Requirements for Swedish Vodka are not compatible with EU law

Requirements for Swedish Vodka are not compatible with EU law

The Swedish National Food Agency is changing the requirements specification for the geographical indication Swedish Vodka. According to the amended specification, a product sold under the designation Swedish Vodka must contain at least 40% alcohol, be made with Swedish water and diluted in Sweden. A company that already sells vodka under the name in question challenges the decision to amend the tender specifications before the courts. It must be held that those requirements cannot be justified by the quality of the products or the expectations of consumers and that they are therefore not lawful.  

The Swedish National Food Agency has decided to change the specifications for the protected geographical indication Svensk Vodka. A geographical indication means that a product’s quality, reputation, or other characteristics can be attributed to the geographical area from which the product originates. Products relating to the area in question can then be sold under the geographical indication, provided that they meet the standard set by the designation. A requirement specification means that an EU Member State imposes additional requirements on products that already have to meet a certain standard under EU law. According to the Swedish National Food Agency’s new specification, vodka sold under the geographical indication Svensk Vodka/Swedish Vodka must, among other things, have an alcohol content of at least 40% and be diluted with Swedish water in Sweden. Previously, an alcohol content of 37.5% applied and there was no requirement for Swedish water or dilution in Sweden.

Lantmännen Reppe AB (Lantmännen) manufactures and sells vodka under the designation Svensk Vodka which, following the changes made by the Swedish National Food Agency, will no longer live up to the requirement specification.Lantmännen is therefore appealing the National Food Agency’s decision to amend the requirements specification to the Administrative Court and claims that the decision should be set aside. The company argues that the new specification constitutes measures with an effect equivalent to quantitative import and export restrictions (ÅMV). As a general rule, ÅMV is prohibited under EU law, but can be allowed to protect geographical indications if they meet the so-called proportionality principle. That principle implies that a measure pursues a specific objective, is necessary to achieve that aim and, moreover, is proportionate to the adverse effects that may arise. In this case, the aim is that products sold under the geographical indication Svensk Vodka have quality, reputation or other characteristics that can typically be attributed to vodka from Sweden. According to Lantmännen, the principle of proportionality is not fulfilled in the case, which is why it is considered that the new specification constitutes an illegal ÅMV.

According to the Swedish National Food Agency, the requirements for Swedish water and the dilution of vodka in Sweden are justified by the fact that they must ensure the quality of the product, and that consumers may have expectations of Swedish raw materials and a thoroughly Swedish production. According to the Authority, the requirement for alcohol content is imposed because the Swedish Association of Producers of Wine and Spirits believes that spirits marketed as Swedish Vodka should contain at least 40% alcohol. The Administrative Court states that it shares Lantmännen’s assessment that the product specification constitutes ÅMV and that the requirements set out therein must therefore be proportionate in order to be permitted. The Court will begin by examining whether the requirement of at least 40% alcohol content is acceptable. Since several Swedish operators produce vodka with a lower percentage, it is not considered that at least 40% alcohol is characteristic of Swedish vodka. Therefore, it must be held that the percentage is not an appropriate threshold for achieving the purpose of the geographical indication. The requirement is therefore not proportionate and cannot therefore be accepted as ÅMV.

Regarding the requirements for Swedish water and dilution in Sweden, the court states that it is the origin of Swedish vodka that contributes to its good reputation and that consumers may have expectations that all raw materials come from Sweden. The requirement for Swedish water should therefore be allowed. According to Lantmännen, a requirement for dilution in Sweden would increase both transport costs and emissions, as the vodka could otherwise be shipped undiluted.Since the court has already ruled that the requirement for Swedish water should be accepted, it is considered that the vodka will still need to be transported diluted, which is why the requirement for dilution in Sweden is also proportionate. In other words, the National Food Agency wins the case on all counts except for the requirement regarding alcohol content.Lantmännen appeals the Administrative Court’s decision regarding the requirements for Swedish water and dilution in Sweden to the Administrative Court of Appeal, which takes up the case for review.

The Court will first examine whether the requirements for Swedish vodka and dilution in Sweden can be justified with regard to the quality of the products. The court believes that a requirement for Swedish water does not necessarily affect the quality because not all Swedish water has the same characteristics. Regarding the dilution in Sweden, the court considers that it is a relatively simple production step that should not need to take place in a certain place for the execution to be correct. The Administrative Court of Appeal therefore finds that neither the requirement for Swedish water nor dilution in Sweden can be justified on the basis of the quality of the products. Furthermore, the Administrative Court of Appeal states that the requirements could possibly be justified by the fact that consumers expect a product with the designation Svensk Vodka to be produced entirely in Sweden. However, the Swedish Consumer Agency has not presented any evidence to prove that this is the case, which is why the Court does not consider itself able to assess how strong the link between the origin of the products and the consumers’ expectations is. The requirements in the new specification are therefore not proportionate according to the Administrative Court of Appeal, which means that Lantmännen wins the case.