The prices of various food products sold in Rimi stores in Baltic States do not differ much. The difference is generally less than 1%, LLC Rimi Latvia Marketing and Public Relations Department’s manager Kristine Ciemite has said, commenting on the recent price survey performed by the Institute of Agro-Resources and Economics (AREI) in Latvia, Lithuania and Estonia.
Ciemite stressed that the institute’s survey focused on a small and very specific range of products.
She explained that Rimi’s everyday price monitoring surveyed a much larger number of products.
“We perform price monitoring in each of our markets for all groups of products every day,” said Ciemite, adding that, for example, comparison of Latvia and Estonia showed that of the 50,000 products offered in each country, prices of 7,238 were completely the same, while prices of 4,012 were 10% lower. Prices of the remaining products may vary based on product category and the level of competition in a specific market.
The remaining goods, according to Ciemite, are mostly locally made products unique to each country.
She also said that AREI survey did not include the VAT difference between Latvia and Estonia, which had a significant effect on price differences. According to the company’s data, the difference in prices of products between Latvia and Estonia is 0.3%, if VAT is taken into account.
Ciemite said that AREI survey also did not take into account the general difference in VAT between Baltic States. This influences, among other things, product categories like coffee and lemonade.
“However, looking at both AREI data with their smaller range of monitored products and our own data, the conclusion is only one, that among Baltic States there are slight food price differences, where difference between countries is less than 1%,” stressed Ciemite.
Rimi Latvia Marketing and Public Relations Department lead also said that if AREI’s objective was to study necessities or low-cost product categories, information used was partial, because it focused only on Rimi brand products. Rimi Basic, for example, is gradually leaving the Baltic Market. Authors of the survey, perhaps, did not include this factor in their price monitoring.
She explained that over the past several months there had been active work performed to remake the Rimi Basic line. For several years this has been the company’s base product line.
“Currently various discussions operate with partial information about the prices of Rimi Basic products. These discussions does not cover the fact that work on new line products goes at a different pace in different markets,” said Ciemite.
She said that examples mentioned by the media and social networks about especially low prices on Rimi Basic vinegar or tea in Latvia’s neightbouring countries could be related to sales of remaining stores of these products and transition to a new brand – Rimi Smart.
“It is normal for prices to differ slightly in the short-term,” said Ciemite, adding that the new low-price Rimi Smart line of products was planned to be presented in September.
Rimi Latvia representative also said various discussions showed a lack of understanding of the fact that the Baltic Market was not united – each country had its own market, regulations and competition.
This means there will be differences with different production promotion strategies.
For example, in Estonia the most popular coffee brand in Rimi is Paulih, whereas Merrild is more popular in Latvia.
“There are many such examples. Questions sometimes surface as to why some local brand is cheaper in a neighbouring market – perhaps at that moment this brand tries expanding to a new market and offers a lower than average price for a limited time,” says Ciemite.
She also said the it was wrong to believe that if a company were represented in all three Baltic States, that prices had to be the same everywhere. For example, in Rimi’s case, the company has different market positions in Baltic States and store formats represented in each country – the stores are not identical at all. In one country there are more hypermarkets, whereas in another there are more smaller stores than supermarkets. Business strategies vary as well.
Among Baltic States goods sold in Rimi stores are the most expensive in Latvia. In Lithuania goods are the most expensive in Maxima stores, according to information compiled by the Institute of Agro-Resources and Economics (AREI) in June and July.
Among the analysed products are also ones under Rimi brand.
Of the 189 surveyed products in Latvia, 80 have prices in Rimi stores that are higher than prices in Lithuania and Estonia, whereas the prices of 58 products in Latvia are the lowest among Baltic States. Prices of 38 other products are on average level among Baltic States. (BNN/Business World Magazine)
