Margins on food products at suppliers and grocery chains vary widely in Norway, according to a study conducted by the country's competition authority on behalf of the Ministry of Trade, Industry and Fisheries.
The survey revealed that profitability of different products differs for suppliers and grocery chains.
For example, grocery chains earned more money selling chocolate and snacks than meat, eggs, and seafood.
At the same time, they saw low and sometimes negative margins on own-brand products.
Norway's minister of trade and industry, Cecilie Myrseth, stated, "The high food prices are having a big impact on people's wallets. The government has implemented a number of measures to improve competition in the grocery industry.
"In the long term, this can contribute to lower food prices and better selection. We will now thoroughly review the survey and assess whether there are findings that indicate that we should update our action plan."
Findings
For suppliers, the survey unveiled large variations in margins.
From 2020 to 2021, supplier margins were stable with a slight decline after 2021.
The cost of goods accounted for 70%-95% of variable production costs, and was the largest expense for suppliers during the period.
For grocery chains, brand margins were stable during the period, but with seasonal variations.
There was significant variation in margins for different suppliers' product portfolios and across different product categories, the study noted.
In the chocolate and snacks category, the grocery chains saw high margins for both branded and private-label (Egne merkevarer - EMV) products.
In the meat and seafood categories, retailers had low and sometimes negative margins on EMV. The survey only includes results for EMV within these categories.
Data showed that margins for EMV were approximately 12 percentage points lower than the margins for brands.
It reflects that some product categories within EMV, which are not mapped for brands, had very low margins and therefore contributed to an overall lower margin for EMV than for brands.
The survey also unveiled wide margin variation across product categories for both EMV and branded products.
The Study
In October 2023, the Norwegian Competition Authority was commissioned by the Ministry of Trade, Industry and Fisheries to investigate price increase in food and beverages, including the margins in various segments of the grocery value chain.
In May 2024, the Norwegian Competition Authority submitted a profitability study.
The report on product margins, which the authority submitted in December has now been published. The two reports complement each other.
Myrseth added, "The competition authority's survey gives us up-to-date knowledge about the situation in the grocery industry. We see that there are large variations in how much the chains earn on different products.
"The authority has previously assessed that competition in the grocery market is weak. The margin study does not provide grounds for changing this assessment. The government will therefore continue its work to improve competition with full force."
