Food prices in Norway have recently seen a historically sharp increase, coinciding with the announcement that the country's largest retail giant, Norgesgruppen (owner of Kiwi), is acquiring the second-largest pharmacy chain, Vitusapotek. Experts suggest these developments reflect weak competition in the domestic grocery sector.

Critics, such as the author of "Rik på lavpris" (Rich on Low Prices), Espen Bogen, point out that these practices, including so-called "shelf fees" or "joint marketing," contribute significantly to Norway's rising food prices. Bogen estimates that these fees, paid by suppliers for access to shelf space and promotional campaigns, could amount to "billions in invoicing" within the Norwegian trade system.

Products like "mackerel in tomato" and "liver pâté" are cited as notable examples, where profit margins are allegedly exceptionally high, with a substantial portion of the final price attributed to display space costs. While companies like Orkla struggle to disclose details about these fees, the Norwegian government is holding meetings with key players in the grocery sector to address pricing issues.

Market Signals

Sector impacts and investment opportunities in the Norwegian seafood sector, particularly mackerel, driven by strong Asian demand.
Price volatility driven by rising key input costs and internal business practices.
Competitor positioning changes with continued consolidation of the retail sector.

Winners & Losers

Norwegian mackerel producers and exporters benefit from rising export values and potential profit margins from shelf fees. Conversely, Norwegian consumers face higher food prices, and smaller suppliers may encounter barriers to entry.

Action Timeline

Immediate (24-48h): Companies involved in the Norwegian seafood supply chain should monitor price fluctuations closely.
Short-term (1-3 months): Assess the impact of current market prices and retailer demands on profitability.
Long-term: Explore strategies to influence or adapt to potential future regulations regarding shelf fees and retail pricing transparency.

Risk Assessment

Regulatory Risks: Increased governmental and consumer scrutiny of shelf fees could lead to new regulations or caps.
Market Volatility: Over-reliance on specific export markets (e.g., Asia) carries risks related to trade policies or geopolitical events in those regions.
Competition Intensity: The highly concentrated nature of the Norwegian retail market can lead to aggressive fee structures.

Key Indicators

Export strength signals robust market dynamics, but shelf fees raise consumer concerns.
Leading indicators such as mackerel export data and competition statements from authorities.

Regional Perspective

A major Norwegian grocery conglomerate's acquisition of a pharmacy chain sparks criticism about weak competition and rising food prices, focusing on local shelf fee practices.

Immediate Implications

Government discussions could lead to regulatory pressure on retailer fee structures.
There is an opportunity for suppliers to better understand and negotiate shelf space and promotional terms.

What to Watch

Continued demand from Asian markets.
Norwegian retailers' pricing strategies and their responses to scrutiny.
Any regulatory actions or statements regarding shelf fees.

Analysis

The "mackerel in tomato" issue highlights how internal business practices, like shelf fees, can complicate value chains and impact consumer prices in concentrated markets like Norway. Businesses should carefully evaluate these dynamics.