Danish Market

General economic indexes:

General information about Denmark and its economics shows that this is economically developed and successful country, member of European Union, with GDP equal to $174,400,000,000 USD and GDP per capita equal to $32,200 USD in 2004 (by the way it is one of the highest indicators in the world), unemployment rate equals to 5.3 percent, inflation rate equals to 2.4 percent; Denmark external debt equals to 21,700,000,000 USD. The same source claims that there is not a single man in Denmark, who lives in poverty. Quite high salaries, high living standards and good social policy (almost free medicine, financial help to elders and unemployed, almost free education) of the government provide high purchasing capacity in Denmark. Researches shows that typical family expenses in Denmark include 17 percent on food, drink and tobacco . From this information it can be assumed that average statistical Dane can afford drinking malt whiskey that is provided by ‘The Olde Distillerie’ company.

Drinking preferences:

As it is stated in the traveling guide “…beer, the most popular Danish drink, at all levels of society …” but it was also mentioned that Danes do not neglect spirits at all and often accompany beer with spirits. Moreover Danes like alcohol and it is widely available to the citizens. Applying to the statistics it is important to mention that “Danes now drink an average of 11.5 litres of pure alcohol each year” . Youth (16 – 24 years) is the most widely presented age category in alcohol drinking statistics and thus national health organization is worried much about that problem – they claim youth consume more and more alcohol. The second large category is elders (after 60), adults (30-35) do not drink a lot of alcohol. So it can be concluded that Danes drink whiskey in spite of the fact that beer is their national drink.

Investment Climate:

a. General information:

Denmark has quite stable and dynamic economics, political stability and developed legislation – as the evidence of stability Denmark is a member of European Unity (which in turn lays down strict conditions for its members), WTO (World Trading Organization), WCO (World Customs Organization), OECD (Organization for Economic Cooperation and Development) and other international trading organizations. Thus Denmark is quite open country for foreign investors (for instance 375 companies from the United States of America have opened their subsidiaries in Denmark!). Many international corporations establish their headquarters in Copenhagen, the capital of Denmark, because its liberal legislation and developed infrastructure. Moreover Danish government established ‘Invest in Denmark’ agency in order to attract potential investors to the country. Foreign companies can receive credits on the same conditions as domestic. Country can be characterized by stable and developed banking system and financial market.

b. Taxation:

Income taxation system in Denmark bears progressive character (it means the more you earn the more taxes you pay). Corporate taxation is one of the lowest in the European Union (28 percent of the taxable profit) and is a subject to be paid twice a financial year, “Dividends paid by foreign subsidiaries in Denmark to their parent company are not subject to Danish taxation provided the parent company has owned at least 20 percent of the share capital for a continuous period of at least one year” . In the opposite, personal income taxation is one of the highest in the world and takes almost a half of taxable income.

Moreover, value added tax (VAT) is paid by enterprises while producing goods and services (25 percent from the ”difference between VAT paid on purchase and VAT levied on sales” ).

The excise duties on alcohol are imposed in accordance to European Union rates: minimum 2.2 Euro per litre of a product (considering spirits). In order to establish a corporation its capital must be approximate to 75,000 USD. In order to establish a company with limited liability its capital must be approximate to 20,000 USD.

Employers do pay very low rate of social contribution (1.37 percent only ) and thus workforce cost is decreased significantly.

One more important trait of the Danish taxation system is that in 2002 it was frozen – it means that tax rates can not be increased any more.

c. Legislation:

Legislative system of Denmark has all necessary laws and regulations for developing business in the country as well as for domestic and foreign companies, and does not make any serious obstacles for entering the market and operating on it. All regulations are transparent, consistent and correspond to the international law standards.

d. Corruption:

“According to the Transparency International, Denmark has the third lowest level of corruption in the world” . Thus this question will not raise while making business in Denmark probably.

e. Competition:

Competition in Denmark is extremely high. There are almost all whisky types and marks. There are plenty domestic (Danish Distillers, Juul's Vinhandel etc) and foreign competitors (Irish, Scottish, USA etc) in each price segment. Competitors sell whiskey online, in shops and have good distribution networks already. Thus it will be quite difficult to enter this market and it will take a lot of money to provide corresponding marketing support.

f. Entering barriers and other disadvantages:

Unfortunately, there is only one place in Denmark where duty-free (tax-free) products can be sold - Copenhagen Free Port.

Notwithstanding the fact that European Union members closely collaborate with each other, Danish legislation requires all foreign companies to open bank accounts in one of Danish banks.

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