Northern lights out? Chocolate sees big sugar tax hike in Norway

By Oliver Nieburg

- Last updated on GMT

Chocolate in Norway set for growth despite huge sugar tax hike ©GettyImages-XtockImages
Chocolate in Norway set for growth despite huge sugar tax hike ©GettyImages-XtockImages

Related tags European union Compound annual growth rate Tax Norway

Industry players and a market researcher speculate how Norway’s 83% increased duty on chocolate and sugar products, which took effect on January 1 this year, will affect sales.

Norway this month increased its levy on sugar and chocolate products to NOK 36.92 ($4.69) per kg.

Industry players say this may mean some cross border buying in Sweden, but market research provider Euromonitor still expects the domestic market will grow faster than the Western Europe average.

An 83% rise

Norway introduced its ‘chocolate and sugar products’ tax in 1922 and this year upped the rate by 83% compared to 2017 levels.

The tax applies to imported and domestically produced goods and is also payable on chocolate and sugar products without added sugar or sweeteners.

“The tax is imposed for fiscal reasons, although it also entails some health benefits. It is intended to include products which are seen as a sweet treat that can be immediately enjoyed,”​ the Norwegian Tax Adminstration (Skatteetaten) told this site.

Norway’s chocolate market to outpace Western Europe

Despite the increased levy, market research provider Euromonitor expects sales growth in the Norwegian chocolate market.

It anticipates retail value sales – which reached $734m in 2017 - will climb at a compound annual growth rate (CAGR) of 3.6% up to 2022.

Retail value sales in Western Europe’s chocolate market are expected to grow just 0.7% over the same period.

Orkla: Cross-border shopping likely

Orkla – the number two player in Norwegian chocolate behind Mondelēz – said it does not plan to change its long-term new product development strategy as a result and said the Norwegian chocolate market has remained stable historically.

“It is too early to say anything about the long-term consequences for the industry, but more cross-border shopping is likely,”​ said Elise Andersen Heidenreich, communications manager at the Nidar brand owner.

Cloetta draws on Finland experience

Swedish confectioner Cloetta – the number three player in Norwegian chocolate – also said it will not change its strategy based on the increased tax.

“It is hard to judge how sales will be affected given the increase in sugar tax in Norway, but the experience from Finland when a confectionery tax was introduced in 2011 was that sales declined with approximately 5%, but after a year or so it was back to ‘normal’,”​ Jacob Broberg, SVP of corporate communications & investor relations at Cloetta, told ConfectioneryNews.

“But that was an introduction of a new tax, now it is ‘only’ a sharp increase of an existing tax.”

Finland’s confectionery excise tax was abolished in 2017 after the European Commission said the levy may violate EU state aid laws.

Hungary and Mexico have taxes affecting certain confectionery products, but most other state food taxes – such as those in France – are limited to sugary drinks.

Pressure group Action on Sugar last year urged the UK government to expand its sugar tax​ on soft drinks to chocolate and sweet confectionery – a move seen as “punitive”​ and "discriminatory”​ by industry bodies.

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