Swedbank: Food basket study in baltic countries

Institute for Private Finances, Swedbank 1

Institute for Private Finances, Swedbank

Food basket study in Baltic countries 27 February 2013

In Baltic household expenditure structure expenses for food and non-alcoholic beverages significantly exceed EU average1 as well as are the largest group of expenditures in Baltic households. In order to have a reliable and comparable benchmark for evaluation of household cost of food in all three Baltic countries, Baltic Institutes for Private Finances, Swedbank, developed a study of food basket costs. Study includes defining a recommended food basket, which ensures a balanced diet for individuals, tailored to the consumption patterns of Baltic inhabitants.

1 Analysis of EU-27 household final consumption

expenditure, the EU Statistical Office Eurostat 2013

Study results reveal monthly food costs for a household of a four-member family, identify expense drivers in food basket and reveal impact of available food discounts on household expense. Study is a valid reference for households to compare their actual expenses for food against basket costs and identify areas for money savings without compromising nutritional value of their food intake. Study could also introduce new perspectives for more sustainable food consumption in households for example decreased food waste and savings thereof. Study contains reference to national household average income, revealing proportion of income supposedly allocated to food to ensure balanced nutrition of the family. To compare some aspects of cost of living in three Baltic countries, data comparison is available in the study.


Findings

The cost of an optimal food basket for a four-person family in Lithuania amounts to EUR 280, in Estonia EUR 304, and in Latvia EUR 319 per month.

Based on a wage gap evaluation, the lowest burden of food expenditures is in Estonia, where 2 adults, receiving an average wage, can allocate up to 22% of their income for an optimal food basket compiled for a four-person family. In Lithuania this part of expenditure for food is 29%, and in Latvia 32%.

Food in Latvia is more expensive than in Estonia and Lithuania. The optimum estimated food basket for a family per month in Latvia costs 14% more than in Lithuania, and 5 % more than in Estonia.

Products in the protein group, i.e. meat, fish, dry beans, nuts, etc. take the biggest proportion, with more than one-third of the food basket in each Baltic country. The remaining part of food basket costs (dairy, bread and cereals, vegetables, fruits, fats and other products) is distributed on a relatively even basis.

After comparing the food prices of Estonia, Latvia and Lithuania, the largest differences were found in dairy products, meanwhile the minimum differences were in the category of fruits. The highest price for an estimated food basket consisting of dairy products and fruits, as well as bread and cereals, vegetables and other products (coffee, tea, sugar, salt, etc.) would be paid in Latvia. The cost of recommended meat and fish products would be the highest for consumers in Estonia.

Although the highest cost of the estimated food basket is in Latvia, Latvians may also have the best opportunities to save, if shoppers take advantage of promotions and discounts in stores. If a family in Latvia purchases products on discount, they would save 14% of the money available for the estimated food basket. A Lithuanian family could save 8% of the money available for food, meanwhile average savings in Estonia would amount to 3% of the money available for the food basket.


Study methodology

Information on study In order to undertake a study of the Baltics’ food basket and to evaluate food prices in Estonia, Latvia and Lithuania, Baltic Institutes for Private Finances, Swedbank, developed research methodology that enables the comparison of indicators between the three countries. An estimated food basket was compiled in accordance with the methodology of the Estonian Society of Nutritional Sciences, which is recommended by nutritional experts and is consistent with health nutrition principles. Necessary amounts of food were recalculated based on energy needs according to the Swedish National Food Agency. In conclusion, an average monthly cost for a food basket was calculated, after research company AC Nielsen Baltics, had collected prices for food basket products in stores of Estonia, Latvia and Lithuania. Results disclosed that food prices in the Baltics are different. Food Basket The study was conducted using a recommended estimated food basket which was worked out based on the methodology of the Estonian Society of Nutritional Sciences, which belongs to International Union of Nutritional Sciences. The food basket consists of food items used in home cooking. Those food items ensure the generally daily needs of an adult for nutrients, vitamins and minerals without causing health problems, and correspond to the daily nutritional habits of people from Baltic countries. The diurnal energy value of the estimated food basket is 2,400 kcal. In accordance with this estimated food basket, an adult should consume meat – 4.5 kg, fish – 2.9 kg, vegetables – 25.1 kg, fruits – 7.3 kg, and etc. per month.

Products were grouped based on the product classification model which was developed in accordance with the recommendations for healthy eating of the United States Department of Agriculture. Based on this model, food is classified into six groups – fruits, vegetables, grains, proteins, dairy products and fats. Households and Calories Consumed by Household Members Household – one person living separately or a group of people who live in a common main dwelling and share joint financial and/or food resources. Family or marital connections between members of such household are optional. In terms of this study, a household consists of two adults and two children: grown up male and female with preschool boy and teenage girl. Different age groups and genders have different energy needs. In order to calculate the calorie intake of a household, the calorie intake of one person multiplied by the number of members in a household is insufficient, as, for example, a child or an adult woman will consume fewer calories than an adult man. For these reasons the recommended amount of calories for households was determined in accordance to the Swedish National Food Agency. Based on this, a man and woman between the ages of 31 and 60 should consume respectively 2,700 kcal and 2,150 kcal per day, a boy between the ages of 4 and 6 and a girl between the ages of 11 and 14 should consume respectively 1,700 kcal and 2,000 kcal per day. The energy need increases with more physical activity or regular exercise.


Data Collection Commissioned by Institute for Private Finances, Swedbank, AC Nielsen Baltics collected data on recommended food basket product regular prices from 14th till 20th of January, 2013. Shelf price collected in chain stores in every capital of the Baltic countries, where overall market share of each country exceeds 75%. Prices are therefore representative of the whole country. Regular shelf price collected in the

following chain stores: Vilnius – Maxima, Rimi, Iki, Cento, Aibė, Kubas; Ryga – Rimi, Supernetto, Maxima, Mego, Elvi, Iki; Tallinn – Rimi, Säästumarket, Selver, Maxima, Prisma, Maksimarket. After collecting the prices of the most popular products within the indicated group, the average price was calculated and the resulting amount used to calculate the study results.


Study results

Food basket value The study of Food Basket in Baltic countries shows that the cost of recommended estimated food basket for a family in Baltic countries, is between EUR 280 and 319 per month: the highest in Latvia, the lowest in Lithuania. The cost of recommended estimated food basket per family in Estonia is EUR 304. The tax environment has little impact on differences of food baskets’ cost in the three Baltic countries, since Estonia, Latvia and Lithuania apply a similar rate of value added tax (VAT), excluding the reduced rate for certain foodstuffs. However, the VAT rate in Estonia is 1% less than in Latvia and Lithuania; therefore the cost of an estimated food basket for an Estonian family approaches the relevant estimate in Latvia, unless this difference is eliminated. It should be noted that Latvia applies excess duty on coffee beans; however, this tax has a minor effect on the final cost of estimated food basket. Nutrition experts recommend that the monthly coffee consumption should be no more than 150 g, which constitutes less that EUR 2 per month.

The Impact of Average Wage The cost of the same food basket is highest in Latvia, both in absolute amount and after the assessment of average wage after taxes differences in Baltic countries. Assuming that both family adults earn an average wage, family in Latvia spends 32%, Lithuania 29%, Estonia 22%

Household income expenditure and average annual food and non-alcoholic beverages inflation (%)

Estonia Latvia Lithuania

Food basket cost per person, EUR 85.51 89.49 78.54

Food basket cost per family with children, EUR 304.41 318.60 279.59

Family average wage level after taxes, EUR (2012Q3) 1362 982 976

Percentage of household income spent on estimated food basket, if family income is two average wages

22% 32% 29%

Average annual food product and non-alcoholic drinks inflation (2012)

3.9 2.3 3

Source: Calculations of Institute for Private Finances, Swedbank, based on the study of food baskets in Baltic countries and data of national departments of statistics and the EU Statistical Office Eurostat

Cost of estimated food basket in Baltic countries (EUR)

Source: Study of Food Basket in Baltic countries performed by Institute for Private Finances, Swedbank


of total average wages on food.

Cost structure of food basket The biggest proportion of expenditures (on average 37%) takes the protein group, i.e. meat, fish, dry beans, nuts, etc. The major drivers in this group of products are pork meat, fresh fish and chicken. The remaining part of food basket cost is distributed on a relatively even basis. On average, cereals and dairy products each constitute 15%, vegetables and fruits each 10-13%. The cost structure of food baskets in Latvia and Lithuania is more similar than in comparison with Estonia. The most distinguished product group is pork meat and fish, the cost of which of the estimated food basket in Estonia is higher than other Baltic countries by 6%. This difference is mainly caused by the price of pork in Estonia, which is 29 % higher than in Lithuania and almost 10 % higher than in Latvia. However, Estonians should then allocate a lower amount of the cost of estimated food basket for vegetables, dairy products, bread and cereals.

If family consumes the amount of food provided in estimated food basket, they will spend an

average of EUR 110 for proteins, EUR 49 for bread and cereals, mainly black and white bread, and EUR 44 for dairy products per month. Expenditures for vegetables (mainly potatoes, cabbage and carrots) and fruits (mainly apples and banana) would amount to EUR 69 per month.

Cost structure of food basket, broken down by product group in the Baltic countries (%)

Source: The study of food basket in Baltic countries performed by Institute for Private Finances, Swedbank

Cost structure of food basket for a family, broken down by product group in Baltic countries (EUR per month)


Total: € 304.41

Total: € 318.60

Total: € 279.59


Differences in food prices After comparing food prices between Estonia, Latvia and Lithuania, the largest differences were found in dairy products. For example, 300−400 g pack of sour cream in Estonia costs EUR 1.87, in Lithuania EUR 2.26, and Latvia EUR 2.80; 300−400 g pack of yogurt respectively EUR 2.08, 1.76 and 2.38. Meanwhile minimum differences occur in the category of fruits. One kilo of the cheapest apples in Baltic countries ranges from EUR 0.53 to 0.68, one kilo of bananas – from EUR 1.30 to 1.50. The highest cost for one kilo of the most popular black bread is in Latvia, white bread – in Lithuania, meanwhile, the highest cost for one kilo of pork meat is in Estonia, lowest – in Lithuania (difference – EUR 1.12 /kg). The cheapest potatoes are in Estonia; however one kilo of cottage cheese is approximately a quarter more than expensive than cottage cheese in Lithuania. Differences in prices (even in neighbouring countries) result from a group of factors, which should be analysed separately. For example, the part of domestic demand that is met with imported production (import partners, their prices, tax system requirements) and domestic production (cost of domestic producers). Also important is the export of manufactured products, since successful trading with higher living standard countries facilitates opportunities for domestic producers to maintain a higher price level. The final price of products is influenced by the economic environment of a country (purchasing power of its residents, tax system changes).

Prices of the most popular products in Baltic countries (EUR/kg)


Black bread 1.54 1.62 1.44

White bread 1.33 1.6 1.79

Milk 0.54 0.68 0.57

Yogurt 2.08 2.38 1.76

Sour cream 1.87 2.8 2.26

Cottage cheese

3.88 3.37 2.91

Potatoes 0.24 0.32 0.26

Cabbage 0.27 0.27 0.3

Carrots 0.26 0.38 0.39

Apples 0.53 0.68 0.64

Bananas 1.34 1.5 1.3

Oranges 1.49 1.27 1.28

Eggs 1.26 1.52 1.31

Pork 4.93 4.5 3.81

Chicken 2.6 2.58 2.5

Butter 6.44 6.67 5.94

Sugar 1.02 1.17 1.06



Effect of food promotions If usual food prices are known, special offers and promotions may be a great opportunity to reduce personal and household expenditures. In accordance with the data of analysis, which was commissioned by Institute for Private Finances, Latvians can save the biggest amount if they purchase at discount: families with two children, who purchase products indicated in the recommended estimated food basket, would save almost EUR 44 or 14% of all funds intended for basket purchase. Discounts offered by stores to a family living in Lithuania would help save EUR 23 per month, i.e. 8% of the funds intended for basket purchase, in Estonia respectively EUR 10 or 3%.

Thus, if a family buy discounted food, the most expensive estimated food basket would be in Estonia, but not in Latvia. Here it will amount to EUR 295, and in Latvia it will cost 7% less, i.e. almost EUR 275 per month. After considering the effect of food promotions, the cost of the basket is still the lowest in Lithuania. Here its cost will amount to slightly more than EUR 256 per month.

Family food basket cost difference, assessing the effect of food promotions (EUR per month)


-3% -14%

-8%


Relevant information Economic Indicators of Baltic Countries Although foodstuff and non-alcoholic beverages in Baltic countries take the biggest proportion of expenditures, a considerable amount of products, including money, ends up in the garbage. In accordance with the European Commission study, 27 European Union (EU) members annually generate 89 million tons of food waste, or 179 kg per capita. This is expected to rise to about 126 million by 2020, unless additional prevention policy is adopted or activities are taken. Hence it was announced that 2014 will be the Year Against Food Waste.

Annual average inflation and food inflation in each Baltic country and the EU average in December, 2012 (%)

Source: National departments of statistics

VAT rates for food in each Baltic country (%)


VAT rate 20 21 21

Source: EU Statistical Office Eurostat

Average monthly wage level before and after taxes in each Baltic country in 2012Q3 (EUR)

Source: National departments of statistics

Food waste in Baltic countries

EU27 Estonia Latvia Lithuania

Food waste kg per capita 179 260 94 171

Food waste arising by households, % 42% 23% 37% 19%

Food waste arising by households, kg/year 76 60 34 33

Food waste in country, tonnes/year 89 277 472 355 000 216 000 581 000

Source: Data of preparatory study on food waste across EU 27, which was published in 2010


Household Budget Structure in Baltic Countries Based on Eurostat, the EU Statistical Office, data expenditures on food and non-alcoholic beverages form the largest part of household expenditures in all three Baltic countries.

The largest proportion of expenditures (almost 26%) on food and non-alcoholic beverages is in Lithuania, and the lowest (almost 21%) in Estonia. Latvia’s expenditures on food and non-alcoholic beverages amount to almost 24% of total expenditures. Meanwhile, relevant average expenditures in the EU are below 16%.

Household expenditure distribution, Baltic countries 2012 (%)*

EU27 Estonia Latvia Lithuania

Food and non-alcoholic beverages 15.3 20.9 24 25.9

Alcoholic beverages and tobacco 4.3 8.8 7.0 8.6

Clothing and footwear 6.5 6.4 5.3 5.9

Housing, water, electricity, gas and other fuels 16.1 15.1 15.7 13.2

Furnishings, household equipment and routine maintenance of the house

6.4 4.4 4.1 5.6

Health 4.2 3.3 5.5 6.1

Transport 15.2 13.8 14.8 13.2

Communications 3.2 4.2 3.9 3.5

Recreation and culture 9.8 8.0 7.0 5.3

Education 1.2 1.6 1.4 1.7

Restaurants and hotels 9.0 8.9 6.4 6.4

Miscellaneous goods and services 8.8 4.6 5.0 4.6

Source: Harmonised consumer price index, Items weights, Eurostat * Savings and expenditures for financial commitments were excluded


Further information

Erika Pahne

Head of Baltic Institutes for Private Finances

Tel.: +46 70 2271656

E-mail: [email protected]

Odeta Bložienė

Head of Institute for Private Finances, Swedbank,

in Lithuania

Tel.: +370 687 90767

E-mail: [email protected] Adriāna Kauliņa


in Latvia

Tel.: +371 674 44489


Anne Kalberg-Sägi


in Estonia

Tel.: +372 50 52747


mailto:[email protected]




Economy & Finance

Swedbank: Food basket study in baltic countries