""

Required Report - public distribution

**Date:** 12/29/2003

**GAIN Report Number:** FI3003

FI3003

**Finland**

**Retail Food Sector**

**Report**

**2003**

**Approved by:**

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

U.S.Embassy

**Prepared by:**

Bettina Dahlbacka, Agricultural Marketing Specialist

**Report Highlights:**

The consolidation and restructuring of the Nordic food retail sector
offers new interesting opportunities in terms of volumes and diversity
of products being demanded. Best products prospects include fish and
seafood and convenience food and beverages which appeal to teh healt
conscious. Additionally, the market is expanding for international and
ethnic cuisine, including foods that are uniquely associated with the
various regions of America. Major current impediments to U.S. sales
include consumer resistance to products containing genetiacally modified
(GMO) ingredients. The strong dollar, which has also been a major
impediment, has weakened considerably.

Includes PSD Changes: No

Includes Trade Matrix: No

Annual Report

Stockholm \[SW1\]

\[FI\]

Table of Contents

[**SECTION I: Market Summary 3**](#section-i-market-summary)

[Sweden and Finland 3](#sweden-and-finland)

[Advantages and Challenges Facing U.S. Products in Sweden and Finland
4](#advantages-and-challenges-facing-u.s.-products-in-sweden-and-finland)

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

[A. Supermarkets, hyper-markets or super centers, club and warehouse
outlets
4](#a.-supermarkets-hyper-markets-or-super-centers-club-and-warehouse-outlets)

[Market Structure 5](#market-structure)

[Company Profiles - Sweden 5](#company-profiles---sweden)

[Sweden -- Major Food Retail Profile
7](#sweden-major-food-retail-profile)

[Company Profiles - Finland 7](#company-profiles---finland)

[FINLAND -- Major food retail profile
9](#finland-major-food-retail-profile)

[B. Convenience Stores, Gas marts and Kiosks
10](#b.-convenience-stores-gas-marts-and-kiosks)

[Entry Strategy 10](#entry-strategy)

[Market Structure 10](#market-structure-1)

[Company Profiles - Sweden 11](#company-profiles---sweden-1)

[Gas Marts in Finland 11](#gas-marts-in-finland)

[C. Traditional markets -- Small Independent Grocery Stores.
12](#c.-traditional-markets-small-independent-grocery-stores.)

[SECTION III: Competition 12](#section-iii-competition)

[TABLE A: Sweden's import of Consumer-Oriented Agricultural Products in
2002
12](#table-a-swedens-import-of-consumer-oriented-agricultural-products-in-2002)

[TABLE B: Finland's import of Consumer-Oriented Agricultural Products in
2002
13](#table-b-finlands-import-of-consumer-oriented-agricultural-products-in-2002)

[SECTION IV: Best product prospects
13](#section-iv-best-product-prospects)

[A. Products present in the market with good sales potential:
13](#a.-products-present-in-the-market-with-good-sales-potential)

[B. Products not present in significant quantities that have good sales
potential:
14](#b.-products-not-present-in-significant-quantities-that-have-good-sales-potential)

[C. Products not present because they face significant barriers:
14](#c.-products-not-present-because-they-face-significant-barriers)

[SECTION V: Post contact and further information
14](#section-v-post-contact-and-further-information)

# SECTION I: Market Summary

## Sweden and Finland

Economic growth in both Sweden and Finland has strengthened domestic
demand for high-value consumer-ready products. However, the recent
slowdown in both world and local economies inserts some caution
concerning future consumer spending habits. Thus far, however, retail
food sales have remained high and further growth is expected.

The food retail sector in these markets are largely integrated and
concentrated. In both Sweden and Finland, the three largest
import/wholesale groups in each country cover about 80% of their
markets.

The restructuring of the Nordic retail food sector continues as
pan-Nordic mergers and cooperative agreements seek to achieve greater
efficiencies and economies of scale to fend off other European
competitors. The Swedish and Finnish retail chains are meeting the
intensifying competition by increasing efficiency by centralizing
purchases, international alliances and expanding their operations in the
Nordic and Baltic countries. In such concentrated markets where
retailers have such large market shares, growth in the home market
becomes virtually impossible. Going abroad, therefore, becomes the only
possible road to growth and the Swedish and Finnish retailers are being
pressured into finding new and larger forms of cooperation and mergers
at an international level.

The fastest growing \"concept\" in the food retail trade in Sweden and
Finland is discount stores. Although discount stores currently account
for only 13 and 10 percent in Sweden and Finland respectively, volumes
have tripled over the last ten years. Growth figures are showing no
signs of leveling off, and this, of course, has stirred interest among
foreign players to enter the domestically dominated Nordic food retail
market. The German hard discounter Lidl has started an explosive market
entry into the Nordic countries. The chain entered the Finnish market in
August 2002 and the Swedish market in September 2003, with expansion in
Norway and Denmark set for next year.

The trend throughout Europe of fewer but larger players continues. In
2002, 75% of Swedish retail food sales of approximately USD 19 billion
went through large supermarkets and hypermarkets. In Finland, the 375
largest stores accounted for half of total retail food sales of USD 12
billion in 2002. There were 6,060 food retail outlets in Sweden in 2002
compared to 13,000 in 1970. In Finland, there were 4,163 outlets in
2002, which was slightly fewer than the previous year.

Swedish and Finnish consumers are gravitating towards fresher, more
convenient and more nutritional foods. High demands are being made on
food quality, origin and environmental concerns. The ongoing
socio-demographic changes with busier life styles and increasing
single-person households are affecting food retailing to a high degree.
Retailers are shifting their product ranges towards an increasing share
of ready-to-eat foods and home meal replacements. Eating out is growing
faster than traditional retail sales. Both in Sweden and Finland, about
20 percent of meals are currently eaten out of the home. Fast food is
the segment benefiting most from these trends, and it is now a rapidly
growing part of the traditional restaurant sector. American-style fast
food chains, sushi bars and coffee shops are extremely popular in these
markets.

Organic and functional foods are gaining popularity in these markets
with significant consumer awareness in the area of food safety and
healthy eating habits. Consumers are willing and able to pay higher
prices for food and drink products that fall into these categories.
Also, through increased traveling and willingness to move away from
their culinary traditions, Swedish and Finnish consumers are more open
to ethnic foods.

Despite the facts that the Nordic countries maintain a leading position
when it comes to computers per capita, and that many consumers are
attracted by the thought of doing their food purchases from a computer,
internet sales of retail food products have been limited. The positive
outlook that the major retailers had a few years ago regarding this
sales vehicle has changed, and the list of retailers terminating their
websites is long. Currently, there are only a few profitable Internet
operators in food distribution in Sweden and Finland.

## Advantages and Challenges Facing U.S. Products in Sweden and Finland

  ----------------------------------- -----------------------------------
  **Advantages**                      **Challenges**

  Sophisticated markets. High         U.S. products at a price
  acceptance of new products and      disadvantage compared to
  concepts. U.S. products are         competitors based in the European
  considered high quality and trendy. Union.

  Growing consumer demand for         High distribution and shipping
  value-added products, convenience   costs.
  foods, international/ethnic         
  cuisine, \"functional\" and organic 
  foods.                              

  Location gives access to a          Strong hesitation with respect to
  Nordic/Baltic market comprising 25  genetically modified products and
  million consumers spending about    no access for hormone-treated beef
  USD 45 billion annually on food,    from the U.S.
  beverages and meals out.            

  High standard of living,            Strong dollar in 2002 was
  well-educated workforce, growing    negatively affecting U.S. sales.
  incomes. English is widely spoken.  
  ----------------------------------- -----------------------------------

# SECTION II: Road map for market entry

## A. Supermarkets, hyper-markets or super centers, club and warehouse outlets

## 

As stated above, these markets are dominated by a few
import/wholesale/retail groups, and therefore, U.S. exporters have a
relatively easy job of locating potential buyers. However, for the same
reason, it may be difficult to get in the door. Depending on the product
and the quantities, there are different ways for the American exporter
to penetrate these markets:

-   retailers/wholesale groups (large quantities)

-   specialized importers/distributors (niche and select brand name and
    private label products)

-   agents (products with strong brand names)

Market entry strategies for U.S. food products should include:

-   Market research in order to assess product opportunities and
    existing competition.

-   Advance calculation of the landed cost of a product in order to make
    price comparisons vis-a --vis competitors.

-   Locating an experienced distributor or independent reliable agent
    with strategic distribution channels to advise on import duties,
    sanitary regulations, and labeling requirements. It is advisable to
    initiate personal contact in order to discuss marketing matters such
    as funding for advertising, slotting allowance, in-store promotions
    and tasting events. Suppliers may also want to consider trade fair
    participation to raise awareness of their products.

-   Exploration of the purchasing arrangements of the larger retail
    chains.

-   Consider using USDA's Supplier Credit Guarantee program to make
    credit terms more attractive to importers.

## Market Structure

The Swedish and Finnish retail food industry has long been characterized
by stable structures and a low degree of internationalization. However,
this picture began to change in 1999 when the Netherlands's retail food
giant Ahold took over a 50% interest in Sweden's leading retailer ICA.
Subsequently, there has been a wave of consolidations among the Nordic
retailers and the companies are becoming more Nordic than domestic in
their perspective.

Looming international competition has increased the role of volume
dynamics in the food retail sector in the Nordic market. All the major
players are seeking to minimize their costs by coordinating central
purchasing and taking advantage of the economies of scale. Also, the
Nordic retailers are aggressively promoting the development of private
label product lines.

The general trend remains unchanged in Sweden and Finland, with
hypermarkets and large supermarkets increasing sales volumes, while
small and medium-sized stores lag behind. The number of retail outlets
continues to decrease, although at a somewhat slower pace.

The discount stores continue to gain market shares in Sweden and
Finland. In 2002, there were 365 discount stores in Sweden which
accounted for 13% of total sales, compared to 3% in 1990. Discount
stores have not been developed as extensively in Finland as in Sweden.
However, this scenario is about to change with the market entry of
German hard discounter, Lidl, into Finland in August 2002. Since opening
up their first outlets, Lidl has grabbed a 2.5% market share and has
about 40 outlets. The chain has aggressively targeted the Nordic
countries and is now moving into Sweden with the opening of 11 stores in
September 2003. Establishments in the Norwegian and Danish markets have
been projected for quite a while and operations are expected to begin in
2004.

The Nordic retailers have been gearing up for Lidl's entry in the market
and are opening up their own discount units and increasing the number of
products sold under their own label, which offer better margins. Axfood,
the main player in the discount sector in Sweden, has started up
\"Willys Hemma\" stores, a Swedish version of Lidl's outlets. Sweden's
major retailer, ICA Ahold, and leading Danish retailer, Dansk
Supermarked, combined forces in a 50/50 joint venture to operate Netto
discount stores in Sweden and Norway. So far, 25 Netto stores have been
opened in the South of Sweden and more locations in Sweden are expected
during 2004.

## Company Profiles - Sweden

The Swedish wholesale and retail food market is dominated by four
groups, ICA, Axfood, Coop and BergendahlsGruppen, accounting for about
80 percent of the commodity retail market. Each group has developed a
tight integration of purchasing, importing, wholesaling, distribution
and retailing. Imports of foods are either handled by the chains
themselves or through specialized importers and agents. ICA and Coop are
also engaged in joint Nordic buying groups.

Nordic expansion has been high on the agenda for the three major Swedish
food retailers. The formation of Coop Norden in 2002 was the Swedish
cooperative movement's first step toward working on a pan-Nordic basis.
ICA, in turn extended its Nordic cooperation by entering into a joint
venture with Dansk Supermarked and Axfood strengthened its ownership in
Spar Finland in 2002.

[ICA Ahold]{.underline} is the Nordic region's largest grocery retail
group. Although most of its stores are located in Sweden and Norway, the
chain is now expanding its interests into Denmark and the Baltic
countries. In 1999, the Netherlands' retail food giant Ahold acquired a
50-percent stake in ICA. A merger between ICA and the Norwegian Hakon
Group had been implemented earlier in 1999. In 2001, a joint venture
between ICA Ahold and the leading Danish retailer Dansk Supermarked was
formed. The 50-50 venture operates discount stores and hyper-markets in
Sweden and Norway. ICA Ahold operates about 1,858 outlets in Sweden (ICA
Nara, ICA Supermarket, ICA Kvantum, ICA Maxi, Rimi), and the operations
center is located in Vasteras. ICA stores accounted for 36.5% of
Sweden's retail food sales in 2002.

ICA Ahold is present in all three Baltic countries and intends to grow
in the Baltics. Reportedly, ICA and Finland's largest retailer, Kesko,
is planning joint retail food operations in the Baltics. The new entity
will combine the retailers' current operations in Estonia, Latvia and
Lithuania. The planned arrangement supports ICA's and Kesko's strategies
for a strong growth and profitability in the Baltic countries. The joint
venture aims at reaching the market leader position in the Baltic food
market and a 25% market share in three years.

[COOP Norden]{.underline} is the result of a merger of three
Scandinavian cooperatives; Coop Sweden, Danish FDB and Coop Norway. Coop
Norden is estimated to have a turnover of USD 8 billion, a 30% market
share of the Nordic market and 26,000 employees. Coop Norden established
its headquarter in Gothenburg, Sweden and started operations there on
January 1, 2002. The increase in competition from large international
chains and the pace of changes in the industry prompted this merger of
cooperatives. Through the merger, the three cooperatives believe they
can face these challenges by benefiting from larger buying volumes,
efficiencies in distribution, a common business development strategy and
lower costs for information technology. Coop Norden owns the biggest
share of NAF International, a buying company located in Denmark, which
represents retail cooperatives in the Nordic countries and other
European countries. In Sweden, Coop operates about 914 outlets
(supermarkets, hypermarkets, discount outlets) and accounted for 18.5%
of Sweden's retail food sales in 2002.

[Axfood AB]{.underline} was formed in November 1999 through the merger
of Hemkop and D&D Dagligvaror and the subsequent acquisitions of Spar
Sverige, SparInn Snabbgross and a 60% of the share capital in Spar
Finland. The new organization became one of the largest food retail
operations in the Nordic countries. Axfood has 918 stores in Sweden
(Hemkop, Willys, Willys Hemma, Spar, Tempo, Vivo) and 296 stores in
Finland (Spar, EuroSpar). In 2002, Axfood had a market share of 18.2
percent and 9 percent in these countries, respectively.

[BergendahlsGruppen AB]{.underline} is a regional group with a strong
base in the Southern part of Sweden where the market share is about 20%.
Bergendahls has a total of 116 outlets (food retail, discount,
supermarkets) and a market share of 2.4%. In 2002, BergendahlsGruppen
entered the Stockholm market with two outlets, Eko Lanna and City Gross.
The City Gross outlets have, in general, a sales area of 7,000-12,000
square meters. Bergendahls operates totally five City Gross outlets of
which one is Sweden's largest food store.

## Sweden -- Major Food Retail Profile 

# 

+----------------+----------+-------+-------+--------+------+--------+
| *              | **Own    | **    | **No. | **Loca | **M  | **Pu   |
| *Retailer/Type | ership** | Sales | of**  | tion** | kt** | rch/** |
| of Outlet**    |          | C     |       |        |      |        |
|                |          | Y02** | *     |        | *    | *      |
|                |          |       | *Outl |        | *Sha | *Agent |
|                |          | **(\$ | ets** |        | re** | Type** |
|                |          | Mi    |       |        |      |        |
|                |          | ll)** |       |        |      |        |
+----------------+----------+-------+-------+--------+------+--------+
| ICA Ahold      | Swedish/ | 7,361 | 1,858 | Sweden | 36.5 | D      |
|                |          |       |       |        |      | irect/ |
| -food retail   | No       |       |       | Norway |      |        |
|                | rwegian/ |       |       |        |      | imp    |
| -discount      |          |       |       | D      |      | orter/ |
| stores         | Dutch    |       |       | enmark |      |        |
|                |          |       |       |        |      | whol   |
| -gas           |          |       |       | E      |      | esaler |
| mar            |          |       |       | stonia |      |        |
| ts/convenience |          |       |       |        |      |        |
|                |          |       |       | Latvia |      |        |
| -supermarkets  |          |       |       |        |      |        |
|                |          |       |       | Lit    |      |        |
| -hyper-markets |          |       |       | huania |      |        |
+----------------+----------+-------+-------+--------+------+--------+
| Coop           | Swedish  | 3,727 | 914   | Sweden | 18.5 | D      |
|                |          |       |       |        |      | irect/ |
| -food retail   | N        |       |       | Norway |      |        |
|                | orwegian |       |       |        |      | imp    |
| -gas           |          |       |       | D      |      | orter/ |
| mar            | Danish   |       |       | enmark |      |        |
| ts/convenience |          |       |       |        |      | whol   |
|                |          |       |       |        |      | esaler |
| -supermarkets  |          |       |       |        |      |        |
|                |          |       |       |        |      |        |
| -hyper-markets |          |       |       |        |      |        |
|                |          |       |       |        |      |        |
| -department    |          |       |       |        |      |        |
| stores         |          |       |       |        |      |        |
+----------------+----------+-------+-------+--------+------+--------+
| Axfood         | Swedish/ | 3,667 | 918   | Sweden | 18.2 | D      |
|                |          |       |       |        |      | irect/ |
| -food retail   | Finnish  |       |       | F      |      |        |
|                |          |       |       | inland |      | imp    |
| -convenience   |          |       |       |        |      | orter/ |
|                |          |       |       | Norway |      |        |
| -discount      |          |       |       |        |      | whol   |
| stores         |          |       |       | D      |      | esaler |
|                |          |       |       | enmark |      |        |
| -supermarkets  |          |       |       |        |      |        |
|                |          |       |       |        |      |        |
| -gas           |          |       |       |        |      |        |
| mar            |          |       |       |        |      |        |
| ts/convenience |          |       |       |        |      |        |
+----------------+----------+-------+-------+--------+------+--------+
| Berg           | Swedish  | 1,498 | 107   | So     | 2.4  | D      |
| endahlsGruppen |          |       |       | uthern |      | irect/ |
|                |          |       |       |        |      |        |
| -food retail   |          |       |       | Sweden |      | imp    |
|                |          |       |       |        |      | orter/ |
| -discount      |          |       |       | Sto    |      |        |
| stores         |          |       |       | ckholm |      | whol   |
|                |          |       |       |        |      | esaler |
| -supermarkets  |          |       |       |        |      |        |
+----------------+----------+-------+-------+--------+------+--------+

# 

## Company Profiles - Finland

A few central wholesale organizations (K-Group, S-Group, Tradeka/Elanto,
Spar Group, Wihuri and Stockmann) together dominate the food industry
with an aggregate market share of nearly 95%. These chains have closely
knit wholesale and retail arrangements comprising a compact and
efficient goods delivery system and a nationwide network of retail shops
as well as department stores and supermarkets. They also have hotel and
restaurant chains and catering services. The centralized system makes
distribution economical, and purchases from abroad can be made in
feasible quantities considering the relatively small size of the market.
Almost one-third of the total wholesale trade in Finland goes through
these wholesale organizations.

[KESKO]{.underline} is the leading trading company in Finland. It
consists of the parent company Kesko Ltd. and its four subsidiaries of
which Kesko Food Ltd. is the largest. The key businesses of Kesko Food
Ltd. are the chain operations of the K-Food stores, catering sales to
HRI customers and wholesaling and retailing in the Baltic countries. The
K-food stores are privately owned and buy most of their products from
the Kesko wholesale organization. Centralized purchasing gives
competitive advantages by creating volume and synergy benefits. Also,
Kesko works in cooperation with major European food chains in AMS
(Associated Marketing Service). The total sales of the Kesko-affiliated
retailers accounted for 36% of retail food sales in Finland in 2002. The
K-Group operates about 1,106 outlets (Citymarkets, K-Supermarkets,
K-markets, K-Extra, K-Pikkolo, Rimi chains).

Kesko continues to aggressively expand its operations in the Baltic
countries. As mentioned earlier, Kesko and ICA recently combined forces
in a 50/50 joint venture to operate retail food stores in the Baltics.
Both retailers have identified the Baltic region as a driver for future
growth and is aiming at a 25% market share in the next three years.

###### S-GROUP

The S-Group and Tradeka/Elanto Group represent the cooperative movement
in Finland. The S-Group consists of member-owned regional cooperative
societies and their subsidiaries and the Finnish Cooperative Wholesale
Society (SOK). In June 2003, the S-Group's largest regional cooperative,
HOK and Elanto merged into a new cooperative, Helsingin Osuuskauppa
Elanto. The new cooperative society will begin operations in 2004 and
become a part of SOK. Consequently, Elanto will end its cooperation with
Tradeka. The S-Group operates Citysokos department stores, S-Market
supermarkets, Prisma hypermarkets, Sale and Alepa grocery stores, hotels
and restaurants, service stations, hardware and agricultural stores as
well as several specialty stores. The S-Group's grocery store chains,
Prisma, S-market and Sale/Alepa have, during recent years, been
extremely successful. This success can be measured by a market share
increase from 15.9% in 1990 to 31.1% in 2002. Through its subsidiaries
and associated companies, the S-Group also conducts food trade in the
Baltic countries.

[INEX PARTNERS OY]{.underline} is a joint venture owned on a fifty-fifty
basis by the S-Group and Tradeka/Elanto. Inex Partners OY specializes in
the sourcing of groceries and the provision of logistic services for the
retail chains operated by the S-Group, Tradeka and Elanto.

[SPAR Finland]{.underline} is a subsidiary of the Swedish food retail
company Axfood AB. At year-end, the parent company held 69.3% of Spar
Finland's share capital. The Spar Group comprises 296 retail outlets
(Eurospar, Spar) of which 79 are owned by Spar Finland. In 2002, Spar
Finland had a market share of 8.1% compared to 8.6% in 2001.

[LIDL]{.underline} the German hard discount chain entered the Finnish
market by simultaneously opening up ten outlets around the country in
August 2002. Today, Lidl has 40 outlets and further expansion is planned
throughout Finland. According to a market survey, Lidl's products are
priced at about 10-15% below the average Finnish food prices and about
80% are private label products. Lidl's entry into the Finnish food has
undoubtly increased the competition in the Finnish retailing sector and
is a player to take into account. Since opening up their first outlets
in August 2002, Lidl has grabbed a 2.5% market share in Finland,
pressing prices at about the same rate.

## FINLAND -- Major food retail profile

+---------------+--------+--------+-------+---------+-----+-----------+
| **            | *      | *      | **No. | **Loc   | *   | **Purc    |
| Retailer/Type | *Owner | *Sales | of**  | ation** | *Mk | hasing/** |
| of Outlet**   | ship** | CY02** |       |         | t** |           |
|               |        |        | *     |         |     | **Agent   |
|               |        | (\$    | *Outl |         | **S | Type**    |
|               |        | Mill.) | ets** |         | har |           |
|               |        |        |       |         | e** |           |
+---------------+--------+--------+-------+---------+-----+-----------+
| Kesko         | F      | 3,754  | **1,  | Finland | 3   | Direct/   |
| (K-Group)     | innish |        | 106** |         | 6.0 |           |
|               |        |        |       | Sweden  |     | importer/ |
| \-            |        |        |       |         |     |           |
| hyper-markets |        |        |       | (ha     |     | w         |
|               |        |        |       | rdware) |     | holesaler |
| \- department |        |        |       |         |     |           |
| stores        |        |        |       | Estonia |     | (Ru       |
|               |        |        |       |         |     | okakesko) |
| \-            |        |        |       | Latvia  |     |           |
| supermarkets  |        |        |       |         |     |           |
|               |        |        |       | Li      |     |           |
| \-            |        |        |       | thuania |     |           |
| self-service  |        |        |       |         |     |           |
|               |        |        |       |         |     |           |
| \- small      |        |        |       |         |     |           |
| shops         |        |        |       |         |     |           |
+---------------+--------+--------+-------+---------+-----+-----------+
| S-Group       | F      | 3,241  | **    | Finland | 3   | Importer/ |
|               | innish |        | 652** |         | 1.1 |           |
| \-            |        |        |       | Estonia |     | w         |
| hyper-markets |        |        |       |         |     | holesaler |
|               |        |        |       | Latvia  |     |           |
| \- department |        |        |       |         |     | (Inex)    |
| stores        |        |        |       | Li      |     |           |
|               |        |        |       | thuania |     |           |
| \-            |        |        |       |         |     |           |
| supermarkets  |        |        |       |         |     |           |
|               |        |        |       |         |     |           |
| \-            |        |        |       |         |     |           |
| self-service  |        |        |       |         |     |           |
|               |        |        |       |         |     |           |
| \- small      |        |        |       |         |     |           |
| shops         |        |        |       |         |     |           |
+---------------+--------+--------+-------+---------+-----+-----------+
| T             | F      | 1,345  | **    | Finland | 1   | Importer/ |
| radeka/Elanto | innish |        | 594** |         | 2.9 |           |
|               |        |        |       | Estonia |     | w         |
| \-            |        |        |       |         |     | holesaler |
| hyper-markets |        |        |       | Latvia  |     |           |
|               |        |        |       |         |     | (Inex)    |
| \- department |        |        |       | Li      |     |           |
| stores        |        |        |       | thuania |     |           |
|               |        |        |       |         |     |           |
| \-            |        |        |       |         |     |           |
| supermarkets  |        |        |       |         |     |           |
|               |        |        |       |         |     |           |
| \-            |        |        |       |         |     |           |
| self-service  |        |        |       |         |     |           |
|               |        |        |       |         |     |           |
| \- small      |        |        |       |         |     |           |
| shops         |        |        |       |         |     |           |
+---------------+--------+--------+-------+---------+-----+-----------+
| Spar Group    | S      | 843    | **    | Finland | 8.1 | Importer/ |
|               | wedish |        | 296** |         |     |           |
| \- department |        |        |       | Sweden  |     | w         |
| stores        | F      |        |       |         |     | holesaler |
|               | innish |        |       |         |     |           |
| \-            |        |        |       |         |     | (Tuko     |
| supermarkets  |        |        |       |         |     | L         |
|               |        |        |       |         |     | ogistics) |
| \-            |        |        |       |         |     |           |
| self-service  |        |        |       |         |     |           |
|               |        |        |       |         |     |           |
| \- small      |        |        |       |         |     |           |
| shops         |        |        |       |         |     |           |
+---------------+--------+--------+-------+---------+-----+-----------+
| Wihuri        | F      | 552    | **    | Finland | 5.2 | Importer/ |
|               | innish |        | 564** |         |     |           |
| \-            |        |        |       |         |     | w         |
| supermarkets  |        |        |       |         |     | holesaler |
|               |        |        |       |         |     |           |
| \-            |        |        |       |         |     | (Tuko     |
| hypermarkets  |        |        |       |         |     | L         |
|               |        |        |       |         |     | ogistics) |
| \- small      |        |        |       |         |     |           |
| shops         |        |        |       |         |     |           |
+---------------+--------+--------+-------+---------+-----+-----------+
| Stockmann     | F      | 151    | **6** | Finland | 8.1 | Importer/ |
|               | innish |        |       |         |     |           |
| \- department |        |        |       | Estonia |     | w         |
| stores        | F      |        |       |         |     | holesaler |
|               | innish |        |       | Latvia  |     |           |
|               |        |        |       |         |     | (Tuko     |
|               |        |        |       | Li      |     | L         |
|               |        |        |       | thuania |     | ogistics) |
|               |        |        |       |         |     |           |
|               |        |        |       | Russia  |     |           |
+---------------+--------+--------+-------+---------+-----+-----------+

## B. Convenience Stores, Gas marts and Kiosks

## Entry Strategy

The convenience sector offers more limited opportunities for the U.S.
exporter, but certain products could sell well via such outlets. Most of
the convenience stores belong to established retail chains, and the same
large wholesalers/retailers are suppliers to the convenience sector. Gas
marts are either affiliated with gasoline companies or with the large
retail food distribution groups. New-to-market exporters should target
this sector in the same way as described under the entry strategy
section for supermarkets.

## Market Structure

As in the retail food sector, there has been a wave of consolidations
and mergers among the Nordic players over the last years. In Sweden, the
six largest players in the convenience sector, ICA, Coop OKQ8, Shell,
Reitan Narvesen, Axfood and Preem accounted for USD 1.7 billion SEK or
52% of total sales of grocery products in the convenience sector.

[Gas marts]{.underline} continue to gain market shares in Sweden and
Finland. Fast food is the concept that is expanding the most in gas
marts. In 2002, total sales of grocery products in gas marts in Sweden
amounted to USD 1.2 billion, or 6% of total retail food sales. In
Finland, sales reached USD 376 million in 20021.

[Convenience stores]{.underline} have been in a continued decline for
the last couple of years, mostly due to tough competition from gas
marts. However, the extension of opening hours for stores of under 400
sqm in Finland in 2001, has been somewhat of a renaissance for small
convenience stores. Several of the large Finnish retail chains have
started operations with a network of small shops. These stores are
especially popular in larger cities, where time-pressured lifestyles
predominate.

[Kiosks]{.underline} offer limited items such as snacks, sweets,
cigarettes and magazines. The Rautakirja R-Kiosk is the leading kiosk
chain in Finland, where kiosks still have 3.5% of total grocery sales.
The chain comprises a total of 769 R-kiosks in Finland and over 200 in
Estonia. Rautakirja's involvement in Latvia derives from its 50% holding
in Narvesen Baltija SIA. Narvesen Baltija is jointly owned by the
Norwegian Reitan Narvesen and operates around 450 kiosks in Latvia. In
2002, total sales of grocery products in kiosks in Finland amounted to
USD 401 million.

## Company Profiles - Sweden

###### Major Gas Marts and convenience stores in Sweden

+----------+-------------+------------+------+--------+--------------+
| **       | **          | **2002     | *    | **Loca | Purchasing   |
| Retailer | Ownership** | Grocery**  | *No. | tion** | Agent Type   |
| Name/    |             |            | of   |        |              |
| Outlet   |             | **Sales**  | O    |        |              |
| Type**   |             |            | utle |        |              |
|          |             | **(US\$    | ts** |        |              |
|          |             | million)** |      |        |              |
+----------+-------------+------------+------+--------+--------------+
| Statoil, | Statoil/ICA | 463        | 550  | S      | Wholesaler/  |
|          |             |            |      | weden, |              |
| gas mart | (Norwegian/ |            |      | Norway | Importer     |
|          |             |            |      |        | (ICA)        |
|          | Swedish)    |            |      | D      |              |
|          |             |            |      | enmark |              |
+----------+-------------+------------+------+--------+--------------+
| OK/Q8,   | Swe         | 300        | 578  | Nati   | Wholesaler/  |
| gas mart | dish/Kuwait |            |      | onwide |              |
|          |             |            |      |        | Importer     |
|          | Petroleum   |            |      |        | (Axfood)     |
+----------+-------------+------------+------+--------+--------------+
| Select,  | Swedish     | 258        | 291  | Nati   | Wholesaler/  |
| gas mart | Shell       |            |      | onwide |              |
|          |             |            |      |        | Importer     |
|          | (Dut        |            |      |        | (Axfood)     |
|          | ch/Swedish) |            |      |        |              |
+----------+-------------+------------+------+--------+--------------+
| Preem,   | Sa          | 111        | 171  | Nati   | Wholesaler/  |
| gas mart | udi/Swedish |            |      | onwide |              |
|          |             |            |      |        | Importer     |
|          |             |            |      |        | (Axfood)     |
+----------+-------------+------------+------+--------+--------------+
| Pre      | Reit        | 223        | 320  | Sweden | Wholesaler/  |
| ssbyran, | an/Narvesen |            |      |        |              |
|          |             |            |      | Norway | Importer     |
| con      | (Norwegian) |            |      |        | (ICA)        |
| venience |             |            |      | Latvia |              |
+----------+-------------+------------+------+--------+--------------+
| H        | Axfood      | 144        | 225  | Nati   | Wholesaler/  |
| andlarn, |             |            |      | onwide |              |
|          | (Swedish)   |            |      |        | Importer     |
| con      |             |            |      |        | (Axfood)     |
| venience |             |            |      |        |              |
+----------+-------------+------------+------+--------+--------------+
| 7        | Reitan      | 68         | 70   | S      | Wholesaler/  |
| -Eleven, | /Narvesen   |            |      | weden, |              |
|          |             |            |      | N      | I            |
| con      | (Norwegian) |            |      | orway, | mporter(ICA) |
| venience |             |            |      | D      |              |
|          |             |            |      | enmark |              |
+----------+-------------+------------+------+--------+--------------+
| NaraDej, | ICA         | 19         | 45   | Nati   | Wholesaler/  |
|          | (Swedish)   |            |      | onwide |              |
| con      |             |            |      |        | Importer     |
| venience |             |            |      |        | (ICA)        |
+----------+-------------+------------+------+--------+--------------+

In Finland, the four largest gas marts (Neste, Shell, Esso and Teboil)
accounted for almost 80% of total gas mart sales of grocery products in
2002. These companies operate their shops under the names of Quick Shop
for Neste, Snack & Shop for Esso and Select for Shell.

## Gas Marts in Finland

+-------------+--------------------+---------------------+------------+
| **Gas       | **No. of Outlets** | **Grocery Sales**   | **Market   |
| Marts**     |                    |                     | Share %**  |
|             | **in 2002**        | **(US\$ Million)    |            |
| **Finland** |                    | 2002**              |            |
+-------------+--------------------+---------------------+------------+
| Neste       | 356                | 120                 | 30         |
+-------------+--------------------+---------------------+------------+
| Shell       | 240                | 92                  | 20         |
+-------------+--------------------+---------------------+------------+
| Esso        | 185                | 78                  | 16         |
+-------------+--------------------+---------------------+------------+
| Teboil      | 192                | 46                  | 16         |
+-------------+--------------------+---------------------+------------+
| Seo +       | 217                | 39                  | 18         |
| others      |                    |                     |            |
+-------------+--------------------+---------------------+------------+
| Total       | 1,190              | 376                 | 100        |
+-------------+--------------------+---------------------+------------+

## C. Traditional markets -- Small Independent Grocery Stores.

The small \"gourmet food\" grocery stores offer limited possibilities
for U.S. exporters. The stores are usually located in larger cities and
sometimes carry a wide range of imported products, but they tend to buy
in very small quantities.

# SECTION III: Competition

European Union (EU) member states provide the main competition to U.S.
consumer-oriented food imports. EU-origin products have a natural
advantage in many product categories simply because they enter Sweden
and Finland duty free, while American exporters have to face the EU's
external duty/tariff structure as well as non-tariff barriers to trade
(e.g. the hormone in beef ban, sanitary restrictions on poultry and GMO
policies).

# TABLE A: Sweden's import of Consumer-Oriented Agricultural Products in 2002

  -------------------------- ---------------------------- ----------------
  **Country: Sweden**        **Import in 2002 (\$1,000)** **Market Share**

  Denmark                    738,040                      20%

  Netherlands                629,321                      17%

  Germany                    413,701                      11%

  Spain                      227,202                      6%

  Italy                      226,162                      6%

  France                     211,078                      6%

  Belgium                    147,272                      4%

  Finland                    143,900                      4%

  United Kingdom             141,599                      4%

  Ireland                    125,099                      3%

  Norway                     81,446                       2%

  **Country: United States** **73,247**                   **2%**

  Panama                     57,391                       2%

  Austria                    40,064                       1%

  Poland                     35,774                       .97%

  Other                      388,142                      11%

  World                      3,679,515                    100%
  -------------------------- ---------------------------- ----------------

Note: Imports from the U.S. are understated due to transit trade via
other EU countries such as the Netherlands and Germany.

# TABLE B: Finland's import of Consumer-Oriented Agricultural Products in 2002

  -------------------------- --------------------------- ----------------
  **Country: Finland**       **Import in 2002            **Market Share**
                             (\$1,000)**                 

  Sweden                     214,960                     15%

  Netherlands                154,521                     11%

  Germany                    137,735                     10%

  France                     135,713                     10%

  Spain                      126,506                     9%

  Denmark                    111,474                     8%

  Belgium                    61,460                      4%

  Italy                      61,452                      4%

  United Kingdom             48,432                      3%

  Costa Rica                 43,518                      3%

  Ireland                    38,436                      3%

  **Country: United States** **23,778**                  **2%**

  Brazil                     25,678                      2%

  South Africa               18,027                      1%

  Austria                    16,056                      1%

  Other                      205,491                     14%

  World                      1,424,325                   100%
  -------------------------- --------------------------- ----------------

Note: Imports from the U.S. are understated due to transit trade via
other EU countries such as the Netherlands and Germany.

# SECTION IV: Best product prospects

## A. Products present in the market with good sales potential:

Wines

Tree Nuts

Dried Fruits

Snack Foods

Fruit Juices

Processed fruits & vegetables

Sauces/Seasonings

Pancake/cake mixes

Rice (most U.S. rice currently packaged in other European countries)

Candies

## B. Products not present in significant quantities that have good sales potential:

Seafood Products

Fresh Fruits and Vegetables

Organic Food

Ethnic Food

Niche market; Specialty Food Products

Frozen Food

Rice mixes

Vegetarian Food

Ready-made convenience meals

## C. Products not present because they face significant barriers:

Meat (hormone ban)

Poultry (sanitary restrictions)

# SECTION V: Post contact and further information

Foreign Agricultural Service

American Embassy

Dag Hammarskjolds Vag 31

S-115 89 STOCKHOLM, Sweden

Tel: (46-8) 783 5390

Fax: (46-8) 662 8495

Email: agstockholm@usda.gov

For further information on exporting U.S. agricultural products to
Sweden, please visit the FAS/Stockholm home page at:
[http://www.usemb.se/Agriculture]{.underline}.

Average exchange rate 2002 in Sweden: US\$ 1 = SEK 9.72

Average exchange rate 2002 in Finland: US\$ 1 = EUR 1.06