Finnish customers demand that regular Valio milk stays in grocery stores

Valio more concerned about imported cheese

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Last week, HOK-Elanto, the largest regional cooperative retail chain in Finland, announced that it would no longer sell any regular milk products produced by the dairy cooperative Valio, the most significant milk processor in Finland.
      Earlier the chain had decided to drop Valio milk products from its assortment, with the exception of specialist milks, following a deal struck with the Swedish-Danish dairy Arla Ingman.
     
Following a heated discussion in Finland over the decision, including remarks by the Centre Party leader and Prime Minister Matti Vanhanen that he would henceforth be shopping elsewhere, HOK-Elanto - part of the retail S-Group - has now promised that it would be keeping Valio’s fat-free and low-fat milk cartons at least on its Prisma supermarket shelves after all.
      Other parts of the chain will have to decide later whether or not they have enough space on the shelves of their refrigerators for both Valio and Arla Ingman milk cartons.
      The feedback received by HOK-Elanto indicates clearly that the domestic content of milk products as such is not a good enough purchasing argument for all customers.
      Even the brand of a product is very significant, the HOK-Elanto CEO Matti Niemi says.
      Matti Niemi notes further that the deal with Arla Ingman is still in force and the Swedish-Danish dairy will remain HOK-Elanto’s main milk supplier.
     
Part of the strong reactions resulted from a misunderstanding.
      ”Based on the news, many people got the impression that HOK-Elanto would begin to sell only Swedish milk. This is not the case. All milk to be sold under the brand Arla Ingman in Finland will be entirely Finnish”, Niemi argues.
      Since last March, HOK-Elanto has also been importing to Finland Swedish milk, which is packed in Finland and sold under the Arla brand. The country of origin is printed on the carton.
      Valio managed to be HOK-Elanto’s main milk supplier only for one year. Previously the agreement was held by Arla Ingman for many years.
     
From the retail chains’ perspective, the problem is that Valio has wanted to take care of the distribution of its products itself. Arla Ingman’s products are transported to stores jointly with other logistics service providers. From the retailers’ angle this arrangement is more economical and more flexible.
      Antti Rauhamaa, the Chairman of the Board of Directors at Valio, hopes that the debate on the domestic content of milk products has been beneficial for Valio.
      ”It was a major change in the Finnish dairy market to have a competitor that is one of the largest milk processors in Europe”, Rauhamaa notes.
      Rauhamaa says that he has been contacted mainly by milk producers who are concerned about a potential decline in producer prices.
     
Valio’s Rauhamaa is more worried about cheese imports than about imported milk. He says that as much as 40 per cent of the cheese consumed in Finland is foreign.
      Why is it that the foreign origin of cheese and yoghurt is apparently not a problem, but the imports of milk prompt strong emotions among consumers? This logic Robert Ingman, the Managing Director of Arla Ingman, does not quite understand.
      ”Even Finland exports dairy products, and it would be beneficial for Finland if the products were approved in the export countries”, says Ingman, referring for example to Finland’s Russian trade, which is important for Valio.
     
One political dimension to the recent spat is that Valio supported Centre Party candidates to the tune of several thousands of euros at the last general election.
      The company channeled around EUR 20,000 to the major parties in the 2007 elections, reported the late-edition tabloid Iltalehti on Tuesday.
      Backing was given either directly to candidates or to their own support groups. According to the newspaper, Valio has supported candidates for Parliament on earlier occasions as well.
      Arla Ingman has not directed money to political campaigns.


Previously in HS International Edition:
  Arla Foods director surprised by strong reactions over selling of Swedish milk in Finnish grocery stores (8.3.2010)
  HOK-Elanto retail chain chooses Swedish-Danish Arla Ingman dairy goods over domestic Valio (5.3.2010)

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