Kiwi owner critical of report saying profits are high – E24

The grocery players are adamant that there is fierce competition.

In a recent analysis, the Norwegian Competition Authority states that there is high profitability and weak competition in the grocery industry.

Communication director Stein Rømmerud in the Norgesgruppen is critical of this.

– Had the competition been as weak and the profit as high as is claimed, Lidl and Ica would of course not have thrown in the cards and fled the country, he writes in an e-mail to E24.

Earlier in the day, he emphasized that Norgesgruppen has a profit margin of no more than about three percent.

– This is low and in line with other grocery chains in the countries around us.

However, the Norwegian Competition Authority has not neglected the profit margin in its study. That number says little about the competition in a market, they believe.

Instead, they have focused on how much the companies earn in relation to what they have invested in their operations. This figure is consistently higher than one would expect, according to the inspectorate.

– This supports our concern that the competition in the grocery industry is not good, says Magnus Friis Reitan in the Norwegian Competition Authority.

Magnus Friis Reitan

Deputy head of the Norwegian Competition Authority’s department for food, trade and health.

Nuances about margins

Both Rømmerud and Coop’s Ingvill Størksen, director of policy and government relations, have been busy in meetings on Tuesday and have therefore asked for questions by e-mail.

Størksen writes that “the report says that there is consistently high profitability at the suppliers and that the picture is more varied at the retail level. It is emphasized that the grocery chains generally have low operating margins.”

What she does not mention is that the report says in the next sentence that “low operating margins are not synonymous with low profitability”.

Rather, the Norwegian Competition Authority writes that they find “high profitability in the operation of parts of the retail sector throughout the entire period”.

Størksen does not answer questions about whether Coop, based on this finding, has confidence in the conclusion that the competition is too weak.

– We cannot be more specific without having had time to go through the report thoroughly, is the answer.

Have confidence in the report

Kårstein Løvaas, head of business policy at Rema owner Reitan Retail, maintains that there is “fierce competition every day”.

– But we have confidence in this report. That this is a basis that allows one to discuss on the basis of facts, he says.

Løvaas thinks the discussion about profitability and competition is interesting. He makes no secret of the fact that there are relatively few players in Norway, both suppliers and store chains.

– I see that the inspectorate points to obstacles to establishment. We welcome more competitors.

At the same time as the former Conservative politician says that Reitan Retail is positive about the report, he believes that a “light wear and tear” is beginning to occur in the industry.

– We have spent an extremely large amount of time and effort answering various analyzes and investigations. I hope we can soon use these powers to sell food at low prices.

– Big differences

In addition to the chains, some of the country’s largest suppliers have been seen in the cards of the Competition Authority.

Communications director Mette Hanekamhaug at the Danish Grocery Store Association (DLF) was also busy with meetings on Tuesday. She writes in an e-mail that it is good that the inspectorate has looked at total profitability and not just margins.

– The report has obtained figures from a small selection of suppliers, and shows that there are large differences in the profitability of the suppliers.

Mette Hanekamhaug

Director of Communications at DLF

E24 has referred to the Norwegian Competition Authority’s conclusion that a significant proportion of the suppliers’ results can be considered as “super profit super profitA term for excess return. If you earn more than the return requirement, the term “super profit” is often used.». “The results are consistent with weak competition and high profitability in a number of different product markets,” the inspectorate writes.

– Do you think that it could help the consumer with more players and increased competition?

Hanekamhaug points out that the inspectorate also writes that “when the variations are so great, it is difficult to draw a conclusion about general profitability at the supplier level”.

– We must go through the report thoroughly before we can give further comments and our input to the government.