Norwegian consumers will pay for U.S. quality - includes related articles on Norway's food processing sector and on EFTA

AgExporter,  Feb, 1999  by Asle Eek Johansen

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It isn't the $2.6 billion worth of agricultural products that Norway imports yearly that first attracts U.S. exporters. It's when they notice the country's gross domestic product (GDP) that their eyes light up. Norway's GDP has averaged a 3.5-to 4-percent yearly gain over the past five years, topping 25 years of solid growth and prosperity.

The 13-percent increase in imports in 1997 further proclaims the country's stability in troubled economic times.

U.S. exporters of consumer-oriented products are happily enlisting new fans as Norwegian consumers line up behind a global trend toward convenience goods. Manufacturers of wood products and pet foods have also been rewarded for hustling up more market share.

In 1997, U.S. exports to Norway, which totaled $107 million, were mostly:

Commodity                     $ million

Fruits and vegetables           46.0
Feed                            27.0
Grain                           13.5
Beverages                       13.5
Tobacco                          5.0

Private Brands Usurp Branded Items

The advent of larger supermarkets in Norway has led to a market phenomenon that affects how U.S. suppliers should market their products. A retail trend toward private brands has led importers to buy more bulk products, then package the goods in-country before distributing.

Because of this development, the promotion of generic over branded products makes sense. While in the past, Norwegian private brands weren't always of the highest quality, consumers and retailers will pay for better quality, especially if they know a product originates from the United States.

A recent survey showed that private labels make up from 5 to 10 percent of the market share in grocery stores in Norway. Compared with neighboring European Union (EU) countries, this amount is low. Retailers consider a 20-percent share within range and are aiming for it, which means that importers will be buying more bulk products.

Norway Coddles Its Own

Norway is very protective of its dairy, meat, berry, fruit and vegetable sectors, but tariffs have not historically been a shield. Prior to its World Trade Organization (WTO) requirements that became effective in 1995, Norway controlled imports through quantitative restrictions, state trading, import calendars, licensing, sanitary and phytosanitary regulations and a minimum pricing system.

Norway's WTO accession had the unusual effect of actually raising tariffs on many agricultural products. Before the WTO, Norway had no or very low tariffs on agricultural products. With the introduction of WTO tariffs, competition in processed foods increased dramatically, particularly for goods produced outside the EU.

The government doesn't bind imports with as much bureaucratic red tape now, but still reserves the right to squash imports when it feels domestic sectors are threatened.

Though the country already meets its WTO duty rates slated for 2000, Norway also uses a "bound"(1) rate of duty for all products affected by its WTO commitments. If agricultural products are in competition with domestic production, the country implements a matrix(2) duty, increasing and decreasing rates based on the domestic supply.

This aspect of the Norwegian market could tie logistics in knots for U.S. exporters, and it definitely favors nearby countries with short supply lines.

Another requirement: If more than 2 percent of the ingredients of a packed product are products derived from biotechnology, the label must state that. Norway is also expected to follow the EU's upcoming Novel Foods directive when it is enacted.

Despite these market constraints, U.S. exports still find a ready market. The increase in tariffs hasn't had much effect on the many U.S. products that do not compete with Norwegian or EU products. And Norway eventually plans to reduce some of its higher tariffs.

What Exporters Need To Know About...

Fresh fruits and vegetables. Best sellers for U.S. veggies include iceberg lettuce, cauliflower, broccoli, carrots and celery; favorite fruits include apples, pears, cherries, plums, grapes and grapefruit.

Import trade in this sector is very seasonal and transportation costs can be critical. Norwegian importers look for "new crop" supplies, which benefits the southern hemisphere's suppliers. EU competitors benefit from proximity and lower transportation costs.

U.S. exporters need to check out the possibilities of efficient air freight shipping for their pricier, fragile fresh items.

Canned fruits and vegetables. Thus far, only U.S. canned corn has dominated its category. But other canned goods are doing well despite substantial competition: popular vegetables include mushrooms, tomatoes (whole and paste), asparagus, and beans. Fruits making it to market baskets include pineapple, fruit cocktail, peaches, pears and, to a lesser degree, apricots and citrus.

Earlier market trends emphasized price over quality, but as Norway's population becomes more affluent, this is changing. Recognizing the high quality of U.S. products, Norwegian importers often apply U.S. standards when they ask for price quotes.