The Nordic consumer-cooperative food retailers in Sweden, Denmark and Norway will merge their retail business in the three countries to create the second largest Nordic food retail group, Roland Svensson, president of the Swedish KF said on Monday. The Swedish board is expected to make its decision today, and early next year KF’s annual meeting is expected to give its final approval.

Svensson acknowledged that this was un unprecedented step taken by any consumer-cooperatives, but said that the rapid consolidation in the Nordic food retail market had prompted them to take this step.
“We’ve seen that we will be too small in our respective country, so we need to strengthen ourselves through closer cooperation,” Roland Svensson told Swedish Radio.

The three coops, KF, FDB in Denmark, and Coop Norge in Norway, will reach a combined turnover of SKr100bn and control 3,000 outlets in the region. It will be able to draw on 5 million consumers who are currently members of the individual coops.

KF had a share of the Swedish food retail market of nearly 19% last year, but has seen its second place behind market leader ICA being challenged by Axfood, a company emerging from the merger of Hemköp and the D&D wholesale and retail group.

In Norway, Coop Norge last year had a market share of 25.2%. In Denmark, the FDB Group, is the market leader with a market share of as much as 39% last year.

The decison to merge the Nordic consumer cooperatives follows a wave of consolidation in the Nordic food retail market.

Only last year, Dutch group Ahold bought 50% of the ICA group and later the Swedish Axfood was created. Both groups have large interests in the other Nordic countries and have expressed ambitions to grow even further, also into the Baltic countries Latvia, Lithuania and Estonia.

The Finnish Nordic cooperatives, the Tradeka/Elanto group and the S-Gruppen, with nearly 40% of the Finnish market, will not participate initially in the merger plans, but high-ranking Swedish coop officials have earlier opened the door for them too to participate in a closer cooperation of the Nordic coops.

The combined value of the Nordic markets is nearly SKr500 bn. The region’s 20 million customers are now within reach for most of the major players through their increasingly efficient pan-Nordic distribution networks and strong purchasing logistics.

The rapid Nordic consolidation could also be seen in the light of the increasing interest large global players such as Ahold has shown for the Nordic food retail market.According to industry analysts, the threat from such groups as Wal-Mart of the US and Carrefour of France cannot be ignored.