Coop expands market share with Prisma takeover but rules out price rises

Coop Eesti Keskühistu will take full ownership of Prisma Peremarket’s Estonian stores at the end of August, increasing its market share in Tallinn from about 5 percent to 17 percent, ERR reported. The company says the deal will not create room for higher prices.

Coop representative Rainer Rohtla said the transaction is scheduled to close on August 31 after the Competition Authority approved it. The current Prisma stores will begin moving under the management of different Coop cooperatives in the second or third week of September.

All former Prisma stores are expected to operate under the Coop name by the end of November.

Coop aims to preserve Prisma’s familiar product range, including Scandinavian goods and Prisma’s private-label products that are not currently sold in Coop stores. Rohtla said this will require the company to expand its logistics and supply-chain capacity.

The best-selling and most popular Prisma products will be introduced in Coop stores during the first half of next year. By July next year, the products are expected to be available in Coop stores across Estonia.

Rohtla said the takeover would not lead to higher prices, citing strong competition in Estonia’s retail sector, rising food prices in recent years and low consumer purchasing power and confidence.

“Even if we wanted to raise prices, there is certainly no room in the market for a price increase,” Rohtla said.

Analyst sees little effect on food prices

Economist Raul Eamets agreed that Coop’s larger market share would not necessarily result in higher prices.

He said competition in the food retail market remained strong, particularly following Lidl’s entry into Estonia several years ago. Eamets added that the margins of large retail chains were only a few percent, meaning a larger market share would not immediately allow a company to manipulate prices.

According to Eamets, food prices in Estonia are influenced less by domestic competition than by food producers’ prices and, above all, prices on global markets.

Rohtla declined to disclose the purchase price for Prisma’s stores or say how quickly Coop expected to recover its investment. He said the company was optimistic about the plans.