Sweden: its value-added market

AgExporter, Sept, 1993

Market Overview

The standard of living in Sweden is high. However, a severe recession has pushed unemployment above 10 percent. Despite the recession, demand for consumer-ready products, including those from the United States, is expected to remain strong because of the very high proportion of two-income families. In addition, generous unemployment and retraining benefits have maintained consumer incomes and, thus, spending.

On the other hand, consumption of imported foods from the United States could fall because of the precipitous decline in the value of the Swedish crown against the dollar, down more than 30 percent during an eight-month period ending in July 1993.

Sweden has no quantitative constraints on food imports. Swedish standards on food are very strict and imported foodstuffs must meet these requirements. Sweden's tariffs are very low, but many imported agricultural commodities are assessed a variable import levy which protects domestically produced foods.

On July 1, 1991, Sweden revised its agricultural and food policy from a price-regulated (farm income) system to a market-oriented one more favorable to consumers. Variable import levies also were decreased to stimulate import competition and, thereby, decrease food costs to Swedish consumers.

Sweden has applied for membership in the European Community (EC). EC membership, expected sometime in 1996, will bring into play the EC's variable levy system, which is generally more effective in limiting imports than Sweden's current variable levy system. Therefore, a positive result in the current multilateral Uruguay Round negotiations will be necessary to allow U.S. exporters substantially greater access to the Swedish market after Sweden gains EC membership.

U.S. Market Position

According to Swedish government figures, U.S. products account for about 7 percent of the country's total agricultural imports, by value. Swedish trade data indicate that high-value imports totaled $3.0 billion in 1992.

Among high-value products, the United States is a leading supplier of almonds, peanuts, prunes, raisins, crayfish, pears, cherries, apples and parboiled rice. U.S. exporters also sell significant amounts of pork loins, avocados, grapes, orange juice and wines. Consumer-oriented products make up nearly 70 percent of total U.S. agricultural exports to Sweden.

Market Competition

Italy provides stiff competition for carrots, grapes, pears, cherries and kiwis. Israel is a major competitor for avocados and grapefruit, while Morocco supplies half the tangerine market. Chile is a major supplier of grapes and apples, and Argentina of apples and pears. France dominates the Swedish wine market. Australia, Chile, Austria and Germany also are major wine competitors. Hungary and Denmark are primary suppliers of beef livers, and Spain has a strong market position in tomatoes, celery, oranges, lemons, strawberries, plums and wines. Italy, Israel, Spain, Australia and New Zealand are particularly active in funding market promotion efforts in Sweden.

Market Trends

Swedish consumers are willing to pay for quality, freshness and convenience. This is also a market that strongly emphasizes the healthful and ecological attributes of a product. Food shoppers and retailers want detailed information on how foods are produced and packaged. Many insist on freedom from pesticides and chemicals, favor foods that are "close to nature," and look for packaging that minimizes waste and is seen as friendly to the environment.

The health-oriented emphasis is reflected in product demand patterns. Some of the best sales opportunities include high-fiber cereals, pasta products and sauces, fruit juices of all kinds, celery, dried fruit, spices and condiments. There is a significant demand for fresh fruit--apples, pears, cherries, grapefruit, grapes, plums and avocados--and the U.S. share of this market could grow if quality remains high and prices are competitive.

Among other products, U.S. menhaden oil (a fish oil) sells well when the price is right, and high-quality U.S. beef--assuming hormone-free beef could be supplied--would probably be received enthusiastically by the hotel and restaurant industry. Crayfish is a seasonal demand item, consumed each year mainly for a few days in early August. Prepared foods, including microwaveable foods, might find a ready niche, assuming they meet strict Swedish standards. Microwave ovens are now found in about 45 percent of Swedish homes, with important implications for the types of convenience foods that are purchased.

Marketing System

Large suburban supermarkets and discount (hyper) stores are becoming more popular, but corner groceries, mostly owned by the same conglomerates that own and operate the supermarkets, department and discount stores remain popular with consumers. Four Swedish groups--ICA, KF, Axel Johnson (formerly Saba) Group and D-Group--account for 95 percent of food and grocery sales through their integrated wholesale and retail affiliates.