Swedbank: Food basket study in baltic countries


Published on

This is a study where a comparison has been made re food-prices in the BAltic countries.

Published in: Economy & Finance
  • Be the first to comment

  • Be the first to like this

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

Swedbank: Food basket study in baltic countries

  1. 1. Institute for Private Finances, SwedbankFood basket studyin Baltic countries27 February 2013In Baltic household expenditure structure Study results reveal monthly food costs for aexpenses for food and non-alcoholic beverages household of a four-member family, identifysignificantly exceed EU average 1 as well as are expense drivers in food basket and reveal impactthe largest group of expenditures in Baltic of available food discounts on householdhouseholds. expense. Study is a valid reference for households to compare their actual expenses forIn order to have a reliable and comparable food against basket costs and identify areas forbenchmark for evaluation of household cost of money savings without compromising nutritionalfood in all three Baltic countries, Baltic Institutes value of their food intake. Study could alsofor Private Finances, Swedbank, developed a introduce new perspectives for more sustainablestudy of food basket costs. Study includes food consumption in households for exampledefining a recommended food basket, which decreased food waste and savings thereof.ensures a balanced diet for individuals, tailored tothe consumption patterns of Baltic inhabitants. Study contains reference to national household average income, revealing proportion of income supposedly allocated to food to ensure balanced nutrition of the family. To compare some aspects of cost of living in three Baltic countries, data comparison is available in the study.1 Analysis of EU-27 household final consumptionexpenditure, the EU Statistical Office Eurostat 2013Institute for Private Finances, Swedbank 1
  2. 2. Findings After comparing the food prices of Estonia, The cost of an optimal food basket for a four- Latvia and Lithuania, the largest differences person family in Lithuania amounts to EUR were found in dairy products, meanwhile the 280, in Estonia EUR 304, and in Latvia EUR minimum differences were in the category of 319 per month. fruits. The highest price for an estimated food basket consisting of dairy products and fruits, Based on a wage gap evaluation, the lowest as well as bread and cereals, vegetables and burden of food expenditures is in Estonia, other products (coffee, tea, sugar, salt, etc.) where 2 adults, receiving an average wage, would be paid in Latvia. The cost of can allocate up to 22% of their income for an recommended meat and fish products would optimal food basket compiled for a four- be the highest for consumers in Estonia. person family. In Lithuania this part of expenditure for food is 29%, and in Latvia Although the highest cost of the estimated 32%. food basket is in Latvia, Latvians may also have the best opportunities to save, if Food in Latvia is more expensive than in shoppers take advantage of promotions and Estonia and Lithuania. The optimum discounts in stores. If a family in Latvia estimated food basket for a family per month purchases products on discount, they would in Latvia costs 14% more than in Lithuania, save 14% of the money available for the and 5 % more than in Estonia. estimated food basket. A Lithuanian family could save 8% of the money available for Products in the protein group, i.e. meat, fish, food, meanwhile average savings in Estonia dry beans, nuts, etc. take the biggest would amount to 3% of the money available proportion, with more than one-third of the for the food basket. food basket in each Baltic country. The remaining part of food basket costs (dairy, bread and cereals, vegetables, fruits, fats and other products) is distributed on a relatively even basis.Institute for Private Finances, Swedbank 2
  3. 3. Study methodologyInformation on studyIn order to undertake a study of the Baltics’ food Products were grouped based on the productbasket and to evaluate food prices in Estonia, classification model which was developed inLatvia and Lithuania, Baltic Institutes for Private accordance with the recommendations for healthyFinances, Swedbank, developed research eating of the United States Department ofmethodology that enables the comparison of Agriculture. Based on this model, food isindicators between the three countries. classified into six groups – fruits, vegetables, grains, proteins, dairy products and fats.An estimated food basket was compiled inaccordance with the methodology of the Estonian Households and Calories Consumed bySociety of Nutritional Sciences, which is Household Membersrecommended by nutritional experts and is Household – one person living separately or aconsistent with health nutrition principles. group of people who live in a common mainNecessary amounts of food were recalculated dwelling and share joint financial and/or foodbased on energy needs according to the Swedish resources. Family or marital connections betweenNational Food Agency. In conclusion, an average members of such household are optional.monthly cost for a food basket was calculated,after research company AC Nielsen Baltics, had In terms of this study, a household consists of twocollected prices for food basket products in stores adults and two children: grown up male andof Estonia, Latvia and Lithuania. Results female with preschool boy and teenage girl.disclosed that food prices in the Baltics aredifferent. Different age groups and genders have different energy needs. In order to calculate the calorieFood Basket intake of a household, the calorie intake of oneThe study was conducted using a recommended person multiplied by the number of members in aestimated food basket which was worked out household is insufficient, as, for example, a childbased on the methodology of the Estonian or an adult woman will consume fewer caloriesSociety of Nutritional Sciences, which belongs to than an adult man.International Union of Nutritional Sciences. For these reasons the recommended amount ofThe food basket consists of food items used in calories for households was determined inhome cooking. Those food items ensure the accordance to the Swedish National Foodgenerally daily needs of an adult for nutrients, Agency. Based on this, a man and womanvitamins and minerals without causing health between the ages of 31 and 60 should consumeproblems, and correspond to the daily nutritional respectively 2,700 kcal and 2,150 kcal per day, ahabits of people from Baltic countries. The diurnal boy between the ages of 4 and 6 and a girlenergy value of the estimated food basket is between the ages of 11 and 14 should consume2,400 kcal. respectively 1,700 kcal and 2,000 kcal per day. The energy need increases with more physicalIn accordance with this estimated food basket, an activity or regular exercise.adult should consume meat – 4.5 kg, fish – 2.9kg, vegetables – 25.1 kg, fruits – 7.3 kg, and etc.per month.Institute for Private Finances, Swedbank 3
  4. 4. Data Collection following chain stores: Vilnius – Maxima, Rimi, Iki,Commissioned by Institute for Private Finances, Cento, Aibė, Kubas; Ryga – Rimi, Supernetto,Swedbank, AC Nielsen Baltics collected data on Maxima, Mego, Elvi, Iki; Tallinn – Rimi,recommended food basket product regular prices Säästumarket, Selver, Maxima, Prisma,from 14th till 20th of January, 2013. Maksimarket.Shelf price collected in chain stores in every After collecting the prices of the most popularcapital of the Baltic countries, where overall products within the indicated group, the averagemarket share of each country exceeds 75%. price was calculated and the resulting amountPrices are therefore representative of the whole used to calculate the study results.country. Regular shelf price collected in theInstitute for Private Finances, Swedbank 4
  5. 5. Study resultsFood basket valueThe study of Food Basket in Baltic countries Cost of estimated food basket in Balticshows that the cost of recommended estimated countries (EUR)food basket for a family in Baltic countries, isbetween EUR 280 and 319 per month: thehighest in Latvia, the lowest in Lithuania. The costof recommended estimated food basket perfamily in Estonia is EUR 304.The tax environment has little impact ondifferences of food baskets’ cost in the threeBaltic countries, since Estonia, Latvia andLithuania apply a similar rate of value added tax(VAT), excluding the reduced rate for certainfoodstuffs. However, the VAT rate in Estonia is1% less than in Latvia and Lithuania; therefore Source: Study of Food Basket in Baltic countriesthe cost of an estimated food basket for an performed by Institute for Private Finances,Estonian family approaches the relevant estimate Swedbankin Latvia, unless this difference is eliminated.It should be noted that Latvia applies excess dutyon coffee beans; however, this tax has a minor The Impact of Average Wageeffect on the final cost of estimated food basket.Nutrition experts recommend that the monthly The cost of the same food basket is highest incoffee consumption should be no more than 150 Latvia, both in absolute amount and after theg, which constitutes less that EUR 2 per month. assessment of average wage after taxes differences in Baltic countries. Assuming that both family adults earn an average wage, family in Latvia spends 32%, Lithuania 29%, Estonia 22% Household income expenditure and average annual food and non-alcoholic beverages inflation (%) Estonia Latvia Lithuania Food basket cost per person, EUR 85.51 89.49 78.54 Food basket cost per family with children, EUR 304.41 318.60 279.59 Family average wage level after taxes, EUR (2012Q3) 1362 982 976 Percentage of household income spent on estimated food 22% 32% 29% basket, if family income is two average wages Average annual food product and non-alcoholic drinks inflation 3.9 2.3 3 (2012) Source: Calculations of Institute for Private Finances, Swedbank, based on the study of food baskets in Baltic countries and data of national departments of statistics and the EU Statistical Office EurostatInstitute for Private Finances, Swedbank 5
  6. 6. of total average wages on food. Cost structure of food basket, broken downCost structure of food basket by product group in the Baltic countries (%)The biggest proportion of expenditures (onaverage 37%) takes the protein group, i.e. meat,fish, dry beans, nuts, etc. The major drivers in thisgroup of products are pork meat, fresh fish andchicken. The remaining part of food basket cost isdistributed on a relatively even basis. Onaverage, cereals and dairy products eachconstitute 15%, vegetables and fruits each 10-13%.The cost structure of food baskets in Latvia andLithuania is more similar than in comparison withEstonia. The most distinguished product group ispork meat and fish, the cost of which of theestimated food basket in Estonia is higher than Source: The study of food basket in Baltic countriesother Baltic countries by 6%. This difference is performed by Institute for Private Finances,mainly caused by the price of pork in Estonia, Swedbankwhich is 29 % higher than in Lithuania and almost average of EUR 110 for proteins, EUR 49 for10 % higher than in Latvia. However, Estonians bread and cereals, mainly black and white bread,should then allocate a lower amount of the cost of and EUR 44 for dairy products per month.estimated food basket for vegetables, dairy Expenditures for vegetables (mainly potatoes,products, bread and cereals. cabbage and carrots) and fruits (mainly apples and banana) would amount to EUR 69 per month.If family consumes the amount of food provided inestimated food basket, they will spend anCost structure of food basket for a family, broken down by product group in Baltic countries(EUR per month) Total: Total: Total: € 304.41 € 318.60 € 279.59Source: The study of food basket in Baltic countries performed by Institute for Private Finances, SwedbankInstitute for Private Finances, Swedbank 6
  7. 7. Differences in food pricesAfter comparing food prices between Estonia, Prices of the most popular products in BalticLatvia and Lithuania, the largest differences were countries (EUR/kg)found in dairy products. For example, 300−400 gpack of sour cream in Estonia costs EUR 1.87, in Estonia Latvia LithuaniaLithuania EUR 2.26, and Latvia EUR 2.80;300−400 g pack of yogurt respectively EUR 2.08, Black bread 1.54 1.62 1.441.76 and 2.38. Meanwhile minimum differences White bread 1.33 1.6 1.79occur in the category of fruits. One kilo of the Milk 0.54 0.68 0.57cheapest apples in Baltic countries ranges from Yogurt 2.08 2.38 1.76EUR 0.53 to 0.68, one kilo of bananas – fromEUR 1.30 to 1.50. Sour cream 1.87 2.8 2.26 CottageThe highest cost for one kilo of the most popular 3.88 3.37 2.91 cheeseblack bread is in Latvia, white bread – in Potatoes 0.24 0.32 0.26Lithuania, meanwhile, the highest cost for one kiloof pork meat is in Estonia, lowest – in Lithuania Cabbage 0.27 0.27 0.3(difference – EUR 1.12 /kg). The cheapest Carrots 0.26 0.38 0.39potatoes are in Estonia; however one kilo of Apples 0.53 0.68 0.64cottage cheese is approximately a quarter more Bananas 1.34 1.5 1.3than expensive than cottage cheese in Lithuania. Oranges 1.49 1.27 1.28Differences in prices (even in neighbouring Eggs 1.26 1.52 1.31countries) result from a group of factors, which Pork 4.93 4.5 3.81should be analysed separately. For example, the Chicken 2.6 2.58 2.5part of domestic demand that is met with importedproduction (import partners, their prices, tax Butter 6.44 6.67 5.94system requirements) and domestic production Sugar 1.02 1.17 1.06(cost of domestic producers). Also important isthe export of manufactured products, since Source: The study of food basket in Baltic countriessuccessful trading with higher living standard performed by Institute for Private Finances, Swedbankcountries facilitates opportunities for domesticproducers to maintain a higher price level. Thefinal price of products is influenced by theeconomic environment of a country (purchasingpower of its residents, tax system changes).Institute for Private Finances, Swedbank 7
  8. 8. Effect of food promotionsIf usual food prices are known, special offers and Thus, if a family buy discounted food, the mostpromotions may be a great opportunity to reduce expensive estimated food basket would be inpersonal and household expenditures. In Estonia, but not in Latvia. Here it will amount toaccordance with the data of analysis, which was EUR 295, and in Latvia it will cost 7% less, i.e.commissioned by Institute for Private Finances, almost EUR 275 per month. After considering theLatvians can save the biggest amount if they effect of food promotions, the cost of the basket ispurchase at discount: families with two children, still the lowest in Lithuania. Here its cost willwho purchase products indicated in the amount to slightly more than EUR 256 per month.recommended estimated food basket, would savealmost EUR 44 or 14% of all funds intended forbasket purchase. Discounts offered by stores to afamily living in Lithuania would help save EUR 23per month, i.e. 8% of the funds intended forbasket purchase, in Estonia respectively EUR 10or 3%.Family food basket cost difference, assessing the effect of food promotions (EUR per month) -3% -14% -8%Source: The study of food basket in Baltic countries performed by Institute for Private Finances, SwedbankInstitute for Private Finances, Swedbank 8
  9. 9. Relevant informationEconomic Indicators of Baltic Countries VAT rates for food in each Baltic country (%)Although foodstuff and non-alcoholic beveragesin Baltic countries take the biggest proportion of Estonia Latvia Lithuaniaexpenditures, a considerable amount of products,including money, ends up in the garbage. In VAT rate 20 21 21accordance with the European Commissionstudy, 27 European Union (EU) members Source: EU Statistical Office Eurostatannually generate 89 million tons of food waste,or 179 kg per capita. This is expectedto rise to about 126 million by 2020, unlessadditional prevention policy is adopted oractivities are taken. Hence it was announcedthat 2014 will be the Year Against Food Waste.Average monthly wage level before and after Annual average inflation and food inflation intaxes in each Baltic country in 2012Q3 (EUR) each Baltic country and the EU average in December, 2012 (%)Source: National departments of statistics Source: National departments of statisticsFood waste in Baltic countries EU27 Estonia Latvia Lithuania Food waste kg per capita 179 260 94 171 Food waste arising by households, % 42% 23% 37% 19% Food waste arising by households, kg/year 76 60 34 33 Food waste in country, tonnes/year 89 277 472 355 000 216 000 581 000Source: Data of preparatory study on food waste across EU 27, which was published in 2010Institute for Private Finances, Swedbank 9
  10. 10. Household Budget Structure in Baltic The largest proportion of expenditures (almostCountries 26%) on food and non-alcoholic beverages is in Lithuania, and the lowest (almost 21%) inBased on Eurostat, the EU Statistical Office, data Estonia. Latvia’s expenditures on food and non-expenditures on food and non-alcoholic alcoholic beverages amount to almost 24% ofbeverages form the largest part of household total expenditures. Meanwhile, relevant averageexpenditures in all three Baltic countries. expenditures in the EU are below 16%.Household expenditure distribution, Baltic countries 2012 (%)* EU27 Estonia Latvia Lithuania Food and non-alcoholic beverages 15.3 20.9 24 25.9 Alcoholic beverages and tobacco 4.3 8.8 7.0 8.6 Clothing and footwear 6.5 6.4 5.3 5.9 Housing, water, electricity, gas and other fuels 16.1 15.1 15.7 13.2 Furnishings, household equipment and routine 6.4 4.4 4.1 5.6 maintenance of the house Health 4.2 3.3 5.5 6.1 Transport 15.2 13.8 14.8 13.2 Communications 3.2 4.2 3.9 3.5 Recreation and culture 9.8 8.0 7.0 5.3 Education 1.2 1.6 1.4 1.7 Restaurants and hotels 9.0 8.9 6.4 6.4 Miscellaneous goods and services 8.8 4.6 5.0 4.6Source: Harmonised consumer price index, Items weights, Eurostat* Savings and expenditures for financial commitments were excludedInstitute for Private Finances, Swedbank 10
  11. 11. Further informationErika PahneHead of Baltic Institutes for Private FinancesTel.: +46 70 2271656E-mail: erika.pahne@swedbank.seOdeta BložienėHead of Institute for Private Finances, Swedbank,in LithuaniaTel.: +370 687 90767E-mail: odeta.bloziene@swedbank.ltAdriāna KauliņaHead of Institute for Private Finances, Swedbank,in LatviaTel.: +371 674 44489E-mail: adriana.kaulina@swedbank.lvAnne Kalberg-SägiHead of Institute for Private Finances, Swedbank,in EstoniaTel.: +372 50 52747E-mail: Anne.Kalberg-Sagi@swedbank.eeInstitute for Private Finances, Swedbank 11