alcohol availability. As of January 2021, ÁTVR stores in Iceland are generally open from 11:00 to 18:00, Monday through Saturday, totaling 42 hours of operation per week, and they remain closed on Sundays. This is considerably shorter than other Nordic countries, such as Finland, where stores are open for 69 hours a week, and Sweden with 50 hours. Iceland's more restricted hours reflect a deliberate effort to limit alcohol availability, reduce overall consumption, and address alcohol-related social harms. Compared to its Nordic neighbors, Iceland imposes some of the strictest controls on alcohol access, with shorter opening hours and a higher legal drinking age. This conservative approach contrasts with countries like Norway, which allows for 46 hours of sales per week, and the Faroe Islands, which have the most limited access at 29.5 hours. These variations illustrate the different strategies Nordic countries use to manage alcohol consumption, with Iceland opting for one of the most stringent models.
Online sales - 2024
On September 12, 2024, Hagkaup, a well-established retail chain in Iceland, began offering alcohol sales, sparking significant controversy. Unlike the ÁTVR monopoly stores, Hagkaup customers must purchase alcohol online through a partner company, Hagar Wine, and then collect it at a designated pick-up point in their Skeifan store. This development marks a departure from the traditional state-controlled alcohol retail system, raising concerns about its legality and public health implications.
The online sale of alcohol has long been a contentious issue in Iceland. Although ÁTVR holds a monopoly on alcohol retail, a loophole has emerged under the European Economic Area (EEA) agreement, allowing Icelanders to purchase alcohol abroad and have it shipped home. This has led Icelandic companies to set up foreign websites targeting local consumers, creating uncertainty about whether this practice violates Icelandic alcohol laws. Currently, two cases concerning the online sale of alcohol are under investigation by the police, and the Minister of Finance and the Minister of Health have both voiced opposition to such sales, citing concerns over public health.
Hagkaup’s entry into alcohol sales has drawn significant backlash from public health organizations and advocacy groups. In late August 2024, a coalition of 15 organizations, including health professionals and prevention advocates, called on the Icelandic government to intervene. In their statement, they urged the authorities to uphold existing alcohol laws that promote public health and prevent harmful consumption. The coalition emphasized Iceland’s commitment to being a leader in public health by 2030, arguing that the rise in online alcohol sales undermines this goal. As debate continues, the outcome of these investigations and the government's response will likely have lasting implications for the future of alcohol regulation in Iceland.
More information: Health organizations urge government action against illegal online alcohol sales in Iceland
Alcohol taxation
Alcohol prices in Iceland are shaped by several factors, with taxation playing a central role. Alcohol tax, along with VAT (11%), transport costs, and trade margins, contribute to Iceland having some of the highest alcohol prices globally. For instance, a 50 cl draft beer in bars typically costs around 1,600 ISK (11 EUR), though happy hour can lower the price to 1,000 ISK (7 EUR).
The Icelandic government implements high taxes as part of a public health policy to reduce alcohol consumption. In 2023, a 7.7% tax increase was proposed, affecting prices across the board. Alcohol taxes vary depending on the type of beverage, with beer taxed at 142.15 ISK per cl, wine at 129.5 ISK per cl, and strong liquor at 175.25 ISK per cl. These taxes are some of the highest in the world, contributing to over 60% of the final price for beer.
In practice, Iceland’s alcohol taxation structure is closely monitored through the state-run retail monopoly ÁTVR, where the retail price is determined by adding ÁTVR's trade margin and VAT. This pricing is uniform across all stores in the country. The tax policy aims to limit alcohol-related harm, aligning with WHO's recommendation of using alcohol taxation as one of the most effective public health measures to reduce consumption.
The 2020 comparison of alcohol excise duties in the Nordic countries highlights Iceland as having the highest taxes on alcohol, with 105.5 EUR per liter of spirits and 99 EUR per liter of wine. Beer excise in Iceland is 32.2 EUR per liter, also among the highest, second only to Norway. In contrast, Denmark has significantly lower rates, with 20 EUR per liter of spirits and just 7 EUR for beer. Iceland's excise duties, combined with a 24% VAT, make alcohol more expensive than in neighboring countries.
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Alcohol advertising
Iceland has one of the strictest alcohol advertising regulations in Europe. According to the law passed in 1998 (Áfengislög), all forms of alcohol advertising are prohibited, including any depiction of alcohol consumption or products in marketing materials. This includes printed ads, radio and television commercials, and online platforms. The goal of these restrictions is to reduce alcohol misuse and protect public health, reflecting Iceland's broader commitment to controlling alcohol consumption and mitigating its harms.
Exceptions to this general ban are minimal. Mild beverages containing less than 2.25% alcohol by volume are allowed to be advertised, as these are not considered alcoholic drinks under Icelandic law. Moreover, international publications imported into Iceland are permitted to include alcohol advertisements as long as these publications are not primarily intended for promoting alcoholic products. This exception ensures that Icelandic law does not unduly restrict international media while still prioritizing domestic public health interests.
In 2018, discussions arose about potentially lifting the advertising restrictions, but the ban remains in place, underscoring Iceland's cautious approach toward alcohol promotion. The regulations aim to minimize alcohol exposure, particularly among young people, contributing to Iceland's overall alcohol control strategy, which includes high taxes on alcohol and restrictions on retail sales. Iceland’s policy reflects a comprehensive framework aimed at reducing alcohol-related harm across society.