The decision to merge the retail units of the three Nordic consumer cooperatives in Sweden, Norway and Denmark has received a cool response from the industry. The move was pretty much anticipated following the coops' earlier discussions and the set-up of the earlier Coop Norden, a more loosely jointly owned company set up to explore ways the three coops could cooperate.

"We look at the planned merger between the cooperatives in Sweden, Norway and Denmark with respect. But we also see that the coops in Finland, which have the strongest position of them all, have decided to stay out of the merger. I think that one could see that as a kind of a statement," Mats Jansson, president of the Swedish Axfood said.

KF's Svensson on the defence

KF managing director Roland Svensson, defending the current set-up, explained that cooperation with their Finnish collegues had traditionally not been that deep, but the Finns were well informed about what was being planned.

"They will be part of it, even if not in the first stage," Mr Svensson said.

KF of Sweden, Danish FDB and Coop Norge of Norway plan to have their retail units working as one from July next year, assuming their board of owners agree to the merger. The complex ownership of the coops, especially in Sweden, was also a factor limiting the scope of the agreement, Mats Jansson of Axfood argued.
"KF has big problems with their ownership structure. That problem remains to be solved, and until that is done, the cooperative group will remain outside the real market economy. They are stuck in an impossible form of ownership, which means that they will never be able to run this giant rationally," Mr Jansson said.

Combined turnover of SKr100bn - ICA boss blasé

The three coops will boast a market share in the Nordic region of nearly 30%, generate combined annual turnover of SKr100bn and control in excess of 3,000 outlets in the region. It will be able to draw on five million consumers as members of the coops.

ICA managing director Per Dettman said he was not in the least surprised by the announced merger plans. "The coop sector now does what we have already done. Cooperation is necessary in order to become stronger," Mr Dettman said, referring doubtless to his group's merger with Norwegian group Hakon and later alliance with Ahold of the Netherlands.

"It is still a bit unclear what it will mean for ICA, but probably competition will get tougher. However, it will not make us change our strategy," he said. ICA has nearly 35% of the Swedish market and 28% of the Norwegian. It has just established operations and cooperation in Denmark.

Axfood's Jansson defiant

Axfood's Mats Jansson was not, however, too impressed by the threat from the new coop giant. It's one thing to merge, but as long as the cooperative ownership and the links to politics are there, they will never be able to pose any real threat to other competitors," he said.
Axfood, created by the merger between the D&D Group and the Hemköp chain, has nearly 20% of the Swedish market, as much as KF, and substantial operations in Finland through its Spar group.

For more background on this merger please see our recent feature "Nordic Food Retail Market Buzzing with Takeover Rumours"