This morning's announcement from Statistics Estonia regarding November sales states that food sales have fallen by 4 percent year-on-year. Have this year's Christmas and New Year been different for Selver?

The year-end sales during the Christmas season brought a somewhat more positive picture for food retailers. Specifically, we managed to exceed last year's Christmas sales in terms of volume and there was also a small growth in sales revenue – around 2 percent. When we look into the numbers, setbacks were seen in product groups where price increases exceeded 10 percent. Notably, sales of chocolates, coffee and juices were affected.

Sales of fresh food, however, were brisker compared to last year. Particularly, dairy products and fresh fish saw a noticeable increase in demand. Another highlight in the sales results was the share of promotional products in shopping baskets. In December, this reached an all-time high – 65 percent of items purchased were promotional products at discounted prices. This proportion has never been so high.

This reflects consumers' continued weaker purchasing power and pragmatic choices where they aim to get products with less impact on their wallets. Perhaps because of this, significant compromises in the quality of year-end festive meals were avoided, as confirmed by the sales volumes. In summary, year-end sales in terms of quantity matched last year's levels, which, considering the broader statistics showing a 3-4 percent decline, can be seen as a positive result.

How did alcohol sales perform during the Christmas season?

Sales of light alcohol were close to last year's levels, but for strong alcohol, we saw nearly a 10 percent decline. If this reflects a genuine reduction in alcohol consumption, it could be seen as a positive outcome for the end of the year. Overall, alcohol was purchased in smaller quantities throughout the year. We hope the root cause lies in decreased consumption.

You mentioned that dairy products have been purchased more than in previous years. At the same time, when I look at prices, the price of butter is still very, very high.

Butter has indeed been a declining product (in terms of sales) within the entire dairy segment. It is also the only product segment that saw sales drop by more than 10 percent compared to last year. However, when we talk about milk, yogurts and especially cheeses, those products achieved a 5-10 percent increase in volume sales. Overall, the entire dairy segment experienced growth. But your observation is correct: consumers have struggled to cope with such a sharp price increase and butter was purchased less.

If we look at other product groups, it seems that people baked somewhat less this year. For instance, there was stronger growth in confectionery products. This may suggest that consumers opted for convenience items – ready-made cakes and pastries – rather than baking them at home. Butter, of course, is an essential ingredient for baking.

When reviewing earlier months, we can confirm that butter sales declined by 5-10 percent across different months. Additionally, over 80 percent of the butter purchased was discounted by retailers. This indicates that consumers are mitigating the effects of rapid price increases by choosing cheaper, promotional products.

If we think about fish, for example, specifically trout or salmon, it seems to me that their prices are lower than they were in 2023. Are certain food product groups becoming cheaper or will price increases continue?

Significant price spikes are not anticipated. Specifically, in the case of fish, we believe that the price levels will remain stable. As you mentioned, compared to previous years, fish – such as trout and salmon – has indeed become cheaper and people have started to include it more frequently in their meals again. Intense competition and promotional prices are key factors driving sales volumes in these product groups, ultimately bringing consumers back to them.

What has become somewhat cheaper are dairy products, though this excludes products with a higher cream content. Those items have struggled to maintain stable prices, and in the first quarter of this year, a price increase of over 5 percent is still on the horizon. Other dairy products should be able to maintain their current price levels. Among other fresh food items, no significant signs of price drops are evident. For instance, fruit prices have been on an upward trajectory compared to previous years, but we do not foresee further increases in the coming months. This segment has been influenced by unusual patterns. The abundant harvest in 2024 has had effects that will likely carry into the beginning of this year.

Looking at other product groups, such as preserves, they have struggled to maintain the levels of previous years, or products like juices, which have seen significant price hikes. Many households have likely opted for home preservation methods, relying on their stock of homemade preserves. This factor has likely affected sales volumes to some extent. From the consumer's perspective, this is a rational and, arguably, better choice.

There is indeed competition in Estonia's retail market, as we have more retail chains than Latvia and Lithuania. Will they all still be around by the end of 2025?

All retail chains will certainly remain; everyone is striving for every customer and every percentage point of market share, which ultimately benefits consumers. However, maintaining profitability is a significant challenge for retailers. According to the broad statistics published by Statistics Estonia, profit margins decreased in 2024 compared to 2023. There is a limit to how much retailers can absorb price reductions – costs cannot be endlessly passed on. The factors that increase costs for households also affect businesses. For retailers, the largest and most impactful input cost is labor. Wage pressures are very high, particularly considering that average wages in retail are relatively low. This is the biggest challenge for the sector.

Promotions are the main tool for driving attractiveness. Promotional products account for a substantial share of shopping baskets, and I believe 2025 will continue this trend, where approximately half of the basket consists of discounted products. We are fighting for every customer and aim to provide relief to consumers through promotional prices, especially as food price growth is expected to hover around 5 percent next year.

Of course, retailers hope for some improvement in purchasing power, and there are signs of this. However, optimism is moderate. The days of expecting 3, 5 or 10 percent revenue growth are behind us. Now, we celebrate even a small increase above zero as a sign of improvement.

Nothing drastic will change. All chains will remain, and I believe that by the end of next year, we will be having a very similar conversation to the one we are having now. Optimistically, things will not get significantly worse; at most, we might see modest growth and a return to volume increases, which retailers are eagerly awaiting. However, this hope is likely pinned on the second half of 2025. The beginning of the year will probably start with slight volume declines and only a modest growth of a few percent.

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