Norwegian retail conglomerate NorgesGruppen has emphasised that controlling exponential cost increases in the value chain is essential to keep food prices down.
The observation was part of a meeting between the management of NorgesGruppen and minister of industry, Jan Christian Vestre and minister of agriculture and food, Sandra Borch.
'Costs Are Going Through The Roof'
NorgesGruppen chief executive Runar Hollevik, explained, "Our message to the government is that we see a large increase in costs in all parts of the value chain. Both the suppliers and the shops are experiencing that the costs are going through the roof.
"This leads to food prices increasing, but we still profit less from this situation. I think I speak for everyone in the grocery industry when I say that the situation we are in now is one we would like to have avoided. We understand that many people find the price rise very demanding."
Hollevik also highlighted that extraordinary increase in food and drink prices is a phenomenon throughout Europe, and that it is higher in Norway's neighbouring countries.
He added,"[An] 11.5% increase in prices one year is a lot, but in Denmark and Sweden the increase was 14.9% and 18.1%, respectively.
"It clearly shows that the rise in prices is due to international events, such as the war in Ukraine, which has led to very high growth in a number of raw materials, input factors and record high electricity costs."
Key Focus Areas
During the meeting, Hollevik also urged the government to contribute in three areas: energy prices, the agricultural settlement and securing free commercial negotiations.
The retail group emphasised the importance of this year's agricultural settlement, taking into account the increased costs in agriculture without increasing prices in the market.
Hollevik also advised the government against political interference in the free negotiations between the suppliers and the chains, the group noted.
"When a large majority of the players in the industry, agriculture and the minister of industry's own expert bodies, the Competition Authority and the Food Safety Authority, warn against the proposed regulation and say it will increase food prices, then this proposal must be shelved," he stated.
NorgesGruppen aims to control the rising costs both inside and outside its own operations.
"If electricity prices and raw material prices fall over the course of the year, we will expect suppliers to reduce prices accordingly. Then we will be able to see a normalisation of price growth in groceries. It will benefit consumers," he stated.
It will also cut costs on its part across its value chain and continue to invest in price cuts and other offers to help consumers navigate through the cost-of-living squeeze.
© 2023 European Supermarket Magazine – your source for the latest retail news. Article by Dayeeta Das. Click subscribe to sign up to ESM: The European Supermarket Magazine.