""

Required Report - public distribution

**Date:** 11/26/2003

**GAIN Report Number:** NO3004

NO3004

**Norway**

**Retail Food Sector**

**Report**

**2003**

**Approved by:**

![](media/image1.wmf)Lana Bennett, Agricultural Counselor

U.S.Embassy, Stockholm

**Prepared by:**

Asle Johansen, Agricultural Specialist

**Report Highlights:**

The restructuring of the Norwegian retail food sector continues as
pan-Nordic mergers and cooperative agreements seek to achieve greater
efficiencies and economics of scale. Meanwhile, other European retailers
from countries outside of the Nordic region are building up their
presence in Norway. The latest step is French retail giant Carrefour\'s
franchise partnership with Norway\'s leading food retailer,
Norgesgruppen.

Includes PSD Changes: No

Includes Trade Matrix: No

Annual Report

Stockholm \[SW1\]

\[NO\]

Table of Contents

[Section I. Market Summary 3](#section-i.-market-summary)

[Advantages/Challenges 4](#advantageschallenges)

[Section II. Road map for market entry.
4](#section-ii.-road-map-for-market-entry.)

[A. Grocery Stores (supermarkets, small supermarkets and discount
stores)
4](#a.-grocery-stores-supermarkets-small-supermarkets-and-discount-stores)

[Entry Strategy 4](#entry-strategy)

[Market Structure 5](#market-structure)

[Distribution systems ‑ consumer-ready food products
5](#distribution-systems-consumer-ready-food-products)

[Norwegian grocery retail chains and market shares
6](#norwegian-grocery-retail-chains-and-market-shares)

[B. Gas marts and convenience kiosks
7](#b.-gas-marts-and-convenience-kiosks)

[Entry Strategy 7](#entry-strategy-1)

[Company profiles 8](#company-profiles)

[GAS Marts 8](#gas-marts)

[Kiosks (convenience stores) 9](#kiosks-convenience-stores)

[Section III. Competition 9](#section-iii.-competition)

[Market trends 9](#market-trends)

[Section IV. Best product prospects
10](#section-iv.-best-product-prospects)

[Section V. Further information and post contact
10](#section-v.-further-information-and-post-contact)

# Section I. Market Summary

 Total grocery retail market turnover in Norway in 2002 reached
Norwegian Kroner 108 billion (US\$ 14.4 billion).

 Sales growth in 2002 was 5.3 percent compared with 5.6 percent in
2001.

 Total imports of agricultural products by Norway in 2002 reached US\$
2.6 billion, of which about 50 percent were consumer-oriented high-value
products.

 The U.S. share of Norway's agricultural imports in 2002 amounted to
US\$ 134 million, about 5.2 percent of Norway's total agricultural
imports.

 81 percent of retail food products are sold by the grocery retail
chains, 16 percent by gas stations and kiosks and 3 percent by
speciality stores.

 In 2002, Norway had 4,409 grocery stores and 3,500 gas stations and
kiosks selling grocery products.

 Four retail chains control 99.3 percent of the retail stores and also
dominate grocery sales to gas stations and kiosks.

 The Norwegian retail store capacity and infrastructure can serve as
many as 7 to 8 million people, although the Norwegian population is only
4.6 million.

 All four retail chains are involved in the grocery trade in other
Nordic countries and have established relationships with other Nordic
chains through mergers or cooperative agreements to strengthen their
competitiveness.

 On October 7, 2003, French retailer Carrefour announced a franchise
partnership with Norway's major retailer, Norgesgruppen. The deal brings
Carrefour into Scandinavia for the first time.

 Norwegian retailers are announcing ambitious discount store opening
plans to compete with the German discounter Lidl's planned entry into
the Norwegian market in 2004. About 50 percent of all grocery stores in
Norway are discount stores.

 The private label market in Norway accounts for about 11 percent of
the total grocery market.

 Swedish-Norwegian cross border trade reached a new high and is
estimated at approximately SEK 10 billion (US\$ 1.3 billion) per year.

## Advantages/Challenges

  ----------------------------------- -----------------------------------
  Advantages                          Challenges

  The United States is a preferred    Norwegians regulations and
  supplier to Norway for products     attitudes concerning products with
  such as tree nuts and dried fruits, bio-engineered ingredients are
  both as branded products and for    prohibitive.
  private labels.                     

  U.S. products have a reputation of  Lack of promotion and marketing
  being of high quality, and the      activities in Norway by U.S.
  current low exchange rate enhances  suppliers is handicapping potential
  sales opportunities.                sales.

  The United States is associated     Strong competition from European
  with new-to-market products.        suppliers, who benefit from
                                      preferential customs duties.

  Mergers of the Nordic chains should European discount stores will enter
  bring higher sales volumes to U.S.  the Norwegian market with private
  suppliers that are established in   brands. (LIDL)
  this market.                        

  Products that previously enjoyed    Norway remains a highly protected
  access to only one of the Nordic    market, through tariff and
  markets, or had only small market   non-tariff barriers, for products
  share, could potentially increase   which can be produced in Norway.
  market exposure throughout all      
  Nordic countries via the new        
  region-wide chain agreements.       
  ----------------------------------- -----------------------------------

## 

# Section II. Road map for market entry.

## A. Grocery Stores (supermarkets, small supermarkets and discount stores)

## Entry Strategy

The Norwegian retail market is totally dominated by four retail chains
(Norgesgruppen A/S, Hakon-Gruppen A/S, COOP and Rema 1000 Norge) which
control 99.3 percent of the market. All these chains either own or are
owned by their own wholesaler, both in grocery products as well as fruit
and vegetables. Breaking into sales to these companies can be difficult
for small and medium-sized companies without local representation. All
the above chains want imported products delivered to their stores with
the same convenience and reliability that domestic suppliers provide.
New-to-market exporters need to find an importer, wholesaler or agent to
assist them with product clearances. Also, they must be ready to provide
extensive marketing support to their importers.

New-to-market exporters should:

-   Conduct early market research to assess product potential and
    existing competition.

-   Find an agent, importer, wholesaler or a domestic industry partner
    to assist with information on import duties, phytosanitary
    regulations, labeling requirements and competition.

-   A personal visit is not only advisable, but necessary, to build
    relationships with potential customers.

-   Discuss market strategies and delivery capacity with the importer.
    Reliability of supply is crucial in this market.

## Market Structure

Since 1999, when the Norwegian retail group, Hakon-Gruppen A/S merged
with Sweden's ICA, and subsequently with the Netherlands' Ahold, the
other major retail groups have followed suit. COOP Norge, the
consumer-owned cooperative retail chain has merged with its counterparts
in Sweden (KF) and Denmark (FDB) to form COOP Norden. The leading
Norwegian retail group, Norgesgruppen A/S, is cooperating with Axfood of
Sweden and Dagrofa of Denmark, and recently signed a franchising
contract with French retail giant Carrefour. As part of the deal,
Norgesgruppen will operate stores under Carrefour's banners while
Carrefour will supply groceries to the Norwegian retailer. The Norwegian
retailers are seeking to minimize their costs by coordinating central
purchasing and taking advantage of the economies of scale. Also, the
retailers are aggressively promoting the development of private label
product lines.

Compared to the other Nordic countries, the discount sector has a very
high presence in Norway and accounts for approximately fifty percent of
the food retail market, mostly due to high domestic food prices. Growth
figures in the discount sector are showing no sign of leveling off and
this, of course, has stirred interest among foreign players to enter
domestically dominated Nordic food retail market. The German discount
chain Lidl, already established in Sweden and Finland, is expected to
open its first stores in Norway in 2004, delayed from the original
opening schedule of summer 2003. However, it is expected that Lidl will
have difficulties expanding as rapidly as in the EU countries, as Norway
is still a very protected market with high import tariffs and
restrictions to protect locally produced products. So far, Lidl has not
been able to secure Norwegian suppliers who are willing to produce food
products for its private label product lines, which account for
approximately 85%. The Norwegian retailers are responding to the need to
compete with Lidl by opening new discount stores. For example, in June
2003, Norgesgruppen strengthened its position by buying the Kiwi chain
with 300 discount stores. Lidl is projected to capture about five
percent of the Norwegian retail market within the next five years.

The Swedish-Norwegian cross border trade is increasing and is estimated
at approximately SEK 10 billion (US\$ 1.3 billion) per year. Norwegians
are increasing their purchases of much cheaper Swedish food products at
the supermarkets on the Swedish side of the Norway-Sweden border. The
situation has also affected Norwegian players in the food retail sector,
and Norwegian retailers are now opening up their own operations on
Swedish territory. For example, Norwegian retailer Rema 1000 is opening
an outlet in Northern Sweden.

## Distribution systems ‑ consumer-ready food products

In 2002, Norway had 4,409 grocery stores with a turnover of NOK 108
billion (US\$ 14.4 billion). Generally, grocery stores account for 81
percent of retail food sales including fresh, frozen, and canned goods
as well as non‑alcoholic beverages and non‑food items. Specialty stores
such as bakeries, meat and candy shops account for the remaining 19
percent. In 2002, about 45 percent of Norwegian food distribution to
retailers was handled by the following four large wholesale enterprises:

+-----------------------+-----------------------+-----------------------+
| **Company**           | **Address**           | **Phone/Fax**         |
+-----------------------+-----------------------+-----------------------+
| Joh. Johannson        | Nedre Kalbakkvei 22   | Phone: (47) 22 16 90  |
|                       |                       | 00                    |
|                       | P.O.Box 130 Sentrum   |                       |
|                       |                       | Fax: (47) 22 16 90 10 |
|                       | N-0102 Oslo           |                       |
|                       |                       |                       |
|                       | Norway                |                       |
+-----------------------+-----------------------+-----------------------+
| COOP                  | Østre Aker vei 264    | Phone: (47) 22 89 95  |
|                       |                       | 95                    |
|                       | P.O.Box 21 Haugenstua |                       |
|                       |                       | Fax: (47) 22 89 97 45 |
|                       | N-0915 Oslo           |                       |
|                       |                       |                       |
|                       | Norway                |                       |
+-----------------------+-----------------------+-----------------------+
| Hakon Distribusjon    | Solheimveien 3        | Phone: (47) 67 97 35  |
| A/S                   |                       | 00                    |
|                       | P.O.Box 37            |                       |
|                       |                       | Fax: (47) 67 90 67 97 |
|                       | 1471 Skårer           |                       |
|                       |                       |                       |
|                       | Norway                |                       |
+-----------------------+-----------------------+-----------------------+
| Rema 1000 Sofiemyr    | Sönsterudveien 32     | Phone: (47) 66 80 02  |
|                       |                       | 28                    |
|                       | 1412 Oppegård         |                       |
|                       |                       | Fax: (47) 66 80 02 17 |
|                       | Norway                |                       |
+-----------------------+-----------------------+-----------------------+

## Norwegian grocery retail chains and market shares

The Norwegian retail grocery sector has undergone years of restructuring
during which smaller chains have changed partners several times. The
remaining chains, except for the largest group, Norgesgruppen AS,
control the distribution of products from producers to consumers.
Norgesgruppen AS is more of a buying group, and marketing is done
individually by the different smaller chains it supplies.
Norgesgruppen's cooperation with Carrefour will include joint purchasing
of branded products, development of private labels, logistics and food
safety. Supermarkets, small supermarkets and discount stores make up
about one third each of the total number of stores. Listed below are
market shares and number of stores at the beginning of 2003.

+----------------+------------------+--------------+------------------+
| **Chain**      | **Phone and      | **Number of  | **Market         |
|                | fax**            | stores**     | shares**         |
|                |                  |              |                  |
|                |                  |              | **in percent**   |
+----------------+------------------+--------------+------------------+
| Norgesgruppen  | Phone:(47) 24 11 | 1,913        | 34.5             |
| AS             | 31 00            |              |                  |
|                |                  |              |                  |
| Parkveien 61   | Fax: (47) 24 11  |              |                  |
|                | 31 01            |              |                  |
| P.O.Box 2775   |                  |              |                  |
| Solli          |                  |              |                  |
|                |                  |              |                  |
| N-1007 Oslo    |                  |              |                  |
+----------------+------------------+--------------+------------------+
| Hakon-Gruppen  | Phone: (47) 23   | 1,110        | 23.9             |
| A/S            | 05 50 00         |              |                  |
|                |                  |              |                  |
| Sinsenveien    | Fax: (47) 23 05  |              |                  |
| 47C            | 50 01            |              |                  |
|                |                  |              |                  |
| P.O.Box 6500   |                  |              |                  |
| Rodelökka      |                  |              |                  |
|                |                  |              |                  |
| N-0501 Oslo    |                  |              |                  |
+----------------+------------------+--------------+------------------+
| Coop           | Phone: (47) 22   | 980          | 24.3             |
|                | 89 95 95         |              |                  |
| Østre Aker vei |                  |              |                  |
| 264            | Fax : (47) 22 89 |              |                  |
|                | 97 45            |              |                  |
| P.O.Box 21     |                  |              |                  |
| Haugenstua     |                  |              |                  |
|                |                  |              |                  |
| N-0915 Oslo    |                  |              |                  |
+----------------+------------------+--------------+------------------+
| Rema 1000      | Phone: (47) 24   | 359          | 16.7             |
| Norge AS       | 09 85 00         |              |                  |
|                |                  |              |                  |
| Grenseveien 88 | Fax : (47) 24 09 |              |                  |
|                | 85 49            |              |                  |
| P.O.Box 6428   |                  |              |                  |
| Etterstad      |                  |              |                  |
|                |                  |              |                  |
| N-0605 Oslo    |                  |              |                  |
+----------------+------------------+--------------+------------------+
| Others         |                  | 47           | 0.6              |
+----------------+------------------+--------------+------------------+
| Total          |                  | 4,409        | 100.0            |
+----------------+------------------+--------------+------------------+

## B. Gas marts and convenience kiosks

## Entry Strategy

New-to-market exporters should bear in mind that although there is a
close connection between the larger grocery wholesalers and retail
chains and the gas marts and kiosks, the gas marts and kiosks have their
own organizations for buying and marketing. Close and personal contact
with an importer and/or with the buyers of these organizations is also
necessary in this sector, as well as for the larger chains, to achieve a
good result. Main players include the largest gas stations (Esso,
Statoil, Shell and Hydro/Texaco) and kiosks ( Mix, Narvesen, Gyda and
Small Shops (7-Eleven)). These stores specialize in basic grocery
products and their consumers are not as price sensitive, therefore there
is greater receptivity to convenience foods and impulse-buy products.

Advice to new-to-market exporters:

-   Meet with the major grocery retailers which are the major suppliers
    in this sector.

-   Calculate what your price would be in this market, including
    freight, duties and logistics.

-   Have a clear idea of competition in your product category.

## Company profiles

Gas marts make up 56 percent and kiosks 44 percent of a combined US\$
2.1 billion turnover of grocery products at these two types of outlets.
However, turnover in gas marts and kiosks has stagnated in the past two
years as grocery stores have extended their evening and weekend opening
hours.

## GAS Marts

+----------------+------------------+---------------+----------------+
| **Gas chains** | **Phone and      | **Number of   | **Market       |
|                | fax**            | outlets**     | share**        |
|                |                  |               |                |
|                |                  |               | **in percent** |
+----------------+------------------+---------------+----------------+
| Statoil        | Phone:(47) 22 96 | 450           | 26.9           |
| Detaljhandel   | 20 00            |               |                |
| AS             |                  |               |                |
|                | Fax: (47) 22 96  |               |                |
| Sörkedalsveien | 29 70            |               |                |
| 8              |                  |               |                |
|                |                  |               |                |
| P.O.Box 1176   |                  |               |                |
| Sentrum        |                  |               |                |
|                |                  |               |                |
| N-0107 Oslo    |                  |               |                |
| (1)            |                  |               |                |
+----------------+------------------+---------------+----------------+
| Norske Shell   | Phone:(47) 22 66 | 578           | 31.9           |
|                | 50 00            |               |                |
| P.O.Box 1154   |                  |               |                |
| Sentrum        | Fax: (47) 22 66  |               |                |
|                | 51 97            |               |                |
| N-0107 Oslo    |                  |               |                |
| (2)            |                  |               |                |
+----------------+------------------+---------------+----------------+
| Esso Norge AS  | Phone:(47) 22 66 | 351           | 23.3           |
|                | 30 30            |               |                |
| Drammensveien  |                  |               |                |
| 149            | Fax: (47) 22 66  |               |                |
|                | 34 55            |               |                |
| P.O.Box 350    |                  |               |                |
| Sköyen         |                  |               |                |
|                |                  |               |                |
| N-0212 Oslo    |                  |               |                |
| (2)            |                  |               |                |
+----------------+------------------+---------------+----------------+
| Hydro Texaco   | Phone:(47) 22 12 | 330           | 17.9           |
| AS             | 40 00            |               |                |
|                |                  |               |                |
| Drammensveien  | Fax: (47) 22 12  |               |                |
| 134            | 40 60            |               |                |
|                |                  |               |                |
| N-0212 Oslo    |                  |               |                |
| (2)            |                  |               |                |
+----------------+------------------+---------------+----------------+

\(1\) Main supplier ICA

\(2\) Main supplier Norgesgruppen

## Kiosks (convenience stores)

+----------------+------------------+---------------+----------------+
| **Kiosk        | **Phone and      | **Number of   | **Market       |
| chains**       | fax**            | stores**      | share**        |
|                |                  |               |                |
|                |                  |               | **in percent** |
+----------------+------------------+---------------+----------------+
| Mix Butikkene  | Phone:(47) 22 79 | 950           | 38.8           |
| BA             | 08 00            |               |                |
|                |                  |               |                |
| Haavard        | Fax: (47) 22 79  |               |                |
| Martinsensvei  | 08 01            |               |                |
| 34             |                  |               |                |
|                |                  |               |                |
| N-0978 Oslo    |                  |               |                |
+----------------+------------------+---------------+----------------+
| Narvesen Norge | Phone:(47) 22 57 | 435           | 30.8           |
|                | 30 10            |               |                |
| Bertrand       |                  |               |                |
| Narvesensvei2  | Fax: (47) 22 57  |               |                |
|                | 17 58            |               |                |
| P.O.Box 6125   |                  |               |                |
| Etterstad      |                  |               |                |
|                |                  |               |                |
| N-0978 Oslo    |                  |               |                |
+----------------+------------------+---------------+----------------+
| Gyda Butikkene | Phone:(47) 22 02 | 320           | 10.0           |
| BA             | 64 60            |               |                |
|                |                  |               |                |
| P.O.Box 153    | Fax: (47) 22 02  |               |                |
| Kjelsås        | 64 70            |               |                |
|                |                  |               |                |
| N-0411 Oslo    |                  |               |                |
+----------------+------------------+---------------+----------------+
| Butikkringen   | Phone:(47) 22 64 | 195           | 10.6           |
| Östlandet      | 68 98            |               |                |
|                |                  |               |                |
| P.O.Box 126    | Fax: (47) 22 65  |               |                |
| Ökern          | 37 51            |               |                |
|                |                  |               |                |
| N-0519 Oslo    |                  |               |                |
+----------------+------------------+---------------+----------------+
| Small Shops    | Phone:(47) 23 39 | 65            | 9.8            |
| Norge          | 57 11            |               |                |
|                |                  |               |                |
| Vitaminveien   | Fax :(47) 22 71  |               |                |
| 11A            | 19 70            |               |                |
|                |                  |               |                |
| P.O.Box 11     |                  |               |                |
| Grefsen        |                  |               |                |
|                |                  |               |                |
| N-0409 Oslo    |                  |               |                |
+----------------+------------------+---------------+----------------+

## 

# Section III. Competition

## Market trends

When fish is excluded, Norway is a net importer of agricultural
products. In 2002, imports totaled \$2.59 billion and exports roughly
\$709 million. About half of Norway\'s imports of agricultural products
consist of consumer‑oriented high-value products. Most of these come
from the horticultural and tropical products group. Major imports are
fresh fruits (oranges, bananas, apples and grapes), dry edible nuts,
fruit and vegetable juices, fresh vegetables, snacks, chocolate and
chocolate products, wines, pet food, live plants, cut flowers and
foliage.

The U.S. share of Norway\'s agricultural trade in CY 2002 stood at 5.2
percent (US\$ 134 million) of Norway's imports. The bulk of U.S. exports
to Norway consisted of wheat, leaf tobacco, processed fruit and
vegetables, fresh fruits, nuts, wine and beer.

# Section IV. Best product prospects

The best prospects in the retail food sector in Norway are products not
produced in the country or those containing ingredients not produced in
the country. High tariffs and significant documentation and controls
present obstacles to competition with domestic products.

A. The best market prospects in Norway include rice, tropical fruits\--
both fresh and canned \-- fresh vegetables, and a full range of
consumer‑oriented high-value products such as snack foods, processed
fruit and vegetables, fruit and vegetable juices, tree nuts, pet foods,
wine and beer. The U.S. market share is largest in the dried fruit and
nut sector, where the U.S. has captured about 70 percent of imports.
Raisins and prunes dominate dried fruit imports from the U.S. and
almonds, peanuts and walnuts dominate the nut imports. Sales of U.S.
rice have also been strong, with an achieved market share of about 10.5
percent. In the category of processed vegetables, U.S. canned corn is
the most popular, with a market share of more than 60 percent.

B. Too little attention has been paid to the Norwegian fresh fruit and
vegetable market in the past few years. The U.S. has lost market share,
primarily due to insufficient marketing and lack of market presence.
Shipping terms and the lack of personal contact between U.S. exporters
and their Norwegian customers are principal reasons given by Norwegian
importers as to why U.S. export business in this category has declined.

C. A number of products face high tariff barriers in the Norwegian
market. This is particularly true of products containing meat, fruits,
vegetables and dairy products that compete directly with domestically
produced Norwegian products. In addition, Norway has a ban on
hormone-treated meat and Norwegian regulations and attitudes concerning
bio-engineered products and product ingredients are prohibitive. Should
the market open, Norway will require import approval by the authorities
noted below as well as labeling of such products.

# Section V. Further information and post contact

Important contact information

Norwegian Food Control Authority (SNT)

Ullevålsveien 76

P.O.Box 8187 Dep.

N-0034 Oslo

Norway

Phone: (47) 23 21 70 00

Fax : (47) 22 21 70 01

The above state agency is in charge of product approval, labeling,
additives, and administration of food safety regulations for imported
and domestic products. It primarily serves Norwegian importers rather
than foreign exporters.

Statens Landbruksforvaltning (Norwegian Agricultural Authority)

Dep. Trade and Industry

P.O.Box 8140 Dep.

N-0033 Oslo

Norway

Phone: (47) 24 13 10 00

Fax : (47) 24 13 10 05

The above state-owned agency handles customs duties for industrially
processed agricultural products, based on product ingredients reported
by the importer. It also handles the administrative functions related to
import/supply needs of the country, as well as the auction on quotas
agreed under Norway's WTO commitment. In dealing with this agency, a
local Norwegian agent or an importer would be the best means of contact.

For general questions about exporting to Norway, please contact:

American Embassy Oslo

Foreign Agricultural Service

Asle Eek Johansen, Agricultural Specialist

Drammensveien 18

N-0244 Oslo

Phone: (47) 21 30 86 21

Fax: ( 47) 22 44 94 25

Email: asle.johansen@usda.gov

or agoslo@usda.gov

For more information on exporting U.S. agricultural products to other
countries in the Nordic/Baltic region, please visit the FAS/Stockholm
regional headquarters office at www.usemb.se/Agriculture