Production and profitability in Swedish breweries, 1924-1950

Abstract

Sweden’s alcohol policy during the 20th century was one of the strictest in Europe and it affected producers, such as alcoholic-beer brewers. This article analyses how production and profitability developed among brewery firms following the 1923 prohibition of strong beer. Breweries tried to find other high-return opportunities, for example by increasing the production of non-alcoholic beverages and reaching other segments of the consuming public. However, both production and profitability declined, hence diversification seems to have been rather negative for the brewery industry, although not for all its actors. The article concludes that while diversification gave breweries a way to reach other consumers, it was the largest actors that were best placed to reap the benefits of the closed-off market environment. Thus, the article shows how diversification of production may be a result of government intervention, which will affect firm performance negatively or positively, depending on market structure, competition, and cost structure.