A dip in the price of global sugar prices is not currently being felt in Estonian supermarkets, partly due to European pricing policies, domestic retailers say.
The price of sugar on the global market dropped by more than a third over the past year, and in the last month it fell by 10%.
The change is not seen on Estonian store shelves, said both Oliver Rist, purchasing director of Coop Eesti, and Kertu Kark, communications manager at Prisma.
Rist told ERR that although sugar was cheaper outside the European Union, the EU was protected by high customs duties, which meant that very low prices did not reach the local market.
“As a result, it is not profitable to import sugar from outside the European Union. General consumption trends also affect both sugar production and prices,” he added.
Kark said, from Prisma’s perspective, there had been only one very small change in sugar prices over the past year: starting on February 13, the price of one producer’s sugar fell by one cent per kilogram.
“For another producer, there has been no price change. The situation is similar in Finland,” she noted.
Rist pointed out that the sugar harvest over the past two years had been very good, but as consumption was declining in general, some producers were being paid not to grow too much sugar beet.
Additionally, sugar producers and factories are engaged in price competition, and this complicates the situation.
“Although one producer has slightly lowered the sugar price, the change was too small to be felt in the final consumer price or in our profit margin,” the Coop purchasing director acknowledged.
Prisma’s representative Kark said sugar was more of a habit-based purchase for consumers.
“Our experience shows that even when we have lowered sugar prices at the expense of our sales margin in intense price competition, this has not led to increased sales volumes. Rather, consumption remains relatively stable, and purchasing behavior is influenced more by promotions and seasonality, such as home preserving,” Kark said.
Salvest used sugar in products such as jams, said the company’s CEO Jaanus Aal, adding that jams made up only a small share of their product portfolio.
“All Salvest baby foods and smoothies are sugar-free, and therefore the price of sugar does not affect the final price of those products,” he added.
According to Aal, Salvest generally signs long-term contracts for purchasing sugar, but global market price changes are gradually beginning to reach them as well.
“However, the share of sugar in the price of jam is marginal. The most expensive component of jam is berries, which largely determine the product’s price. Therefore, a change in the price per kilogram of sugar does not significantly affect the price of a jar of jam,” he acknowledged.
Andrei Holm, sales director of Orkla Eesti, said the price of sugar was set on the European price, which had dropped over the last two years, but was fairly stable despite the global market’s downward trend.
“Since the European sugar price has not changed significantly, it does not currently affect the price of our finished products,” he said.
However, the price of cocoa has fallen, and this directly affects the company’s products.
“Last year, the sharp rise in cocoa prices received a lot of attention and had a negative impact on the sales of high-cocoa-content confectionery. Over the past six months, however, cocoa exchange prices have steadily declined, which has created an opportunity for us to lower the prices of our chocolate products as well,” Holm said.
He added that Orkla made a price adjustment at the beginning of February, and to their knowledge, this was reaching retail chain prices.
Holm said Orkla Eesti had never priced its products based on peak cocoa prices, so the reduction was more gradual but still noticeable. For example, while a 270-gram Anneke chocolate bar has recently cost EUR 8.39 at Kalev stores, it has now fallen to EUR 6.97 and, during promotions, even to EUR 4.59.
“We lowered the prices of all chocolate bars by 10 to 20%, depending on the product’s size and cocoa content,” the Orkla sales director said.
However, despite the decline, cocoa remains very expensive with the price doubling over the last two years.
“We continuously monitor the market situation, and if the downward trend continues, we are ready to adjust our prices further,” Holm promised. (ERR)