Finland: Supermarkets are least expensive for organic items, but small shops can still compete on prices
Two baskets for the price of one: there is a distinct difference between the prices of organic produces in large chains’ outlets

Source: hs.fi
By Elina Kervinen

OrganicPortal NewsRoom

A packet of organic muesli or organic butter costs EUR 5.00 at one grocery, while at another the price is about half of that.

This is a familiar observation for friends of organic food, and it is by no means any false belief.

A food basket comparison commissioned by Helsingin Sanomat confirms that there are very substantial differences in the prices of organic products.

The comparison was conducted by Suomen Rahatieto, an independent organisation that offers financial information to households and small businesses.

In the comparison, the difference between the least and the most expensive food baskets was more than EUR 20. considering we are talking of a basket of items that cost EUR 48.77 in the most expensive case and just EUR 25.93 in the cheapest example, this difference speaks for itself.

A consumer for whom the most important selection criterion is the inexpensive price will pick up his or her organic produce from a supermarket that belongs to a large chain.

The comparison showed that the cheapest food basket can be found at a grocery store that belongs to the S-Group (Suomen Osuuskauppojen Keskuskunta SOK).

The price differential between large supermarkets belonging to different chains was clear to see.

The difference between the prices at a K-Market store and those at an S-Market was over EUR 5.00 (EUR 25.93 and EUR 31.12). Stockmann's delicatessen was a futher couple of euros more expensive than the K-Market.

When it comes to smaller specialty outlets, the most inexpensive one was Aitokauppa, a grocery store recently set up in the basement of a residential building in Helsinki’s district of Eira.

At EUR 34.39, Aitokauppa’s organic food basket was more than EUR 14.00 cheaper than the one at the most expensive shop involved in the comparison.

The organic food of large chains is cheaper for example because of large volumes and the smooth delivery chain. Another factor explaining the price level is the fact that large retail groups can afford to sell food with low mark-ups in order to lure customers in.

”This is what it is all about. People have noticed that the proportion of organic products is increasing, and we have wanted to make it possible for consumers to buy organic produce. That is why we have invested in finding a price level that suits our customers”, says Ilkka Alarotu, the Director of Assortments and Pricing at the Finnish retailing cooperative organisation SOK.

At the same time, small specialty stores cannot lower their prices in the same way, as their assortment is small, and small-scale businesses cannot necessarily afford much price elasticity.

According to Juha Sulkakoski, Managing Director of Aitokauppa, the underlying factor affecting the prices is the fact that organic and local foods continue to be a new and marginal phenomenon in the Finnish retail business, compared with for example Central Europe.

Sulkakoski refers to his competitors, saying that the novelty appeal of the items continues to be a moneyspinner in the Finnish food markets.

”Until today, we have been 'bringing back the countryside' in a kind of nostalgia boom. We want to take the food debate towards the point at which organic food and local food are a natural part of everyday life, which is when the price-quality ratio starts to matter”, Sulkakoski says.

The aim of Aitokauppa is to offer an alternative to a small store like Alepa or Siwa outlets, selling organic food that has been bought from a domestic small-scale producer.

Part of the reason for the inexpensive pricing stems from the thinking behind the company's ideals, but part is derived more prosaically from the financing structure.

The Finnish Innovation Fund (SITRA) has put up EUR 100,000 in the initial capital of the company, with the objective of creating a concept chain that will improve the availability of locally-sourced and organic produce from small suppliers.

In practical terms, SITRA is taking a stand and seeking alternatives to the very concentrated structures of the Finnish food retailing and foodstuffs production branch.



FACTFILE

The idea of the food basket comparison was to compare the prices of everyday organic foodstuffs in grocery stores that focus on organic food in Helsinki.

Every effort was made to place in the basket products for which an equivalent product can be found in as many stores as possible. If precisely the same brand could not be found, an equivalent product with a price and quality as close as possible to the original product was chosen.

The packing sizes were harmonised according to kilo prices.

If an organic product was not available, an equivalent domestic product made by a small-scale producer was chosen as far as possible.

The comparison was commissioned by Helsingin Sanomat and conducted by Suomen Rahatieto.

Tip: OrganicPortal Sverige - Ekologisk Livsmedel & Dricka

OrganicPortal NewsRoom

12.01.2012

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