Food, Groceries | Demanding a price freeze at Kiwi after the dividend party: – Unheard of

– While food prices for most people have skyrocketed, things have gone so badly at the top of the value chain, with those who sell the food, says SV deputy leader Torgeir Knag Fylkesnes to Nettavisen.

– This shows once again that the grocery chains prey on farmers and ordinary people, he says.

The SV deputy leader wants to take radical steps to improve competition and thereby bring prices down.

– Now I’m tired of hearing the whining from the grocery stores that the competition is so fierce, that the costs are so high and that the margins are so small, says Fylkesnes.

Also read: The fortunes are increasing for Rema-Reitan and Kiwi-Johannson

Increased food prices and dividend party

For customers, 2023 was anything but a golden year. Food prices then increased by 10 per cent. It was the strongest increase in 40 years.

But for the owner of Kiwi, Meny and the other companies of the Norgesgruppen, the result was really good.

Recently, Norgesgruppen was able to present accounting figures for 2023, and these showed a solid profit of NOK 3.4 billion after tax.

Also read: The most powerful grocery leaders meet here

Top CEO, Runar Hollevik was rewarded with a record bonus. He received a salary and bonuses of NOK 12.5 million and an additional NOK 4.5 million set aside for a pension. In the year when food prices rose by 10 per cent, Hollevik had his salary, bonus, pension and other benefits increased by 8.8 per cent.

– It is unheard of that the owners of Norgesgruppen continue to enrich themselves with yet another billion in profits for the owners and fat bonuses for the management, all at the expense of the customers, says Rødt manager Marie Sneve Martinussen to Nettavisen.

In an e-mail to Nettavisen, Norgesgruppen’s director of communications comments on the criticism as follows:

– Our is low regardless of the industry you compare it to. Operating at a loss will neither serve the farmer nor the consumer, writes communications director Stein Rømmerud.

Previous investigations have shown that the margins of the grocery chains are much lower than for most of the food suppliers.

– Norgesgruppen invests an amount that is greater than the annual result in stores, warehouses, logistics and sustainable solutions throughout the country, and employs more than 45,000. Norway is dependent on private companies turning a profit, he writes.

Also read: Historically: Rema 1000 no longer the country’s largest chain

– Stop price increases at Kiwi

Martinussen in Rødt believes the Norgesgruppen is making more than enough gains.

– Food prices increased by almost 10 per cent last year, which has meant a big dent in ordinary families’ wallets. The group should stop all price increases in Kiwi, Meny and its other storesshe says.

It is the anonymous Johannson family that owns the majority of Norgesgruppen, around 75 per cent. This means that most of the dividend of NOK 875 million accrues to them. Johan Johanson is considered one of Norway’s very richest and took over as chairman of Norgesgruppen after his father in 2022.

Also read: This is how it went when Nettavisen asked Johan Johannson for an interview

– The Johannson family has a fortune of over NOK 50 billion. It tells me that the Norgesgruppen has far too much power, and we see that that power is being used to make one of Norway’s richest families even richer, says Martinussen.

– Ruled by a few families

– The grocery chains say they have such small margins, but they generate huge profits. This is a result of allowing the grocery market to be controlled by very few, and to a large extent by a few families, says Fylkesnes.

He refers to both Norgesgruppen, Rema 1000 and Bunnpris as also family-owned companies. At the food giant Orkla, too, a family dominates, namely Stein Erik Hagen and his children.

Many of the shelves in Norwegian grocery stores are filled with Orkla’s products, everything from Grandiosa, Nugatti, Møller’s cod liver oil to Omo Color, Toro soups and Nidar chocolate.

Also read: Doesn’t like what they have in the ham spread: – It’s almost rude

For Norwegian grocery customers, these goods became increasingly expensive through 2023. But for Orkla, the financial results were brilliant. It has been decided that the dividend to the owners will be a staggering NOK six billion.

Hagen’s company Canica has 20 percent of the shares in Orkla, so of the six billion, NOK 1.2 billion goes to the Hagen family. That is as much as the price of 40 million Grandiosa pizzas or as much as 7,700 Norwegian families spend on food for an entire year.

Chief executive Nils Selte was able to note a total salary and other remuneration of NOK 25.4 million. This includes a bonus of NOK 7.2 million.

Orkla has been given the opportunity, but has not wanted to comment on this article.

– Overpriced food

Nettavisen has recently written about how the grocery chains have secured control over several parts of the value chain over the years.

– They also increasingly own infrastructure, from suppliers to wholesalers, transport and property, says Fylkesnes.

Both Norgesgruppen and Reitan have today become major real estate players. Reitan Eiendom, for example, had NOK 1.5 billion in rental income in 2022. Norgesgruppen is the largest owner in Scala Eiendom, which in turn owns 27 shopping centres.

– What is the problem with them getting so big?

– They grow rich at the expense of ordinary people. There are many indications that Norwegian groceries have been overpriced for a long time, and that these large profits have been financed by ordinary people through excessively high prices in shops.

– We are pumped full of advertising where all the chains claim that they are low-priced. My claim is that none of the big chains in Norway are low-priced.

Rebuke the Government

Fylkesnes believes that it is necessary to take completely different measures than what the government has so far said they will do to improve competition.

– We must introduce a ceiling on how large a part of the grocery market a person or a company can own. The Norgesgruppen is starting to get so big that they can decide the prices, and squeeze suppliers if they want to.

Also read: Egg sales take off at Finn: Extreme prices

He also believes there must be an end to the strong control the chains have over wholesalers and producers.

– This vertical integration must be split up, says Fylkesnes.

Rødt leader Marie Sneve Martinussen believes the Government is doing too little.

– Where is the political courage of the government to do something about the power of the food giants? In 2023, Kiwi became even bigger than the year before, and it is high time to do something about the enormous concentration of power in the grocery industry, as Rødt has suggested.

Do not want socialist arrangements

The Right party also believes that it is necessary to take action to improve grocery competition, but they do not want regulations as SV and Rødt have advocated.

– The right does not believe the solution is to introduce socialist arrangements where we politicians dictate who is allowed to own what, and how much, through ownership restrictions, says Storting representative Lene Westgaard-Halle to Nettavisen.

She believes it is not entirely surprising that some families have managed to build up large fortunes by selling groceries.

– The reason why the grocery players build large fortunes is primarily that they operate with a large volume, i.e. have many stores, she says.

At the same time, she is aware that the situation today is not good.

– The competition in the value chain for groceries is clearly too bad in Norway, and that is precisely why the Storting has joined forces to try to help strengthen this competition, she says.

The Minister of Business has drawn up a ten-point plan to improve competition, but Westgaard-Halle is not impressed.

– Unfortunately, the government is close to being paralyzed in these areas, she says.