How to Enter the Swedish Food Market: Cracking the 3-Player Retail "Monopoly"

Hi, I'm Dmytro Shvets, your host at the Start Global Insights, where I interview experts from different countries about local business secrets and international expansion experience. Did you know that the Swedish food retail market is quite big? It is about 27 billion Euro, but. the catches that 90% of the market is dominated by just three players.

So to be on the market, it is not enough to have a good product. What you need is the insiders. Roadmap and my guest today has the expertise to help us with this question. Jenny Köpper is the CEO of Food Collective, and she has significant experience in helping Swedish and international food companies succeed in Sweden.

Hi Jenny, and welcome to the show. Jenny: Thank you very much. Nice to be here. Dmytro: Your background is amazing.

So you have been on both sides of the food industry. You've managed categories for major retailers like ICA and Coop Sverige, and now you help suppliers to enter the market. Could you share some of your background, with our listeners? Jenny: very good.

So I have, worked in different commercial roles in the food industry for now, more than 35 years. And held positions like, brand manager, marketing manager, buyer, and, commercial manager and the category manager, also, and now since 2019, I'm CEO of Food Collective. And we are a consultancy agency supporting companies with business development, both Swedish partners, but also international, companies. Dmytro: From what I have read, the, Swedish food retail market makes something like 27 billion euro and, is dominated, by.

Three main players. So it is quite concentrated. Could you give us the general picture of the market? Jenny: but that's, true.

the dominant player is Ica. And they have 50% of the, of market share. And, the business model is, franchisees. So each e store is, independent.

And, then we have. They have, also, Axfood have 30% of the market about slightly less. And, and there you have, both franchises, but also centrally managed, stores with chain, chain management. So you, if you get listing in one store, you get automatically access to hundred or 400 stores.

Correct that it highly concentrated, you have three players to approach and this makes it very attractive for many international companies, believing that once you get the listing at, you automatically get access to 50% of the market. And what it actually means is that the doors are open. To 50% of the market if you get the listing, but you still need to do the work, with, in to the stores. and that's also something I say, and I should also mention that Lidl is present in Sweden, but with a very limited, market share.

Dmytro: And what about the online market? Is there a niche in this direction? Yeah, Jenny: and it's small. growing.

it increased during the pandemic, but now it is, going down again. And we have a few, bigger players. one is owned by, Axfood and, in, joint venture with, an company .... so that is the biggest one, but still the volumes are.

Make a sustainable business in Sweden if you, target the online, retailer. And, you also have some niche, players in online. And also there the volumes are, really limited and it is difficult to approach an online retailer from abroad and, expect the volumes to be big enough. Because they rarely take more than one pallet at a time.

Dmytro: And what is the general situation on the market? I am now interviewing Swedes, in my internal project, and they are telling me that after the Russian invasion to Ukraine, they are feeling that with their wallets. Yeah. So despite the fact that the general inflation, rate is not so high.

The prices in supermarkets are up to something like 30%. could you tell, some information about the market and, how it feels right now? Jenny: Yeah, and we had that right after the war, and we have had the peaks of, high inflation and, high, cost by high price increases. And it's not only because of the goods itself, it's because, cost for, energy and electricity increased, due to the war.

and this has now stabilized, about it. And from next year, we're also decreasing our visit. and it's, for a trial period to manage this, the prices. And it's, we have, we have a economic, recession in Sweden at the moment.

So if you have, price has become even more important. Thanks. Argument than before. Dmytro: Yeah.

I'm asking that 'cause mostly, for example, my clients or, in general the exporters. Treats Scandinavian markets and Sweden in particular as, markets with high margins and high prices, and they target their premium products towards these markets. And, with this situation, with recession, I believe, the, situation is not like that anymore. Could you give, your perspective on that, how this, influences the purchasing power of consumers?

Jenny: so even, so if we take, food spends on disposable income, it's still the same amount, but, salaries has not increased in the same speed as prices for food. And when it comes to price level, I, Mid companies that often believe that they can, get rich when they, and now I say rich, but it is, more, it's to export to Sweden because our price levels are higher, but the price levels are not higher because we have more money. The price levels, are higher because it costs more to sell products in Sweden because first you need to transport it from the importing country, to the Swedish market.

And then in our, big country, we have, 11 million people, 3000 stores. And the cost for handling and transportation is quite high when you, divide it into the stores. So it's not because of high margin, it is because of high costs to distribute, the products to the shelves. Dmytro: Uhhuh.

So the B2B market is also price sensitive to this situation. Jenny: Yes, we're price sensitive, but to a high price level. Dmytro: Okay, so let's, dive a bit deeper. Having this situation with market concentration, with these three dominant players, most probably they behave like from the most, more powerful position by selecting the suppliers.

And it is quite, not easy. Let's say, let's, call it not easy, to, get on the shelves of these supermarkets. to be more practical, let's imagine. A small Ukrainian candy producer, for example, a family business that have, has selected Sweden as their target market.

analyze that, market, analyze the, rules of the game and, market potential and understood that their product has potential, demand, from the consumers on the market. And now they would like to enter the market. What kind of a roadmap, what are the major steps that you would suggest them to make in order to achieve their goal and be present on the shelves of these supermarket chains? Jenny: Yeah, so if they are confident about the business and they have a sustainable business case, the trust, and see it's worth, the, risk, entering the Swedish market.

One route. Route could be to approach, the Swedish retailers directly, but they rarely import themself. They normally work with a partner. So the best would be to approach one of the importers or distributors in Sweden to get a partner.

And and now for Ukrainian, we have, Ukrainian companies have a higher level of attention. Retailer. So it's also in parallel. it could be good to also, approach the retailers with your proposal Dmytro: Uhhuh.

Jenny: but still, it must be, positive, business also for the retailers. And even though we have the attention now from the buyers, because of the situation in Ukraine, it still has to be a good business. So no one, don't expect, anyone to buy the products to be kind. and before you, approach a retailer, you should know that, have an understanding of the category and what they are looking for.

So the first step is to identify a gap in the market. And once you have a gap in the market. see that you can, match the consumer price and calculate backwards. Dmytro: Okay, so let's come back to the roadmap.

So the first step is to analyze the market, identify, potential customers, so the players at the market understand their needs and pains, but then as you said, also to be able. To predict the gaps on the market, so to communicate that to, these, players. And then you also need to understand that the distributor has the same task, as for, retailer. Yeah.

So they also need to understand the retailer space and, needs, and also being able to predict the gaps in the market. And then the retailer needs to understand the, needs and, gaps for the consumer. So in fact, you are transferring value via a distributor over to retailer and then to the end consumer. Yeah.

And As, we discussed with the retailers, it is quite easy to find them as there are only three of them. Yeah. In the market. What is the situation with distributors?

is it also concentrated or the situation is different? Could you give us the brief overview of that type of player? Jenny: yeah, you have a few, the biggest one are: Menigo, Martin & Servera and Svensk Cater. So together they have 80% of the market.

in parallel, you have maybe 50 or 60, distributors specialized, in, in, in certain products. So you could have a mid supplier. They're only doing mid. And, one could only do, spices and some are doing so they can have, some are do own, doing only vegetables maybe.

Dmytro: And what do you think, is it worthwhile, especially if you are not, big company and you are just entering the market, and this is the very first step of yours, is it worthwhile to contact the smaller distributor, not the, big one at once? Jenny: I think, yeah, I think so. it, it's, because it's also about, timing, if you're working with a big, distributor for, for restaurants, it takes time. Everything takes time in Sweden.

And it's not because we're not working, it's because we in that, To get access to the market with a smaller distributor and also different kind, re relationship. And yes, because you don't have a big distributor or a big wholesale, it doesn't mean the volumes become big. So the volumes can become bigger with a smaller niche, distributor because they're, the winner in their niche. A general, distributor.

Dmytro: Yeah. And one, one more idea, how to enter the market is to start to, work with smaller shops directly bypassing distributors. It might be easier to contact them so they are more open to calibrate, but then not to have them as the market coverage, but to have them as, platform to test your product with the real clients and, then get, information about your packaging, about the, yeah, delivery problems. And, understand how to work with this market, gather this data and come back to the, big players and show them that you already tested how your product is.

And perceived at the market. And this will help you to open the doors with big players much more easily. Yeah. Y yeah.

I would like to come back to your past experience, working as a category manager. So on the other side, of, the, market. when I'm talking to my clients or other exporters, they always complain that they are trJennyng, to reach the decision maker, the buyer or category manager. and, they have no answer.

But at the same time, I know that, talking with, distributors and buyers, they, say that they get, thousands of emails daily. So that's, overwhelming. Flow of information because we are now living in a global world, which means, with the help of internet and this easy entry point, anybody can find the contact and, send the proposal to potential client. So they get emails, from all over the world.

So you as a supplier, you're, you compete with. Chinese suppliers with Indian suppliers, with, European suppliers. and, this is very hard to be noticed. could you share your experience and, give advice how to behave, to reach the decision maker, how to be, seen or cured, how to differentiate, your approach to, to be successful and effective.

Jenny: so first, please have some understanding for the category managers, it's a very stressful, position, just like what you're saJennyng, that, many people reach out to them, when they're sitting on that chair. And also what they find very stressful is this when, suppliers are just reaching out and hope for the best without, proper prepared, proposal or a customer presentation that is not made, properly. So that as a supplier first understand the needs of the customer and what they're looking for.

And again, they want a safe product. And, that is delivering the margin to them, the business, in the shelf. So if you're well prepared with a good proposal, then it's, still worth, approaching the buyers, in that. And maybe it's good to, if you contact or work with someone you know, that is well known in the market.

It's easier and also not only to communicator, to reach out, but also how to do it. Find someone that is, supporting you is my strong recommendation. Dmytro: Okay? So one of the approaches to find local expert that will use, his or her network to connect you to, the right, potential client.

But if you are doing that on your own. what channels or approaches would you recommend? Jenny: Yeah, so personal, nothing bits a personal meeting. And and each retailer, they have a really service mind, so you can, you can call them also that's working, so then you can, contact them, over the phone or you, email or, LinkedIn.

But LinkedIn is, normally. I know it, I haven't done it to buyers directly, but maybe to, partners for LinkedIn, but not with a direct proposal. Then I do it, through, email or, phone Dmytro: how to differentiate yourself, by doing that, how to be heard and noticed. Jenny: Now, often I know them, so then it's easier.

But before you break that ice, I think you need to be a little bit, creative and stubborn because it's right. With all these emails, it's difficult. and and that's also one of the reasons why I suggest you. Swedish partner.

Dmytro: Interesting that you said about stubbornness. 'cause when I'm reading about Swedish business culture and, negotiation culture, everybody writes that, you should not be pushy to Swedes. So the Swedes do not like, this, arrogant, some to some extent approach and, being annoJennyng and repetitive and not giving up to, get the answer by sending a mail after mail. Maybe there should be some balance, with the stubbornness.

Could you elaborate a bit more about that? Jenny: Yeah, very good comment because, no one likes pushy people. So that's why I say, so maybe the right phrase is to say, stop with some, sophistication because you don't want to receive the same email 100 times so that won't help you. Dmytro: Because in my experience, and I'm working with Swedish customers for many years already, I think I'm just now trJennyng to recall and, I think that almost all sales to Swedish customers were done via a network, via a.

Recommendation and the non, via cold call or, cold email. And now I am thinking if it's at all possible to do that in, a cold way. So not having this network in Sweden. Yeah, Jenny: it's a good reflection and I made a similar reflection when I founded the company, food Collective, the first four years in the history of the company.

Clients and assignments only came, through my network. We had got no, no one without that I hadn't worked with before. So that, and that's a, a quite long time in, and now the company, we are six years, but still it's most of what we do, we get through connections. Dmytro: Yeah, that's quite interesting.

I'm just thinking about the trade shows, again, coming back to that. is it worthwhile at all, to participate in trade shows? trJennyng to sell to Swedish clients, without having this network and, getting contract at the trade show. Jenny: Not the contract, but you can have a first initial meeting in a trade show and now home you're approaching and start the dialogue because if you have a product and you meet the buyer, maybe it's, they already have the product, but next time they're exchanging, or replacing a supplier.

Then maybe you'll be top of mind. Dmytro: So in fact, this is about the brand awareness. yeah. By participating in the trade show, you are creating trust in you as a person in your company, as a partner in your product.

And then, in fact, you are creating this network that, you will use afterwards, to sell to Swedish customers. Jenny: that's, correct because then you can have an initial meeting at the trade show and then, follow up after the show with another meeting. and then also keep in mind, the processes are very long in Sweden. so it is it, It rarely, takes less than a, in a year from first contact to first order.

Dmytro: Are there any dates or periods when, distributors or retailers are looking for suppliers systematically, for example, in autumn or spring, or It is all over the year when you can contact them effectively Jenny: around the year, but also, by the most busy September, October. It's, better to approach them other times of the year than September, October. Dmytro: so many more questions to ask, but I see that the time flies by already so quickly. so we need to wrap up, but maybe a couple of more questions.

And the first one is about the sustainability. how important, it is, for Sweden. Now I know about the traceability, so we need to. Be able to trace, the product, to, the origin, including the raw materials and how it was produced.

the green deal Yeah. in Europe is also, important issue. but what I see in, the Ukrainian suppliers, they, do not pay attention to that, so much. Even having.

the, processes or sustainable processes or, corporate social responsibility within the company, they do not understand, or they do not perceive the need to communicate this value to, their potential customers, in, European Union or in Sweden. but I know that this is important to Swedish, clients. what is your opinion on that? Should they pay attention to that or not?

Jenny: Yeah. All retailers, they have, targets for sustainability and, the greenhouse emissions, how much, products, are allowed to cost you. And for private label, they're actively looking for, if you have a product. they are changing to another supplier.

They're one of them, variables they're comparing is how sustainable companies, and this comes to, how they use energy and transportation and production. So it's very important and if you not yet have started to implement it in your production. It's, a good, recommendation to, to doso. Dmytro: Good.

so maybe the final question. you have worked, a lot, with, Swedish companies trJennyng to go out, and sell abroad, and then you also worked with, international companies willing to go to Sweden. having that, can you summarize, like main three mistakes they all do by approaching potential clients, and trJennyng to reach them? Jenny: The first one is they think it's easy and it's not.

you need and, success. It doesn't come, by luck. you need to work for it. With a plan and also before you, approach any partner in Sweden, distributor, importer, or retailer, do the homework to understand, what, value proposition so you understand what you are con contributing with to your partner.

Because the partners they have that, they have a niche. Wanna improve. So understand how you can support your, partners, goals. Their business, wishes, where they're striving.

I think that is, the most important part, to understand. And also in part of the, one part of the preparation is also to understand the pricing and the margins, and the partner you're working with. they also need a margin. And if you cannot provide a margin to the partner.

Will most likely not prefer working with you. so that is, one thing. And the third thing is that it takes time. so it's, it takes much, longer than what you hope for.

So plan for a longer horizon. Dmytro: By the way, what is the usual margin that, retail chain expects, to have, working with supplier? Jenny: Yeah. And that's now you simplify something that is quite complex, because, when it comes to margin, part of its distributor and, then, when you deliver, even when you're delivering, centrally to any retailers, you also have a, margin for covering logistics and handling.

And then you have the store margin. You need to add the headquarters, margin and, the stores. And then if you take roughly, average, in, in, in the store, you should calculate for, in total 40%, 10% of headquarter, 30%, in the store. But this vary between the categories.

And again, that's why it's so important you do your research. Do the research, before you approach and partner, Dmytro: right? So you roughly need to multiply your X Works price by two to be successful. Jenny: In most, markets.

Dmytro: Okay. So to summarize what we have said, so when you are a supplier to Swedish market, and I think not only to Swedish market, you need to think not in terms, or not only in terms of your product or your company, but you need to develop the empathy and emphasize to, the other side. And, in, in this case, not only the. Consumer, so the final consumer of, your product.

'cause mostly what I see, companies when they go abroad, they still think in terms of, what they have, done in, the local market, selling directly to the consumer. but in this case you need to think, about two more partners, at least two more partners in between in the supply chain, the distributor, and the retailer. And understand that they have definitely different pains and needs than your consumer. 'cause your consumer.

It is, more about your product. And, these two partners is more about you as a reliable partner and, taking into account these different needs. You need to position yourself differently. and as you said, you, need to have this really ability, adaptability, flexibility to succeed, in Swedish market.

And of course, including this. A situation that your partners should earn with you more than without you. So you need to calculate this financial model to deliver this value to your potential partners. Yanni, thank you so much.

It was really insightful. I think that, I have not asked even 5% of all your expertise that you have as for the Swedish market and also as for other markets in terms of, Food, retail. unfortunately we don't have, enough time for that, now, but I hope that, we can come back to that later. So thank you for sharing your experience and your time with us.

Jenny: thank you very much. Nice to be here.