Kiwi Grocery | A clear message from the Norwegian grocery giants: Food prices are now on the rise

You will notice increased prices for fertilizers, transportation and raw materials in Norwegians’ wallets.

We must be prepared for the fact that the bill has to be sent somewhere, and it can affect consumers, says Peter Haas Bruback, CEO of NHO Mat og Drikke, which regulates a number of food and beverage producers.

He believes we will be able to increase food prices in stores when fertilizer prices, transportation costs, and energy prices go up – all at the same time.

However, he won’t comment on the merchandise or how much price increase they think we’ll see in the future.

However, Christian Anton Smedchug in Agri Analyze did this for NRK on Sunday. NRK wrote it Higher fertilizer prices could lead to higher food prices. Agricultural economists assert that rising prices for industrial fertilizers, an energy-intensive product, will have disastrous consequences in 2022.

– In Norway, we’re used to increasing food prices by 2-3 percent per year, but I think it can quickly go up to an average of 5-10 percent for all foods this year, Smedchoj said, NRK.

Bård Gultvedt, director of business policy and government communication at Norgesgruppen – which owns Kiwi and Meny, thinks it’s a lot like that. He says they don’t want to comment further on the claim, except that they are working towards a much lower price increase.

Smedchoj has also been appointed Minister of State for Climate and Environment as Minister Espen Barth Eide, effective January 3, 2022.

These items are becoming more expensive

Gultvedt stresses, however, that many suppliers now want to increase payment for their goods — for various reasons. But he cannot determine how important the increase in fertilizer prices is in relation to food prices.

We negotiate with suppliers to keep inflation low, but we are willing to pay more for the goods we buy. The price is set in the store regardless of the individual chain based on the competitive situation. Our chains will continue to fight for the lowest prices, he tells Netavizen.

Some product categories have higher price growth than others. This is especially true for goods that depend on long transportation, or that are energy-intensive to produce, according to Gulftedt.

Pasta and jam are examples of goods whose price is rising due to increased raw material costs, says Gultvedt.

He says they can’t comment further on how much the prices of these goods are going up, as they are sensitive to competition.

Prices change to us as of February 1st. Like I said, it’s not a given that increased purchase prices are reflected in increased prices in stores, he says.

In Norway, grocery prices can usually be adjusted on February 1 and July 1.

Affects prices

Category and Purchasing Manager Line Aarnes at the Rema 1000 Nettavisen have reported that their suppliers have announced that they expect price increases from February 1 this year.

Naturally, it also affects our prices. It says it remains uncertain how much is in question, and how long those increases will last.

There is no doubt that increased energy prices internationally are giving Norwegian farmers an increase in expenditures for electricity, fuel and fertilizers, Ingevil Storksen, director of policy and government communication at Coop Norge, tells Nettavisen.

However, it is too early to say what impact this will have on food prices for Coop customers.

– A lot of the directives for price development are enshrined in the Agricultural Agreement, ie negotiations between authorities and organizations in agriculture, she said.

Both Coop and Rema say they will keep prices low in stores.

– You will touch more products

Already in October Orkla came out and announced price increases across the board. Toro, Jordan, Nidar, Stabburet, Lano and a slew of other Norwegian brands suffer from much higher costs. This is due to higher freight rates and increased raw material costs.

Many of the items we find on grocery shelves come from farms across the country, and fertilizer is an important input factor in agriculture, notes Håkon Mageli, Orkla’s executive vice president of communications and corporate affairs.

– In Norway, the result of agricultural settlement this spring will play a role, and we expect the price of Norwegian raw materials to rise as a result. This will affect many of our products, he tells Netavizen.

He thinks it’s too early to say which particular products are affected.

Want to get a higher purchase price than grocery chains, maybe what percentage is on average?

– As CEO, Jan-Ivar Simlic Already indicated in July 2021Orkla is strongly affected by the rise in raw material prices in a number of regions. He says the coronavirus pandemic has contributed to bottlenecks and disruptions in international value chains.

– This development, along with increased demand, leads to significant increases in the prices of raw materials, packaging, transportation and energy. This made it necessary to increase our prices for finished goods. Magili clarifies that for competitive reasons, I cannot give details of the size of the price increases.

It’s too early to say anything concrete

Sindre Ånonsen, Head of Communications at Tine, told Nettavisen that there is no doubt that increased prices for fertilizer, electricity, fuel and more will affect farms’ finances.

However, it is too early to say anything concrete about how the price of the various input factors will affect the price of Tine products.

The price-related assessments are about both costs in the farm-to-table value chain — but also about the competitiveness of Norwegian dairy in relation to ever-increasing import, he tells Nettavisen.

– In order to secure farm livelihoods, vibrant Norway with food production across the country – and the competitiveness of the Tyne, there should always be comprehensive assessments behind pricing, Onunsen says.

So Taine is following development closely.

Manufacturers are worried

Brubakk at NHO Mat og Drikke says they have received Abnormal Many inquiries from its members in the past, due to, among other things, high electricity prices.

– Several manufacturers involved. The electricity bill is too high, Bruback says, and many are concerned about being competitive or being less profitable.

All producers want to deliver what consumers demand, but there will be a trade-off between what you get for the goods and production costs, he says, noting that grocery giants Coop, Rema and Norgesgruppen set prices for customers.

You will avoid commercial leakage

However, there is fierce competition in the grocery industry, and competition against imports is an important consideration when setting prices for customers.

– Do you fear that chains will buy more from abroad, at the expense of Norwegian raw materials?

The cost increase is likely to affect other countries as well, it’s not just Norway where prices are going up. But we should think about competition with foreign players, and have competitive prices, he says, adding:

– It’s a particular challenge with cross-border trade in Norway.

Although cross-border trade is limited due to the pandemic at the moment, he believes something needs to be done to stop people from shopping more in Sweden.

– We must do something in the long-run with regard to tax differences on temptations, to prevent trade from leaking into Sweden, he says.