– Many companies receive important raw materials from Ukraine. That was the end of it. Then you have to find alternatives, and the price of alternatives will skyrocket, says Håkon Mageli, CEO of the brand giant Orkla.
The company is behind several brands in the Norwegian market, such as Sætre biscuits, Kim’s potato chips and chocolate spread Nougatti.
– The price increases are so large that we see no other option than to compensate our customers as well, says Orkla Vice President Håkon Mageli.
Photos: Johan B. Sættem / NRK
The common thing in these foods is that they contain sunflower oil, which in practice is no longer available due to the war in Ukraine.
Russia and Ukraine account for approximately three-quarters of the world’s total production.
– Do you see that you just can’t do Nougat?
– We don’t have any signs of that, we don’t. We are doing everything we can to find alternatives to sunflower and sunflower oil and other raw materials from Ukraine.
– Ensure that the prices of most goods rise
In the past, Nougat contained palm oil. According to NRK’s understanding, it can again be used for Orkla in the current situation.
Other options would be to use more canola or peanut oil. But the supply of rapeseed is also decreasing, because Ukraine is also among the world’s largest producers here.
It is from Orkla’s recently published 2021 financial year report that the company will raise prices even more in the summer.
Orkla is a giant of consumer goods brands with 114 factories at home and abroad that produce frozen pizzas, soups, snacks, skin care products, detergents and more.
– The reason why we are sure that the prices of most goods will rise is the war in Ukraine and the tragic things happening there. This has a big impact on the global food chain, as well as the Norwegian grocery market, says Mageli.
In the annual report, the company also points out the sharp rise in energy prices from an already high level and the imbalance in the global flow of goods.
According to Magel, it is still too early to say how much food prices will rise, but prices will rise for raw materials, packaging, energy and transport.
Orkla sells its products to food chains, which in turn set prices for consumers.
– There is no reason why prices should rise more in Norway than in other countries
– When prices generally go up, it’s hard to know exactly which prices will go up and how much they will go up. In this way, the players can also raise the prices of those goods that may not be affected as much by the rise in the price of raw materials, says Alexander Schjøll, a researcher at Sifo’s consumer research institute.
Photo: Johan B. Sættem
Alexander Schjøll, SIFO researcher at the Institute for Consumer Research, says that it is now important for regulators to ensure that suppliers and retailers do not increase their profits at the expense of consumers.
– First, the Norwegian Competition Authority can look at different segments of the grocery market. Not all segments should increase in price by the same amount. Second, they can compare with other Nordic countries where the same commodity prices have been. Schjøll says there is no reason why prices should rise more in Norway than in other countries.
Warns against taking advantage of the situation
Competition director Tina Søreide says that she understands that the increase in input factors leads to price increases in stores. But he warns players against price increases more than the current crisis situation warrants, and says the inspectorate will follow suit.
Competition director Tina Søreide is concerned that Norwegian grocery players are sending price signals that raise prices higher than the cost trend would suggest.
Photos: Christian Lura / NRK
“We want to warn those who provide goods and services not to use this special situation as an excuse for unnecessary price increases for products that are not affected by the war or other ongoing crises,” he says.
Bpoliticians to follow
Director of the Consumer Council Inger Lise Blyverket is aware of the problem of price increases and calls on both the Norwegian Competition Authority and politicians to be aware of their responsibilities now.
– It is very important that they are awake now, so that they see that frustration and desperation can also increase among Norwegian consumers. If you as a consumer feel that you are always going to be the loser, while the public or private actors are profiting, it can lead to much more unrest and less stability and less trust in Norwegian society than what we have been used to. together. This is perhaps especially important to avoid in the times we live in, says Blyverket.