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The oligopoly with the three big Swedish supermarket chains Ica, Coop and Axfood has squeezed more and more from food producers for a long time. At the same time, above all, the dominant Ica, with just over half the market, has profit margins that outperform the international food giants.
DN has been in contact with several producers, who do not dare to tolerate names because they run the risk of companies being penalized: the final threat is that their products leave the stores. Especially when it comes to Ica, it would be a fatal blow.
There are several companies that have been removed from the chain store range over a certain period: Scan, Kelloggs, Skånemejerier, Carlsberg and Saltå Kvarn, to give a few examples. Ica listed parts of the Gevalia 2017 range.
Saltå is a strong brand with an organic profile.
– In the case of Saltå Kvarn, it is the case that consumers are willing to pay a little more for the products. If you eat oatmeal, the 1.5 kilo package is the most sold, the merchant earns a penny from it. But if you buy 650 grams from Saltå Kvarn, that product can earn you as much as three to five crowns, says Per Rosengren.
Per Rosengren has experience on both sides, has been purchasing manager at Coop and sales manager at Saltå Kvarn. And now he’s retired and has nothing to lose, so his name may appear in the newspaper.
– Saltå Kvarn customers are committed and willing to pay a little more. But why should the merchant put the money in his pocket? You should pass it on to the breeder and not least to the farmers. Farmers are the ones who contribute to biodiversity and allow a good living environment for all of us, not shops, he says.
According to Per Rosengren, it is difficult to show how the pressure on purchases is going, with demands for reduced prices and threats to stop buying goods. Saltå Kvarn had a conflict with Coop in 2010 and was banned for a time.
– Everything happens orally. Sometimes after a phone call I write down what they said and send it in an email, so it’s printed. So they have said that “you can’t do that!”
One of the worst events he believes it was during the catastrophic year 2018, when the drought burned much of the crop.
– Then we had a set of rules that says we must announce price increases 16 weeks in advance. In August we say that the harvest goes to the barrel, we buy the most expensive grain, what can be obtained. At that time, no chain approved any price increase. We bought expensive and took all the increase from our coffers, it was the farmer who had to carry it, the grocery trade including Ica did not finance shit. In January, we exceeded the price increases, but next summer they demanded that we lower the prices, “otherwise, it goes out of range.” Hadn’t they understood that it was a disaster? he says.
In 2010, Coop and food producer Saltå Kvarn had a conflict that resulted in the products disappearing from the shelves for a time.
Photo: Magnus Hallgren
In a recurring survey As Livsmedelsföretagen has done with 220 of the largest member companies, 90% respond that there is a threat of delisting. (45 percent respond “Yes, sometimes”, 45 percent “Yes, very often” or “Yes, often.”) Although the dropout rate in the survey is around 50 percent, You can claim that many companies believe it is a problem.
This picture is confirmed in a report on the food market that the Swedish Competition Authority published in 2018, where 60 percent of the companies that responded say they were sometimes exposed to unfair business practices and 20 percent that it happened frequently. Just over half felt that the methods had become more common.
Threat of delisting, being removed from the range is on the “black list” of unacceptable business practices by food companies. A couple of growers interviewed by DN talk about another blacklisted method used by buyers: it demands that trade secrets be revealed.
– They require total transparency in our production, what we have for packaging costs, shipping costs, labor costs. They require that we use a certain raw material supplier that they have an agreement with, even if we could source a better quality raw material ourselves. If we want another supplier, they demand to know what we get for the price, otherwise they won’t buy from us, says a food producer.
By having full control of food producer business, chain store buyers can pit manufacturers against each other and drive prices up.
The retailer also believes that the widespread use of EMV, the chains’ private label products, is problematic.
– It’s pure theft, they copy our products. They copy the leading product in the market and sell it 15 percent cheaper, avoiding all the costs of product development.
It happens that food producers are obliged to, instead of making their own product under their own brand, to do it like EMV for chain stores, with a lower remuneration. EMV products also lead to the strange situation where the food chain becomes both a customer and a competitor on the store shelf. A competitor who determines prices and shelf locations.
Ica, Coop and Axfood are the main players in the Swedish market.
Photo: Helena Landstedt / TT
Buyers’ business practices often it cannot be substantiated, because systems existed for conducting negotiations orally. But it happens that an email arrives late at night with the meaning that “if you do not lower the price, we will cancel your entire range from tomorrow.”
One of the DN informants reads that email.
Details may not appear as the entrepreneur does not want to risk running into the chain in question.
DN has also read a schedule which, according to an informant, was used internally within Ica. The document was shown during a review to a group of different food companies, who were visiting Ica. Then they were also sent, according to the informant. Despite the fact that it happened several years ago, the pressure methods that are on the “reward and punishment ladder” are still used, according to the source.
Livsmedelsföretagen counts several of them as blacklisted business methods.
– We have heard from members that this ladder is there, but we have not seen the document before, says Rasmus Bäckström, Livsmedelsföretagen business policy expert.
In the penalty area of the stairs are both “defensive” and “delisting” price threats on parts or the entire range.
Ica writes to DN in a comment that “they cannot determine if the image comes from Ica” and that the current purchasing strategy, which is from 2013, “has no similarities with it.” According to Ica, the negotiations are focused on large multinational companies, whose objective is to keep prices low and that consumers are not as sensitive to prices when it comes to local suppliers.
Ica affirms that the “penalty ladder”
Photo: Patrik C Österberg / TT
The work is now underway inside the Ministry of Commerce and Industry through the transposition of the EU legislation that allows dealing with unfair commercial practices between companies in the agricultural and food chain, the so-called UTP directive (Unfair Commercial Practices).
The goal is to protect small producers from big buyers and end unfair conditions.
These include:
• Prohibition of payment terms exceeding 30 days
• Prohibition of cancellations of orders with short notice (30 days)
• Prohibition of claims for payment of costs not related to the sale of agricultural and food products.
• Prohibition of commercial retaliation.
• Prohibition of payment claims for deterioration of products already delivered in the store.
• Prohibition of requirements to reveal trade secrets.
• Prohibition to reject written agreements
The Swedish researcher has He proposed that Sweden should go beyond the EU, which has reached a minimum level, where the new laws should only apply in relation to companies below a certain turnover, and only for certain food products.
– I am very happy that the legislation is coming, but it is equally important that it applies to everyone. Simply put, wrong business methods are just as bad regardless of the size of the business and the products they sell, one of the food manufacturers tells DN.
Producer organizations such as Livsmedelsföretagen and LRF have supported the extended proposal.
However, the Ica merchants union has made a reservation against him. It is claimed that it can affect small retailers in Ica when they make local purchases outside of the Ica system.
Ica Sweden CEO Per Strömberg says in interviews that international giants like Nestlé and Unilever do not need further protection from Ica.
The law will go into effect next fall.
Read more:
New Numbers: Top Earning Ica Retailers, And Also Your Local Ica
New billions of rain on Ica merchants
He would become the Zlatan of the merchants: he has released the millions
