Challenging times ahead for Kesko Grocery

The growing inflationary pressures and demand for lower prices presents a significant challenge for Kesko Grocery. As the quality leader with higher prices and cost base, Kesko is more vulnerable than it’s main competitor S-Group.

Market share decline testing Kesko leadership

Kesko was one of the biggest winner during the early pandemic However, as S-Group has rolled out new and remodelled stores, Kesko has started to lose market share. In 2021 Kesko lost 0,3%-points. During this year Kesko has grown less than the overall grocery market during every month, except one (May).

This would indicate that Kesko will continue to lose market share.

The inflationary focus on price will be a true test for Kesko leadership. They were able to win market share with store renovations, by giving out more freedom for the K-entrepreneurs and focusing on higher quality products and ready to eat solutions. Also the economic growth of the Finnish economy helped Kesko.

Now the focus on the market is rather different. The big question is whether Kesko can adapt to those changes?

Kesko’s market share is currently 0,8%-points above the market share lows recorded in 2017.

Kespro driving growth

In 2022 Kesko Food has been able to report record profits despite the declining sales. This has been mainly due to the stellar (and most probably really profitable) growth of the Foodservice division Kespro. They suffered badly during the pandemic times, but have been able to record fantastic growth numbers for the last year.

However, the biggest peak of the growth has probably been seen already. Kespro is a clear market leader in the restaurant wholesale business. One could imagine that the inflationary pressures will eventually hit also the restaurant businesses.