A woman in a grocery shop in Espoo, Finland, on 24 May 2017. (Heikki Saukkomaa – Lehtikuva)

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THE IMPLICATIONS of the Finnish government’s intent to rein in private-label products remain unknown also to grocery retailers, says Mikko Helander, the chief executive of Kesko.

The government states in its newly published government programme that it is planning on improving the position of farmers in the food chain the limit the dominant bargaining position of large retail chains with legislative measures on, for example, private-label products.

“Retailers have yet to figure out what the section means exactly. It deals first and foremost with issues associated with contract relationships and, kind of as a separate issue, makes mention of private-label brands,” says Helander.

“It’s kind of difficult to comment on the issue, as not a single retail industry operator knows exactly what the ruling parties mean.”

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Helander revealed that the government did not contact key stakeholders of the retail sector during or after the government formation process.

“Not in any way, not in any way,” he underlined. “Not us as Kesko, nor the Federation of Finnish Enterprises or the Finnish Grocery Trade Association. Not any of the stakeholders that’d likely be sitting in the negotiating table if the government decided to start the talks.”

Helander highlighted that the share of private-label products, such as Kesko’s Pirkka and S Group’s Rainbow, is relatively low in Finland. Private-label products, he added, have also created genuine cost savings to consumers. “If I remember correctly, the share of private labels is already over 50 per cent in Germany, whereas at Kesko’s K stores the share of private labels is only 20 per cent.”

He also questioned whether the government has the means and the willingness to limit the role of private-label products in the food chain.

“As we’re in a market-economy and free-competition environment, what’d be the means to limit these kinds of things and, in general, would anyone be willing to do so? It’d be good to ask the ruling parties to specify what exactly they’re talking about,” said Helander.

Aleksi Teivainen – HT
Source: Uusi Suomi