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EXPLAINED: The real reason Swiss supermarket Migros doesn’t sell alcohol

Swiss supermarket Migros has never sold alcohol or tobacco since being founded almost 100 years ago. Here's why.

The familiar orange sign of Swiss supermarket Migros.
Swiss supermarket Migros doesn't sell alcohol. Why is this and what does it mean for the future. Photo:Fabrice COFFRINI / AFP

Migros was founded in 1925 by Swiss businessman Gottlieb Duttweiler.

One of the founding principles of the organisation was that the health of customers was paramount – and as a result, outlets would not sell alcohol or cigarettes.

Almost 100 years later and despite significant expansion across the country, Migros outlets still uphold this core promise – although things look set to change from June 2022 (or more likely the start of 2023), as we outlined here

However, there’s a little more to Duttweiler’s stance than a pure dedication to the health of his customers. 

In reality, the supermarket’s refusal to sell alcohol has more to do with marketing and good business sense than genuine concern about his customers’ health. 

Here’s what you need to know. 

Why Migros doesn’t sell alcohol, according to Migros

Despite being one of Switzerland’s most prominent and successful supermarkets and arguably one of its most prominent brands, Migros’ identity is grounded in community values rather than just the pursuit of profit. 

After Duttweiler created the company 100 years ago, he sold food to workers at lower prices and launched a program which promoted cultural diversity

He also gave female members the right to vote at cooperative meetings, which was quite an advance at the time considering women could not vote federally in Switzerland until 1971 (and until 1990 in all cantons). 

EXPLAINED: What happened after Swiss women got the right to vote in 1971?

Another aspect of this social pledge was a promise not to sell alcohol or tobacco in any of its stores – a pledge that it has kept until this day, although alcohol is available with the company’s subsidiaries Denner, Migrolino, Alnatura and Voi, as well as online. 

But why did it really happen? 

Swiss tabloid Blick this week delved into the company’s history, showing that the company’s founder had an eye on appealing to Switzerland’s puritanical consumers when putting the ban in place. 

In 1928, Duttweiler took over a cider brewery on the verge of bankruptcy in Meilen, on the shores of Lake Zurich. 

While Duttweiler’s initial plan was to add another production plant to help his expanding business, he noticed that the founders had a special pledge of upholding public health “against excessive consumption of cheap brandy and fruit schnapps”. 

Finding himself in debt and in “urgent need of money”, as Blick writes, Duttweiler sees a market opportunity by taking the fight to the “popular drug alcohol”, which was increasingly demonised on both sides of the Atlantic. 

By “making a virtue out of necessity”, Duttweiler – a man who was not averse to a good glass of wine or a cigar, as Blick writes – lay down battle lines, pitting “isolated, lone Migros against the colossi of alcohol capital and the food industry” as he actually said in Brücke magazine at the time. 

The rhetoric caught on and Swiss consumers flocked to Migros, allowing it to grow into what is now the country’s major supermarket. 

Will this change? 

Former Migros CEO Mario Bonorand told Swiss media earlier in 2021 that the company could make an additional CHF2 billion if it decided to sell alcohol in its stores. 

Migros will hold its delegate assembly in November and is set to vote on whether or not to keep the ban in place.

READ MORE: Is Swiss supermarket Migros about to start selling alcohol and cigarettes?

Migros spokeswoman Christina Maurer told 20 Minutes that several Migros stores want to start selling alcohol and tobacco.

“Many delegates have raise the issue recently” Maurer said.

In order to allow the sale of alcohol and tobacco, the delegates would need to vote to change the underlying rules drawn up by Duttweiler so long ago.

Maurer said she would consider the issue “through a democratic ballot of all members of the cooperative”. This will take place in June 2022, with each of the company’s ten regional collectives voting on the matter. 

Some on social media spoke out against the change and said it represented a departure from the organisations core values for profit.

Others however point out that it is not the first time the company has made money from selling booze and smokes.

Migros subsidiaries Migrolino and Denner both sell alcohol and cigarettes, while Migros itself currently sells alcohol and tobacco via the internet under the Le Shop banner.

In fact, the Luzerner Zeitung reported in June 2021 that there are so many loopholes to Migros’ position, that it is difficult to argue the company remains consistent with the pledge of its founder. 

“The retailer has now moved far away from its self-imposed alcohol ban. Migros eagerly looks for loopholes, repeatedly approaches the topic and ultimately lies to herself.”

“Because wine, beer and schnapps have long been on the shelves of the group, with the subsidiaries Denner, Migrolino, Alnatura and Voi. The branches of the discount subsidiary Denner are conveniently often right next to a Migros and are not stingy with their high-priced range.”

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EXPLAINED: How inflation is increasing housing costs in Switzerland

Property is not exempt from inflation. Here's how costs are on the rise in Switzerland.

EXPLAINED: How inflation is increasing housing costs in Switzerland

First, the (somewhat) good news: The inflation rate in Switzerland —  2.6 percent  — is significantly lower than in neighbouring France (5.4 percent) and Germany (7.8 percent), as well as throughout much of Europe.

But even with the relatively low inflation, prices of many consumer products have been rising, with economists forecasting further hikes.

READ MORE: Seven products that are becoming more expensive in Switzerland

While you might notice the impacts of inflation when you buy groceries, consumer goods, food and petrol, inflation is also making a mark on the housing market.  

How is the housing market impacted by this phenomenon?

The impact on housing is indirect, which can be likened to the ‘domino effect’ — as the price of construction materials derived from petroleum, such as plastic, have risen, so has the cost of newly built houses and renovation work on existing properties.

Rents and mortgages are also impacted, although there the mechanism may be a bit complex to understand by non-experts. 

As Vincent Leroux, president of SVIT Romandie, the Lausanne-based section of the Swiss Association of Real Estate Economics, explained to Tribune de Genève (TDG), the “central bank have a particular mission to control inflation”.

To do this, it has the option of raising its key rate. When it does, the interest rates of financial institutions follow and rise in turn. The purpose of the maneuver is to reduce the use of credit, and to slow down the level of consumption and the upward trend in supply prices. But, if interest rates go up, rents can go up – as can the interest cost of a mortgage. 

EXPLAINED: How to save on your mortgage in Switzerland

This is the general picture, but what happens if you are a tenant?

All tenants are, or will soon have to, pay higher rents, according to Pierre Stastny, a lawyer at The Swiss Tenants Association (ASLOCA) in Geneva.

The determining factor is when the lease was signed and what the reference rate — weighted average interest rate for mortgages in Switzerland, announced by the Federal Housing Office each quarter — was at the time.

Those who rented their properties at a time when the reference interest rate was low could see their rents increase by 3 percent, Stasny said.

Those who contracted a lease whose rent is indexed to inflation will also see their costs rise.

This is because “the lease law authorises landlords to add 40 percent of the inflation rate to the rent”, Stasny pointed out. “But if the lease is signed for five years or more and the contract contains an indexation clause, the landlord can then pass on to the tenant the entire inflation rate.

How are homeowners affected by inflation?

According to Stéphan Mischler, director of mortgage and real estate platform MoneyPark, it depends on whether you are a first-time buyer, whose mortgage loan is in progress, or non-first-time buyers, who have settled their mortgage.

The former group is most at risk, money-wise.

“With inflation, the ten-year fixed interest rates, which are most often chosen in Switzerland, have started to increase: they have doubled and currently vary on average between 1.8% and 2.5%, compared to around 1% a few months ago”, Mischler told TDG.

“As a result, this doubles the interest cost of a mortgage for those who are currently looking to buy their home or for those who have recently taken out a mortgage.”

However, current owners could also be affected if they have to renew their mortgage in the near future.

Logically, this chain of events will also have repercussions  on potential buyers, as they may not be able to afford higher mortgage rates.

Other housing-related costs have risen in Switzerland as well. For instance, energy, including gas and electricity used by households, will  take a bigger chunk out of an average family’s monthly budget.

READ MORE:  How Covid, Ukraine and energy costs are changing Swiss spending habits

What exactly is inflation and what causes it?

Simply put, it is an increase in the prices of consumer goods and services, causing some loss of purchasing power. In other words, while our wages mostly remained the same, the cost of living went up, and is expected to continue to increase for at least the foreseeable future.

This trend started in mid-2021, as world economies recovered from the Covid pandemic, and Switzerland rebounded better than many other countries. However, with many supply chains still disrupted and struggling to meet consumer demand, prices began to rise.

The situation has worsened since Russia’s invasion of Ukraine on February 24th, which also slowed down or shut down altogether the production and supply of some essential agricultural and energy products, leading to higher prices.

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