Local food markets to triple

Sitra survey reaches out to producers, distributors and sellers of local food

A Sitra survey predicts new kinds of online services, small wholesalers, perishable goods wholesale markets and versatile delivery and transportation models for local food. The willingness to buy local food exists but an efficient distribution and logistics system reducing the need to use intermediaries has yet to be introduced.

Local food is still marginal and reasonably difficult to access in Finland. The food industry and large retail chains rule the food markets and the share of small specialised producers and shops is still less than one per cent.

According to Jyri Arponen, Senior Lead of Sitra’s Landmarks Programme, local food and large chains are not competitors, instead there is an opportunity for synergy on the markets. Because the local food market is only in the early stages of its life, there is room for competition. The entry of new, strong players into the market will increase demand and benefit all the players in the market.   According to the survey, the size of the Finnish local food market will increase in five years to approximately 100–200 million euro.  In 2008, it was approximately 74 million euro.

The survey Lähiruoka, nyt – trendistä markkinoille (‘Local food, now – From trend to market’) is intended as a tool for new and already established entrepreneurs in the field to increase their understanding of the industry, its dynamics and especially of what requirements, challenges and new business models and opportunities the field offers.

Freshness, domestic origin and support of local businesses are the trump cards of local food

The development of the organic food market both in Europe and the USA has been rapid. Consumers want to buy food they feel is fresh, clean, high quality and ecological. According to consumer study included in the survey, the trump cards of local food included also traceability and support shown for local businesses.

However, consumers are price-conscious: for a consumer, higher price must equal a fresher and better product. Even local food must differentiate itself and be known.

“We need strong brands and players to ensure the industry grows at the pace predicted by consumer attitudes. For example, with the introduction of large retail chains, the field would get a wider variety of financiers and funding means,” says Arponen.

“Now, we need to shift the focus from production to consumers and increase investments in marketing and business competence.”

Versatile delivery and transport opportunities

Local food suppliers are primarily small farms which could benefit from joint delivery to consumers. Another possibility for building a cost-effective logistics chain is to organise wholesale operations of local food or its integration with the activities of existing wholesalers. Sufficient delivery reliability and volume can be achieved through producer cooperation.

Arponen explains how to retain the small image while scaling operations.

“Combining Internet with effective logistic services makes even smaller business activities profitable. Moreover, shop-in-shop solutions and permanent presence on the shelves of the shops where consumers shop anyway would enable profitable growth.”

The survey defined local food as food produced in Finland. It has the shortest possible production chain, it is of high quality and fresh and takes into account environmental perspectives and sustainable development.

Further information

Jyri Arponen, Business Development, phone +358 9 6189 9491
Johanna Pellinen, Communication, phone +358 40 561 2551

E-mail: firstname.surname@sitra.fi

Local food survey: summary in English

Publication details

Lähiruoka, nyt – trendistä markkinoille -selvitys
Sitra, the Finnish Innovation Fund
ISBN 978-951-563-718-5 (paperback)
ISBN 978-951-563-719-2ISSN 1796-7104 (paperback)
ISSN 1796-7112
Helsinki, 2010

Landmarks Programme

The countryside could play a more significant role than currently as a source of well-being for each Finnish resident and in finding solutions for sustainable development.

Sitra’s Landmarks Programme 2010–14 open-mindedly seeks new perspectives and promotes innovative activities in order to attain these goals. The Landmarks Programme provides and transmits unbiased information to support social decision-making, while developing and testing new operational models and accelerating the creation of new businesses.