The packaged food retail market in Sweden reached US$14.5 billion in 2015 according to Euromonitor. That represented growth of 7.6% or US$1 billion since 2011. In the forecast, Sweden is predicted to have packaged food retail sales
of US$15.4 billion in 2020, a growth of 5.7% or US$825.9 million. High growth categories in the forecast include spreads; oils and fats; sauces; dressings and condiments; processed fruit and vegetables; sweet and savory snacks; baby food; and baked
goods.
According to Euromonitor everyday luxury was an area within grocery retailing that increased during the review period (2010-2015), with more consumers indulging in home-cooked meals and fresh products. While the improved
optimism regarding the economic outlook among consumers led to a small shift towards non-grocery shopping in 2014 and 2015, booming demand for organic and other premium alternatives underpinned value sales of groceries. According to Ekoweb, an independent
website that monitors the organic market in Sweden, the rise in sales of organic products in Sweden in 2014 was the highest in the world, with a 38% increase. The fact that all grocery players increased their assortments of organic and healthy private-label
ranges helped to facilitate the rising demand for more premium products. In addition, while Swedish consumers are putting a higher premium on health and convenience, they continue to reward themselves with a treat now and then, contributing to grocery
retailers’ continuing development in 2015.
Grocery retailers increased by 2% in current value terms in 2015, which was half a percentage point lower than the current value compound annual growth rate (CAGR) registered during the 2010-2015 review period. When
consumer confidence and optimism increases, sales in the grocery channel tend to be less dynamic, and this was the case in 2015. After the economic turmoil, uncertainty about the economic prospects resulted in consumers forsaking capital-intense purchases
and instead of spending more on everyday luxury items and groceries. However, since consumer confidence rose towards the end of the review period, consumers started to make larger purchases once again, resulting in them being more cautious regarding
their grocery spending.
The competitive landscape within grocery retailers in Sweden is highly consolidated, with one giant followed by two other large companies. ICA Sverige, the leader in grocery retailers in Sweden
and the leading player in overall retailing, accounted for a 39% share of value sales within grocery retailers in 2015. The company experienced a strong performance throughout the review period, increasing its value share by half a percentage point.
ICA was followed by two other strong companies within grocery retailers, Coop and Axfood, which accounted for 15% and 14% value shares respectively in 2015. Both players have a similar positioning to ICA, and also comprise a wide range of chains and
retail formats. Similar to ICA, both players also increased their value shares during the review period, from 14% in 2010 to 15% in 2015 for Coop, and from 13% to 14% for Axfood.
Supermarkets are by far the largest grocery channel in value terms, accounting for a 50% share of overall value sales of modern grocery retailers in 2015. Supermarkets
are a well-established and long-standing grocery retail channel in Sweden. Consumers appreciate the product assortment and the combination of non-grocery and grocery products, along with the sales area and the location of the outlets. Supermarkets
are typically located in city centers or suburbs, where all consumers can easily access them, while hypermarkets and discounters are typically found outside city centers.
Hypermarkets exhibited a slower performance than supermarkets in 2015, which was two percentage points lower than the current value compound annual growth rate (CAGR) registered during the 2010-2015 review period. The
popularity of hypermarkets can mainly be attributed to the one-stop-shopping possibilities, with most families appreciating the wide product assortment. In addition, hypermarkets are often located in the vicinity of other large-scale retail outlets
or shopping malls, making it possible to combine grocery shopping with other shopping for the entire family.
The smaller grocery retail formats, such as convenience stores, forecourt retailers, and discounters, displayed different performances in 2015.
Forecourt retailers continue to struggle due to the comparatively high prices charged. Convenience stores, which are a similar size and format to forecourt retailers, developed notably better. This channel increased by 2% in current value terms in
2015. While sales in convenience stores are not driven on a value basis, unlike supermarkets, hypermarkets, and discounters, they benefit from Swedish consumers’ increasingly hectic lifestyles. Furthermore, convenience stores have successfully
introduced a wide range of healthier on-the-go products appealing to exceedingly health-conscious consumers. In addition, convenience stores are often located in the center of cities and villages, making them a handy alternative for those not seeking
to purchase large quantities of goods or those who shop for groceries on a daily basis.
Discounters, on the other hand, compete mainly with supermarkets and hypermarkets. The two major players in discounters, Lidl,
and Netto, gained value share throughout the review period. Discounters increased by 2% in current value terms in 2015, which was two percentage points lower than the current value CAGR registered during the review period. The lower growth can be
attributed to rising maturity following the rapid development of Lidl and Netto during the review period. As previously mentioned, increasingly price-sensitive consumers led to a surge in low-priced alternatives.
While internet retailing emerged as the most important trend within non-grocery retailing, it still constituted a very minor part of overall grocery retailing. Home
delivery of groceries in Sweden is highly limited, with the major players ICA and Coop starting their online sales as late as near the end of the review period. Furthermore, only a selected number of stores from ICA and Coop offer online ordering,
with some offering pick-up in-store, and others, mainly in larger cities, offering home delivery.
Best Product Prospects
Products in the market which have good sales potential include: processed fruits and vegetables; tree nuts; dried fruit; wine; beer; fish and seafood; fruit juice; sauces and seasonings; pancake and cake mixes; rice (most U.S. rice is currently packaged
in other European countries); and confectionery. Products with good sales potential but not currently in the market in the significant volume include fresh fruits and vegetables; organic food; ethnic food; snack food; niche market and specialty food
products; frozen food; rice mixes; vegetarian food; ready-made and convenience meals; pet food; and non-hormone beef.