Nordic Food Markets - 2. Prices and choice
Face - Contents - Bottom - Previous/Next "Nordic Food Markets" 2. Prices and choiceOne claim frequently met is that Nordic food prices are higher and the supply of food products narrower in the Nordic countries than in other European countries. Whereas there are a number of studies on price differences, there are very few investigations on international differences on food assortments in the stores. This chapter examines the available evidence and presents some new studies conducted by the Competition Authorities. 2.1 Nordic food prices2.1.1 IntroductionThere are several studies of international price comparisons. Some studies compare the purchasing power in different countries by analysing the development of prices over a period. Other studies compare purchasing power by looking at a comparable basket of consumption goods at a given point in time and some studies compare price changes22. The price indices most commonly used for studies of price comparisons and price changes are:
It is important to note that international price comparisons are complicated. First, the retail structure, the consumption pattern, and consumers' habits differ. Second, it is difficult to find goods which are fully comparable across all countries, and furthermore, differences in consumption patterns may cause an imbalance between the countries as some goods, which may have great influence in a few countries but not in others, might not be included. 2.1.2 Nordic food price comparison based on Eurostat pricesThe comparison of the Nordic food prices in this chapter is based on Eurostat data. Eurostat conducts regular price level measurements for consumption goods in all the EU countries plus Iceland, Norway, Switzerland and the candidate countries. These studies provide estimates of international price level differences, but are not comparable over time. Detailed guidelines concerning data collection and analysis have been prepared by Eurostat in order to ensure comparability23. In accordance with these guidelines the composition of the consumer budgets is analysed every third year in all the investigated countries and a comparison of the prices of food is carried out. The price level indices are averages of the consumption and should be representative of the retail structure in the country. Thus, the price indices are more accurate, the more similar the countries are. Moreover, large parts of the food market are characterised by the absence of strong international branded products (milk, vegetables, fruit, meat and bread) and packaging sizes may differ. Therefore, Eurostat's data collection includes generic goods and an extra large sample of different food items in order to ensure comparability. According to the Eurostat guidelines, the prices in national currency are converted into a common currency, Purchasing Power Parities (PPP), where only differences in purchasing power are included (and the influence of the currency markets is excluded). With the introduction of the euro some of the problems concerning the measuring of prices in different currencies have been avoided. However, all Nordic countries but Finland still have national currencies. The prices measured represent what the consumer actually pays in the store, including taxes, price discounts24 and so on. Eurostat advises against a strict ranking of countries according to their price level index since a difference of a few percentage points may be due to a measurement error. The Working Group has included the 15 EU countries, listed in table 2.1, as the reference group for the price comparison. Table 2.1. International economic data for EU15-countries plus Norway and Iceland, 2003
Source: Eurostat, Yearbook 2004 The Eurostat figures confirm the belief that consumers in the Nordic countries pay more for food compared to the average of the fifteen EU Member States. The gap is smallest compared to Sweden and largest compared to Norway and Iceland, cf. fig. 2.1. Only in Ireland are prices at the same level or higher than in the Nordic countries. Figure 2.1. Gross food and beverages prices1, 2004
Source: Eurostat and own calculations. According to these figures, Swedish, Finnish and Danish consumers pay 12-24 per cent more for food and beverages (soft drinks and beer) than an average EU15 consumer. Thus, Swedish, Finnish and Danish consumers pay 112 to 124 for food - each time an European consumer on average pays 100 . In Norway and Iceland food prices are still higher. In these countries consumers pay 43-46 per cent more than the average European consumer, or 143-146 each time the European consumer pays 100 . In Finland, Iceland, Norway and Sweden, the sales of alcoholic beverages in supermarkets are restricted. Therefore, prices on alcoholic beverages in these countries are not the result of the competitive process in the food sector. The food prices exclusive alcoholic beverages are thus between 12 per cent and 42 per cent higher than the European average. Greenland and the Faroe Islands are not included in the Eurostat study as there are no comparable data for these countries. The Eurostat figures confirm other studies, such as Statistics Norway 2001/20: Prisnivå på matvarer i de nordiske land, Tyskland og EU; and ACNielsen, 200525. Nordic countries have a higher price level than the rest of Europe. The price gap is larger for food products than for total final consumption except in Sweden and Denmark. The tax structure and the differentiated VAT rates on food, which are common in the EU, influence this result, see section 2.2. Although the price levels in the Nordic countries are higher than in EU15, the gap seems to have narrowed in recent years. This is illustrated in figure 2.2 which presents the development of the harmonised consumer price index (HICP26) for the years 1999 – 2004. Food prices have increased less in the Nordic region (9 per cent) than in EU15 (12 per cent). Changes in tax levels can influence the result, but not very much. Figure 2.2. The food and non-alcoholic beverages price development in the 15 EU and the Nordic countries
Source: Eurostat, HICP figures. 2.2 VAT and taxesAs mentioned earlier, the price level comparison in the tables and figures above includes direct consumption taxes. Hence, international price level differences also reflect international differences in consumption taxes. The tax level is generally higher in the Nordic countries than in most other European countries. The most important tax is the Value Added Tax (VAT). This is a general tax levied on the value added to goods and services at each stage of the production and distribution chain. The basic rules for charging VAT in the EU are harmonised. Each country fixes its own rates. Many countries, including Finland, Iceland, Norway and Sweden, use a system of differentiated rates, usually high rates for ordinary and luxury goods and lower rates for goods – such as food - which are considered essential to ordinary consumers. Denmark and the Faroe Islands do not differentiate VAT rates. Greenland does not levy VAT at all. Other taxes on food and beverages are excise duties on sugar, cocoa, chocolate, sweets, beer and carbonated soft drinks. In many countries these taxes, like VAT, are levied at differentiated rates, as e.g. in Denmark. There are also different systems for levying packaging taxes on consumer goods. However, in all cases these taxes are imposed on the production and sale of the goods. All sold goods are taxed whether they are imported or not. Table 2.2. Vat and taxes (%) and gross price correction factor, 2004
Source: Deloitte and Landbrugsraadet, 2005, OECD's “Revenue Statistics” and own calculations In order to be able to compare prices without taxes (and thus the influence of differences in the fiscal regimes between the countries) VAT and excise duties can be deducted using correction factors such as those presented in table 2.2. 2.3 Promotion activity2.3.1 IntroductionBesides taxes, temporary price reductions and other promotional activities can affect the accuracy of price level comparisons between countries. In the instructions from Eurostat to the national statistical bureaus, price discounts and bonuses should be included in the survey provided that:
The guiding principle is to collect the prices that the consumer actually pays. Nevertheless, the survey may still be biased if the frequency of rebates and short term price reductions, which are not captured by the survey, differ between countries. When focusing on food, the different patterns in promotion activity between countries become of particular relevance since food products are among the most promoted products in the supermarkets and price cuts are in general used to promote food products. Moreover, price discounts, short-term or long-term, are part of the competition process as short-term price cuts may influence trade patterns. For this reason, the Working Group has conducted an international comparison on promotion activity in the Nordic countries, Germany and France. 2.3.2 MethodThe study is based on data collected by ACNielsen and includes all in-store promotions. The variable definitions are: The data include checkout (by the counter) prices of all sales in the supermarkets within five important food categories: beer, butter/margarines, carbonated soft drinks, milk (fresh) and cold cuts. The survey includes prices for year 2004 for the whole category, i.e. of all items in the specific category, and not only of specified brands, products or segments. The categories which have been picked out represent some of the most promoted food product groups. The promotion data are collected in seven different countries; Denmark, Norway, Sweden, Finland, Iceland, France and Germany in grocery stores that have sales areas that are larger than 100 sqm (in France stores smaller than 400 sqm were excluded). France and Germany have been picked out for the comparison because they represent large economies with very different retail structures. The survey may be subject to measurement errors. First, as markets (countries) vary in types and amounts and level of promotions, ACNielsen strives for common definitions, but not necessarily for common implementation of promotional data types. As the importance of different promotions differs by country (e.g. due to legislation), the ACNielsen definitions can differ by country too. Second, the way of grouping promoted and non-promoted products, which differ in price and quality, means that the price of certain promoted products may be higher even after the price reduction than the price of non-promoted products in the same food category (see figure 2.3). In the category of butter, for example, the price of organic butter sold on promotion, could still be higher than the non-promoted price on e.g. margarine. Thus, by looking at the total category of products, the actual price reduction in a country might be underestimated. Third, with respect to multi-buy promotions (“Buy X, pay Y”), ACNielsen strives to collect the net price per unit sold from the retailers. However, for some articles this has not been possible, and the promoted price is therefore applied to all sales in case the type of promotion has a big impact on the sales level. This might overestimate the actual price reduction. The uncertainties connected with these deviations in the observations are almost the same in all the countries and it is, therefore, likely that they are more or less evened out when the countries are compared. 2.3.3 Scale of promotion activityThe survey shows that the promotion pattern and the promotion extent vary considerably across the Nordic countries and in comparison with the rest of Europe, cf. table 2.3. Generally, promotion activity is higher in the Nordic countries than in other European countries (Germany and France). The differences may be due, in part, to legislation. In some countries, for example, products cannot be marketed below certain low prices, in other countries there are restrictions on television advertising. Alcohol advertising is subject to restrictions (e.g. in Norway and Iceland). The differences may also be due, in part, to different retail structures (discount markets prefer every day low prices whereas hypermarkets offer a lot of special short-term price cuts) and, finally, differences in the competition culture in the countries may play a role. Table 2.3. Share of turnover sold on promotion (%), 2004
Source: ACNielsen Scantrack Promotion is used extensively to sell beer and soft drinks, cf. table 2.3. This is naturally connected to the ability of these products to attract customers – to “create traffic” in the store, i.e. to tempt consumers into the store in the hope they will also buy other products. In Denmark, almost half of the beer sold in supermarkets is sold on promotion whereas the percentage for milk is only 11 per cent of the turnover. In France, and especially Germany, promotion activities are less intense than in the Nordic countries. Germany is the country with the lowest promotion activity. Germany is also the country with the largest discount sector. Discount markets' use of temporary price cuts is limited. Prices are kept low for longer periods. Among the Nordic countries Denmark is singled out as one of the countries where retailers apply the greatest campaign pressure in their marketing. This is mainly achieved by way of weekly promotional brochures. Within the past 20 years the number of promotional brochures received by households in Denmark has increased six-fold and households receive approximately 1,20027 promotional catalogues each year (23 per week). In addition, these promotional catalogues are on average more voluminous than in other countries.28 The conclusions to the survey in Denmark are confirmed by interviews with retailers. They explain that campaign pressure and how marketing strategies are implemented vary from country to country. In Denmark, coupons are not used in the retail market. Consequently, the promotion pattern in Danish supermarkets translates into many price adjustments (i.e. elevator prices) and a relatively large share of promotion sales, cf. figure In Finland the media is the most important marketing channel. Retail chains' own labels occupy a central position in the campaigns. In Sweden coupons are common29. Supermarkets in Sweden and Finland are not allowed to sell beer and alcoholic products of more than 3.5 per cent vol. and 4.7 per cent vol., respectively. In Norway, only alcoholic beverages of a maximum of 4.5 per cent vol. are allowed to be sold in food retail shops and only to people over the age of 18. Advertisements of alcohol are not allowed, and consequently, the promotion of beer in shops is the main marketing activity. In Norway, coupons are not used in the retail market. In Iceland, only alcoholic beverages with maximum of 2.25 per cent alc. are sold in food retail stores. Alcoholic beverages above that limit are only sold in the State Monopoly. It is forbidden to advertise alcoholic beverages. Light beer, i.e. below 2.25 per cent alc. is often sold on promotion. Figure 2.3 (butter and margarine) shows - as examples - the movement of average promotional prices on a week-by-week basis through a period of three months compared to non-promotional prices within the same group. The average non-promotional price is indexed to 100 for the entire period. Figure 2.3. Average promotional prices for butter and margarine
Source: ACNielsen Scantrack The biggest difference in average promotional prices and ordinary prices is the prices of beer and soft drinks cf. table 2.4. Table 2.4. The average price reduction from normal prices (%), 2004
Source: ACNielsen Scantrack. The ratio of the average promotional price divided by the non-promotional average price gives an indication of the mix of discount and more expensive products that are on promotion, and how large possible price reductions might be. For example in Finland, 40 per cent of beer sales are on promotion and the average promotional price for this part of the retail sale is 74.8 per cent of the normal price. The same applies to soft drinks in Finland where the average promotional price is 60.4 per cent of the non-promotional price. These price indices are not comparable over time since the weights in the baskets correspond to the sales in every period. Hence, we do not know whether the prices of individual products have changed during the promotion. The risk is that the general price development of the promoted products is faster than that of the non-promoted products. However, in Germany and France, it is obvious that the average prices of products sold under promotion do not differ significantly from normal prices. This could be due to only limited promotional price reductions. It could also be due to promotional activities focusing on more expensive products. 2.3.4 Impact of promotion activity on pricesAs mentioned above, the Eurostat price level surveys may be subject to measurement error if the frequency of rebates and temporary price reductions - not captured by the Eurostat survey - differ between countries. Deviations from Eurostat price indices can occur where there are many price cuts of very short duration, or where Eurostat's price comparisons do not include the items which are most often used for price campaigns. The present investigation shows that prices in Finland, Iceland and Sweden are collected in such a way that temporary price reduction in practice are captured by the Eurostat procedure. For Denmark the collection of actual prices overestimate the actual price level of the products mentioned. This is due to the fact that Danish supermarkets use short-term (weekly) price cuts much more than supermarkets elsewhere. Moreover, the collection of prices in Denmark does not include beer and soft drinks in crates of 24 or 30 which is the most sold package and the package most heavily promoted. The Danish Competition Authority has estimated that the Eurostat price index for Denmark is overestimated by one percentage point vis-à-vis the other Nordic countries and EU15. Therefore, the Eurostat figures for Denmark in this report have been adjusted with 1 procent point. This estimate considers special Danish circumstances, and is outlined in detail in Appendix 3. This figure confirms another Danish study (cf. Competition Report 2005 – chapter 2. Danish Competition Authority) based on another approach showing the impact on prices of short-term discount (one week). It is, however, important to note that correction of Eurostat's prices for the effects of short-term price cuts is complicated and the results should be interpreted with caution. As mentioned above, consumption patterns and habits differ from country to country which makes it difficult to compare food items in supermarkets in different countries. In addition, a lot of the price cuts are already captured by the procedure defined by Eurostat. 2.4 Net pricesTo supplement the presentation of international relative price differences above, figure 2.4 presents the results after deduction of VAT, other value-added taxes and the special correction for Denmark from the Eurostat price indices. The results of this correction are that Danish, Finnish and Swedish food prices are closer to the European prices, resulting in a price gap of 6-12 per cent (7-11 per cent exclusive alcoholic beverages), cf. fig. 2.4. The price gap is smaller for food and beverage products than for total private consumption in Denmark and Finland (food and non-alcoholic beverages). The significant reduction in the price differences is explained by the fact that especially Denmark and Finland apply higher taxes on food than the rest of Europe. Norway and Iceland are still much more expensive although the price gap has been somewhat reduced too. Figure 2.4. Net food and beverages prices (excl. taxes), 2004
Source: Eurostat and Working Group's own calculations, cf table 2.2. We can therefore conclude that, even though VAT, taxes and differences in promotional pricing are taken into consideration, the Nordic countries still exhibit significantly higher food and beverages (soft drinks and beer) prices compared to most other European countries. Also, the resulting “net” prices assume a full pass-through of taxes on prices30. This is not always the case. It depends on supply and demand conditions on the particular market. For example, a reduction in VAT on food from 25 to 0 per cent would not, at least in the short run, lead to an equivalent price reduction. Therefore, some caution is warranted when considering the price level differences between countries net of taxes. 2.5 Food supply2.5.1 IntroductionIt is a common experience that the assortment of food in supermarkets in a number of countries in Southern and Central Europe is larger, more diversified and more attractive than in the Nordic countries. Also, there is more service; the staff weighs the vegetables and packs at the counter. Diversity and variety of food products on the shelves are a central element of competition in retail. The more choice for consumers in the stores, the better the stores satisfy the demands. When consumers can choose from a large variety, there is more pressure on the suppliers to increase their efforts to offer all the products the consumers prefer. There are hardly any empirical studies on international differences in the variety available to consumers in the food retail sector. The only exception known is a study by the Federation of Norwegian Agricultural Cooperation which in 2005 published a (quantitative) comparison of the number of selected food items (yoghurt, various kinds of bread, cold cuts, sausages, chicken and cheese) in shops in Oslo, Brussels, Madrid and Stockholm. The study has been conducted in one supermarket in each city. This investigation shows that for 4 of the food categories the range of food products in the Nordic capitals are narrower than in Madrid, while in Brussels the product range is narrower than in Oslo and Stockholm. For two of the food categories (bread and cold cuts) Oslo has the widest product range. Thus, the investigation does not show that the product range is narrower in the Nordic countries. However, the study pin point that the low variety in Brussels supermarkets most likely is caused by the more widespread bakeries and butcher's shops in Belgium than in the Nordic countries. Moreover, the collecting of data in Brussels took place at 6.00 pm where the food supply normally is more limited than in the morning, which also can explain the low food supply. This is illustrative of some of the methodical problems such investigations involve. Hornstrup and Hornstrup has conducted by the initiative of the Working Group a quantitative analysis of the food supply. The food supply in the Nordic countries was investigated and compared to France by including a number of supermarkets belonging to different retail chains located close to large cities and capitals: Oslo, Reykjavik, Stockholm, Copenhagen, Helsinki and Lyon. France was picked out as the benchmark country since French consumer food prices correspond closely to the average for EU15. The investigation includes different categories of products. The result should be interpreted with caution given the methodological difficulties. First, food habits are fairly different between the Nordic countries and France, especially when it comes to bread and cold cuts. Second, the comparison of the food supply relies on a limited number of shops at a certain time of year. 2.5.2 MethodThe survey is based on data collection in 36 shops which are member of different retail chains and located close to the capitals in five Nordic countries and close to Lyon31 in France. There are no data for Greenland and the Faroe Islands. The survey includes all products in five important categories: dairy, bread, meat, beer and soft drinks. Dairy products include milk, butter, hard cheese and soured milk products. Bread products include fresh and frozen, light and dark bread and crispbread. Meat products include fresh and frozen meat, canned goods and cold sliced meat. Beer and soft drinks products include alcoholic and non-alcoholic beverages and soft drinks with and without carbon dioxide. Both the number of branded goods, the number of articles within each branded goods, and private labels are counted. Products available through the serviced in-shop delicatessens are included in the figures, but only those that are marketed, i.e. displayed and ready for sale. Special cuts that can be purchased on request are not included. Delicatessens are common features of hypermarkets in all countries and also of many supermarkets. The data collection gives a snapshot picture of the variety in the EAN-code number (i.e. number of different articles) in the different product categories. The frequency with which and the policy for filling supermarket shelves may affect the results. However, in all countries the investigations were carried out from the morning when the cold counter and the products on the shelves give the best picture of the food supply in the supermarkets. The investigation does not provide a picture of the seasonally adjusted assortment. However, a comparison of the different countries at the same time of year, reveal no big differences between the countries. It should be held in mind that the number of hypermarkets is higher in Sweden and Finland than in Denmark, Norway and Iceland – but lower than in France. The survey was conducted in discount shops, supermarkets and hypermarkets. The results are weighted by the market shares (cf. chapter 4) of the types of supermarket in question (discount shops, supermarkets and hypermarkets, respectively) in order to obtain figures which are representative of the retail structure in each country (i.e. figures which state the food supply in an average supermarket in the country in question). 2.5.3 Size of the food supplyThe survey indicates that the Nordic food supply is narrower than the food supply in France. In important product categories such as beer, soft drinks, dairy products and meat, the food supply is much more diversified in France than in any of the Nordic countries. Finland comes close to the level of France with respect to dairy products (and cold cuts). In all other food categories, the diversity and variety of the food supply in Finland is narrower than in France. These differences are partly due to different cultural circumstances (consumer preferences and shopping patterns) and to national legislation (e.g. the highly regulated alcoholic markets in some countries) and partly due to the differences in the competition conditions in the countries. Two explanations are likely for these differences. First, the retail structure is different in France than in the Nordic countries. Since larger stores have more products the differences are, in part, explained by differences in retail structure. Second, the evidence suggests that a food store in France in general has more choice to offer consumers compared to a similar food store in any of the Nordic countries. Dairy products The number of different variants of butter is 3-6 times higher in France than in the Nordic countries. The high number of butter products includes different butter brands and different variants of butter like butter with garlic, butter with herbs etc. When it comes to soured milk products, the range of different products is broader in the French supermarkets than in the Nordic countries except Finland. In Finland, there is a tradition for eating soured milk products. The soured milk products are marketed in a considerable number and with various flavours, coffee flavour, vanilla flavour, etc. In Finland a large share of the soured milk products are sold as private labels. However, when it comes to fresh milk and pre-packed hard cheese, the product portfolio is wider in the Nordic countries. In Denmark and Finland there are three times as many fresh milk products to choose from than in France. In Denmark, the dairies compete on producing and marketing milk as fresh as possible. With regard to pre-packed hard cheese, the French do not have the same tradition for eating hard cheese, especially not for breakfast, as the Nordic countries. The French eat cheese for dessert and often prefer soft cheese32. The French buy hard cheese from the delicatessen store in the supermarket (shop-in-shop) where they can pick their own choice. If soft cheeses were included in the analysis, the differences in the food supply would be even larger. Table 2.5. Number of dairy products, 2005
Meat The tradition for buying meat for dinner in supermarkets is very pronounced in the Nordic countries compared to France where there is a larger market for independent butchers. This is also a sign of a different retail structure and shows a different shopping pattern compared to the Nordic countries, see chapters 3 and 4. In the Nordic countries, consumers do not spend as much time shopping as consumers in Southern Europe. Therefore, the portfolio of pre-packed fresh meat in the supermarkets is large in the Nordic countries. Among the Nordic countries Denmark has a long tradition for deli butcher shops in the supermarkets, i.e. shop in shop. Therefore, the number of food products in the fresh pre-packed category is quite low in Denmark, whereas it is high in the own butcher's category and vice versa in the other countries. In each category frozen products are more represented in Iceland than in other Nordic countries. Table 2.6. Number of meat products, 2005
Beverages In Norway, Sweden and Finland the sale and marketing of alcoholic beverages (incl. beer) is regulated. It is forbidden to sell strong beer in supermarkets. Therefore, the number of different beer products in the supermarkets is probably smaller than in countries without this regulations. Beer consumption in France is lower per capita than in any of the Nordic countries - 36 litres against 96 litres in Denmark, 80 litres in Finland, 50 litres in Norway and 55 litres in Sweden. However, there are quite a few breweries and a wide selection of beers to choose from in the French supermarkets. Looking at the category “cider”, Finland, in particular, has a large variety. In Finland cider has a higher alcohol percentage than in any of the other countries. The variety of water products, like spring water, is broad in France. This might be expected considering the French preferences for branded water from well-known sources. The variety of carbonated soft drinks is broad in Sweden, Iceland, Finland and France compared to Denmark and Norway. For Norway the explanation might be the high market share of discount shops. For the other countries there seems to be no obvious explanation for this. Table 2.7. Number of beverage products, 2005
Note 1. Beer in Finland, Norway, Sweden, and Iceland only contains beer below 4.7% alc., 4.5% alc., 3.5% alc. and 2.25% alc., respectively. Cold Cuts Cold cuts, which include all cold cuts of meat, but pâté and slices of bacon, show more or less the same picture as above. Delicatessen (shop-in-shop) play a role particularly in France, somewhat less in Sweden and Finland. Table 2.8. Number of cold cuts, 2005
2.5.4 Food supplyFigure 2.6 sums up the figures set out above. For each country the number of products within the four groups has been added giving a picture of rather large variations between the ranges of food products in an average supermarket in each country. The number of products in France is obviously significantly larger than in any of the Nordic countries. Figure 2.6. The food supply in an average supermarket, 2005
One reason for the large differences is the difference in retail structure in France compared to the Nordic countries. However, the Working Group concludes that French retailers value a wide selection to a greater extent compared to their northern colleagues. The French hypermarkets that took part in the survey have an average sales area of 3,100 square metres which is slightly less than hypermarkets surveyed in the Nordic countries. Moreover, also the number of items belonging to most of the mentioned food categories is larger in supermarkets and hypermarkets in France, cf. table 2.9. The existence of shop-in-shop concepts is also at least as common in France as in the large supermarkets in the North. Thus, when looking at the range of products available in specific supermarkets in different countries, the differences are significant in supermarkets and hypermarkets, cf. table 2.9. Table 2.9. Relative number of food products in supermarkets and hyper-markets. (Average number for 6 countries = 100)
Source: Hornstrup investigation, see section 2.4 about investigation method. Bread Bread and bread products have not been included in the previous presentations. The picture for bread is somewhat different, first of all owing to the very different consumer habits, see chapter 3 for more information. The supply in the supermarkets is quite different. Sweden has a very large range of different bread products. So has Finland, although not quite as large as in Sweden. The large number and the great variety are found among the pre-packed bread products. As to fresh bread, there is no great difference from one country to another. The supply of fresh (pre-packed) bread in French supermarkets is very limited, and there are no registrations for frozen bread. The French are more in the habit of going to the baker for fresh bread. Table 2.10. Number of bread products, 2005
2.6 ConclusionsThe Working Group has examined the claim that the Nordic food prices are higher and the food supply narrower compared to other European countries. Such studies are loaded with empirical difficulties. However, the available evidence, including the original empirical studies commissioned by the Working Group, supports the conclusion that Nordic food prices are higher than the European average. According to Eurostat figures, the price gap is 12-24 per cent (12-26 per cent exclusive alcoholic beverages) for Denmark, Finland and Sweden, and 43-46 per cent (38-42 per cent exclusive alcoholic beverages) in the non-EU member countries, Norway and Iceland. However, the price gap has decreased during the last 5-10 years. In general, Nordic food prices increase at a slower rate than food prices elsewhere. Various taxes, in particular VAT, account for much of the differences in price levels. Also the fact that promotion activity is more widespread in the Nordic countries may have some impact on the results. Once these effects are eliminated, food prices in the Nordic countries are closer to the European average, corresponding to 6-12 per cent (7-11 per cent exclusive alcoholic beverages) in Denmark, Finland and Sweden, and 38-41 per cent (34-36 per cent exclusive alcoholic beverages) in Norway and Iceland. Irrespective of whether taxes are included or not, the conclusion is that food prices in the Nordic countries are significantly higher than those of most other European nations, including the EU15 average. The survey of the food supply also supports the claim that the food supply is narrower in the Nordic countries than in France. Somewhat different result was found in a Norwegian study from 2005. Both studies are based on limited samples, 4 supermarkets in the Norwegian study and 36 in the study initiated by the Working Group. The conclusions are therefore somewhat uncertain. Footnotes 22 Appendix 1 goes into more details about these studies. 23 “Guidelines for conducting price surveys relating to private household consumption”. Source: Eurostat. 24 Price discounts are included in accordance with the guidelines of Eurostat, cf. section 2.3. 25 The ACNielsen study concerns consumer prices in general, and not only food prices. 26 HICP is the EU harmonised consumer price index. HICP is based on the consumer price index (CPI), subject to which the method for estimating CPI is harmonised between the countries. 27 Source: Jyllandsposten October 11, 2005. Tranberg Marketing. 28 Coop's promotional brochures, for example, consist of more than double the number of pages in Denmark than in Sweden. 29 From 2005 “Prisinformationslagen” regulates the display of prices. Konsumentverket decides the exact requirements. 30 Studies of the Danish Ministry of Taxation's calculation on the effect of changes in the tax rates (http://www.skm.dk/) and Bryggeriforeningen (http://www.bryggeriforeningen.dk/) show that the pass-through effect of taxes on consumer prices of beer and carbonated soft drinks is high in Denmark, even though the prices of these products are very well-known to the consumers. 31 Lyon is a big French city with almost the same number of inhabitants as the Nordic capitals. 32 It may have an impact that sales of soft cheese are not included in the survey. Presumably the selection of soft cheese, such as brie and camembert, is wider in France than in the Nordic countries. Version 1.0 December 2005 • © Danish Competition Authority. | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
