Website for Comparing Grocery Prices Launches in Iceland

Verðgáttin

A new website where consumers can compare the prices of food items in three major grocery chains in Iceland has officially launched. The website features around 80 food staples and prices are updated daily. RÚV reported first.

Verðgáttin, as the website is called, shows the prices of products at three major grocery chains: Bónus, Krónan, and Nettó. Products include basics such as butter, bread, vegetables, fruit, and meat products where each brand is compared across all three chains. A browse through the prices reveals that for many products, the difference is no greater than a single króna: cream, for example, costs ISK 709 at Bónus but ISK 710 at Krónan and Nettó. The difference is more dramatic for a loaf of bread from the producer Mylla, however, sold at ISK 455 in Bónus but ISK 556 at both Krónan and Nettó. Grocery stores submit prices to the website daily, meaning that consumers will also be able to see the price changes over time.

While inflation measured 10.2% in Iceland over the past year, the price of many food staples has risen at higher rates. The price of dairy products, for example, rose 16% over the past year.  On Monday, the government of Iceland introduced a series of measures to fight inflation, a combination of spending cuts and tax hikes, as well as reducing the salary increases of senior government officials.

The website is part of an agreement between businesses and the Icelandic Centre for Retail Studies (Rannsóknarsetur Verslunarinnar, or RSV) to closely monitor the development of the price of essential consumer goods and was partially funded by the Ministry of Culture and Trade.

COVID-19 Restrictions in Reykjavík: Less Traffic and More Online Shopping

There was 21% less traffic in Reykjavík last week compared to the same week in 2019, according to figures from the Road and Coastal Administration. Tightened COVID-19 restrictions are likely the reason. The statistics reflect a similar drop that occurred in March 2020, when restrictions during the first local wave of the pandemic were tightest. Online grocery retailers have seen a surge in customers in the past two weeks, also comparable to the increase seen last March.

COVID-19 Restrictions were tightened across Iceland on Monday last week following a rise in domestic case numbers. Further restrictions were imposed on the Reykjavík capital area two days later, where the vast majority of Iceland’s active cases are concentrated. The measures are similar to those imposed in March, including a 20-person cap on gatherings and the closure of gyms, bars, and swimming pools. The decrease in traffic last March also measured 21% as compared to March of 2019. A week-to-week comparison of traffic between 2020 and 2019 shows a decrease in most weeks throughout this year.

RÚV also reports an increase in online grocery shopping, reflecting similar trends in March of this year. “We are experiencing a huge rise in demand [in online shopping and delivery] in light of this new epidemic,” Ásta Sigríður Fjeldsted, CEO of grocery chain Krónan, stated. “It has just been increasing in the past few months and there’s been a real explosion in the last two weeks.” Online grocery retailer Heimkaup’s CEO says the company has experienced a 400% increase in demand and has had to hire new staff.

“We would like to get rid of the idea of single-use plastic”

Icelandic innovation company Plastplan and discount grocery store chain Krónan are embarking on a plastics recycling collaboration that is intended to make the company more environmentally friendly and reduce its carbon footprint, RÚV reports.

Plastplan grew out of the Precious Plastics project and recycling model started by Dave Hakkens in The Netherlands in 2013. Product designer Björn Steinn Blumenstein then joined Precious Plastics’ international development team in 2017 and used it to found Plastplan with childhood friend Brynjólfur Stefánsson. Plastplan’s goal in Iceland is to recycle plastic and make new and useful items out of it. Their collaboration with Krónan will see them recycling plastic that comes into the store at its Grandi location and turn it into something new and practical to use in the company’s operations: the plastic dividers that customers use to separate their purchases on conveyor belts, for instance, labels, or baskets for fruits and vegetables.

Plastplan will be working with all the plastic packaging that comes into the store and usually gets disposed of right away. The company has four machines to assist in the recycling and recreation process: one that breaks the plastic down and three that mold the molten plastic into new objects. Björn Steinn explains that the machines are very similar to those that are used in larger plastic recycling stations, just scaled down. The smaller machines suit Plastplan at this stage, particularly since they are focused on making small items.

“We want consumers and companies to get something in their hands right away,” he said. “We want to create useful things to support a necessary change [in peoples’] ways of thinking.”

The environmental impact of single-use and/or disposable plastic has become a point of focus around the world, with some places, like Bali, banning plastic all together. Plastplan’s philosophy isn’t anti-plastic, however. “We would instead like to get rid of the idea of single-use plastics,” says Björn Steinn. “It’s possible to recycle plastic more than once and often, more than twice.”

 

Shortage of ‘First Class Icelandic Potatoes’ Say Grocers

The Icelandic Federation of Trade is calling for a suspension of duties on potatoes so that potatoes grown abroad can be imported at an acceptable cost to local consumers. RÚV reports that Iceland’s current potato crop suffered after a wet and cold summer last year. As such, locally-grown potatoes are not up to their usual standard and grocers and produce importers want to see customs duties adjusted accordingly.

“We have plenty of potatoes,” Gréta María Grétarsdóttir, CEO of the Krónan supermarket chain remarked. “But the quality of Icelandic potatoes is not as good as Icelanders are accustomed to…these are not the first class Icelandic potatoes that Icelanders are used to getting.”

 

Imported potatoes “30% more expensive than they need to be”

Guðmundur Marteinsson, CEO of the Bónus supermarket chain, echoed this sentiment, telling RÚV that he finds it strange that import duties on potatoes have not been waived for the time being, given that even the Sales Association of Vegetable Farmers (SFG) has support the idea.

In an announcement on its website, the Icelandic Federation of Trade stated that the Ministry of Industries and Innovation has not complied with requests from importers to suspend custom duties. The organization says this is to the detriment of consumers because imported potatoes will be more expensive. “It isn’t possible to import potatoes unless the duties are cancelled,” said Guðmundur. “We started complaining three weeks ago.”

“When this situation arises, it often happens that customs duties are lifted,” explained Gréta María. “But not now. As such, foreign potatoes are 30% more expensive than they need to be.”

 

No Shortage of Potatoes

By law, the Advisory Committee on the Import and Export of Agricultural Products, which is part of the Ministry for Industries, submits proposals to the minister regarding suspensions of custom duties. This happens, for instance, when there is a shortage of a specific agricultural product on the domestic market. Per the provisions of the laws governing agricultural products, this can only happen when two leading distributors and two key producers cannot keep up with demand. The committee says, however, that no such shortage exists. The situation is being closely monitored, they say, and new data on the local potato crop will be obtained on April 23.

“It’s very strange because SFG’s largest retailer has sent a letter to the committee in which it urges for tolls to be cancelled because there are not enough potatoes of an acceptable quality,” said Guðmundur. “There aren’t enough, but there are some. We’re scraping together what we can for the weekend,” he said, referring to the Easter holiday this week. “That’s where we’re at.”

Ólafur Stephensen, the CEO of The Icelandic Federation of Trade, had stronger words for the committee. “Saying that there’s no impending shortage is preposterous,” he wrote in the published announcement. “And it means that importers are losing the precious time it takes to order and bring into the country products that meet consumer demand.”

Fewer Tourists in Iceland This January Compared to Last Year

Keflavík Airport

Fewer tourists visited Iceland in January 2019 compared to last year, according to a recent survey by the Icelandic Tourist Board and Isavia. The decrease in tourists is estimated to be around 5.8%.

English and American visitors are still the biggest Icelandophiles by far, with about 34.700 Britons leaving Iceland via Keflavík International Airport at the beginning of the year, and about 29.500 Americans. Combined, those two countries made up 46.2% of all departures.

The biggest relative increase came from countries as diverse as India, Italy, Switzerland and China.

Numbers also suggest that tourists in 2018 spent more money on average than their 2017 counterparts, with tourist expenditure increasing by 9.4% between years. For example, tourists in Iceland last December spent about 14 billion ISK during their holiday visit, while the overall increase in Christmas travellers from 2017 was just 1.5%. This means that each tourist spent about 12.9% more last Christmas compared to those who visited the year before that.

This can partly be explained by the weakening of the Iceland króna, whose devaluation made expenditure more easy for visitors. But curiously, tourists also spent more of their own country’s currency.

Says Supermarket Collusion Keeps Prices High

Silent consultation between low-cost retailers in Iceland keeps prices artificially inflated, says Auður Ava Ólafsdóttir, project manager of price oversight at the Icelandic Confederation of Labour. Supermarkets Bónus and Krónan take advantage of a small market to keep prices high when they could be lowered, Auður stated in an interview on RÚV morning radio today.

“These two parties are in a very similar place in terms of prices and they naturally only see it in their favour to keep prices in a certain place,” stated Auður. “Although these are low-cost retailers in Iceland they could actually be lowering prices more than they are.”

“There is leeway here in Iceland for price reductions, as we saw when Costco came to the country. It’s cheap to import goods and the króna is strong. There are many factors that should have the effect of reducing prices, yet prices have remained quite stable for many years.”

This is because Krónan and Bónus take advantage of the Icelandic market’s lack of competition, Auður says. “They’re careful not to compete with each other’s prices too much because both parties would lose out. It is to the economic advantage of both to have it that way and they can do it by virtue of their strong position.”

Auður says she hoped Costco’s opening in May of last year would lower prices over the long term, but the wholesale retailer’s effect seems to have been temporary. Prices “took a little dip until they opened and into the fall and then rose again and are back to a similar level as before.”

Guðmundur Marteinsson, Bónus’ CEO, says the small price difference between products at Bónus and Krónan can be attributed to both companies lowering prices as much as possible. “There is no leeway for price reduction,” he stated. “We cannot sell products at below cost.” He pointed out that Costco’s recently published annual financial statement showed a loss of ISK 100 million ($900,000/€780,000).

Gréta Margrét Grétarsdóttir, CFO of Festi, also denies the two retailers are artificially inflating prices, insisting the similarity in price between the stores is a result of active competition rather than consultation.