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Chocolate Price War: Temporary Sweetness Before Prices Rebound
Chocolate lovers are enjoying a pre-Christmas treat as prices for popular brands like Freia have plummeted to under NOK 30, but experts warn this price party is likely to be short-lived. Grocery chains are leveraging chocolate as a loss leader to attract customers during the crucial holiday shopping season, sparking a fierce price war.
A Strategic Lure for holiday Shoppers
The dramatic price reductions represent a calculated strategy, according to industry analysts.A representative from the Consumer Council explained that the discounts are a “classic lure” designed to entice shoppers into stores with the expectation they will purchase additional, higher-margin items. This tactic is notably evident as all major grocery chains are offering similar deals, suggesting a coordinated effort.
Just two months ago, in October, a large Freia milk chocolate bar cost approximately NOK 59.90, according to reporting by DinSide. The initial price increases were attributed to historically high cocoa prices.While cocoa prices did fall to thier lowest level since February in October,Freia’s parent company,Mondelez,initially maintained prices,citing record high raw material costs and existing long-term contracts.
Campaign Driven, Not Cost-Driven
However, Professor Frode Steen, an economist at the Norwegian School of Economics (NHH), believes the current price drops have little to do with actual cost reductions.”This is probably driven by the fact that one of the chains started a campaign, and as they compete closely, the others follow suit,” Steen stated. He characterizes chocolate as a “price product” – an item closely monitored in price wars where competitors quickly match cuts to avoid losing customers.
Steen anticipates prices will begin to rise again once the pre-christmas campaigns conclude. “I will be surprised if the chocolate bars are not back to normal in January,” he predicted, adding that these campaigns often involve collaboration between suppliers and retailers. He noted that Freia, as a “must-have” product, holds significant power in negotiations with grocery chains.
Grocery Chains Confirm Planned Promotions
Rema 1000, Kiwi, and coop have all confirmed the price reductions are part of a planned pre-Christmas campaign. Coop stated they initiated the price cuts, describing it as a “wild pre-Christmas coup.” Kiwi’s communications director emphasized that price changes in the supply chain take time, but today’s prices are the result of a long-planned promotion. Rema 1000 also confirmed they began cutting prices on Christmas goods, including chocolate, in November.
Notably, none of the chains would disclose the duration of the campaigns, whether they are selling chocolate at a loss, or if Mondelez is contributing financially.
Supplier Holds the Cards
Mondelez maintains that grocery chains ultimately determine shelf prices. A company spokesperson stated cocoa prices remain almost twice as high as normal, despite recent declines.They also explained that lower raw material prices take time to impact production costs due to long-term contracts. The company declined to comment on commercial agreements with retailers, but affirmed a “good cooperation” with all customers.
Olav Kasland, acting head of consumer policy at the Norwegian Consumer Council, echoed Steen’s assessment, stating the price drops are “carefully planned.” He warned that while low prices are welcome, consumers may end up buying more than they need, leading to food waste. “it is the consumers who pay, just for other goods,” Kasland cautioned.
Ultimately, both Professor Steen and Kasland believe chocolate prices will likely return to around NOK 59.90 after the holiday season concludes.
