EXPLAINED: Why food in Norway is so expensive

One of the first things people will say to you when asking about life in Norway is "I've heard it's really expensive", often  before asking how much a beer costs. 

Prices for food and non-alcoholic beverages in Norway are the second highest in Europe, according to Eurostat. 

In 2018 the cost of food and non-alcoholic drinks was 63 percent more expensive in Norway than the EU average, according to a Statistics Norway report. The data agency noted that food prices were 40 percent higher than in Sweden and 25 percent pricier compared to Denmark. 

There isn't one single reason why food in Norway is so expensive. Instead, several factors contribute to the dizzying prices. 

Competition laws and subsidised farms

Dairy and meat products from abroad face high import tolls to protect Norwegian produce and ensure that Norwegian products remain competitive domestically and that farms in the country remain profitable. 

However, the country only produces around 50 percent of the food it needs to be self-sufficient, not including fish, meaning tolls are paid on a lot of the food sold in supermarkets. These tolls are then passed onto to customers in the form of higher prices.

Also, farms in Norway are relatively small compared to other parts of the world, and there are strict laws on the welfare of animals. This makes farming less profitable, so farmers sell their produce for much higher prices than other countries.

Every year the government pumps several billion kroner into farming subsidies to ensure the industry remains viable. Norwegian dairy and meat might not seem cheap in the slightest, but these subsidies help to stop prices being even higher still. 

The prices of dairy in Norway are already the highest out of the 37 European countries that Eurostat uses to compare grocery prices, so it's hard to imagine how high they could go without the government supporting farms. 

READ MORE: Why dairy products in Norway could become more expensive and less varied

A handful of brands dominate the market

Another factor driving high prices in the Scandinavian country is the lack of competition in the market. 

Many living in Norway will have noticed, and even bemoaned, that there are fewer brands and products on offer than in other countries. 

For example, Tine dominates the dairy product market, Notura and Gilde are among the only major players in the meat industry, and Orkla makes up most of the processed food market. The lack of competition among various brands means there's no real incentive for the few dominant brands there are to compete on price. 

Furthermore, there aren't many choices when it comes to major supermarket chains. Norgesgruppen, Rema and Coop are the main competitors, and with so little competition, the supermarkets are not drawn into price slashing wars to get customers through their doors.  

High costs for producers and supermarkets 

Norway is a costly country for all, not just for consumers but also for supermarkets and suppliers. For example, Norway is known just as much for its famously high wages as it is for being expensive. This means supermarkets, food producers, and farms have to pay higher salaries to staff than elsewhere. 

This is also forms part of the explanation as to why eating out in Norway is expensive. 

Taxes

The entirety of Norway's food costs can't all be pinned on suppliers and supermarkets. Instead, some of the costs that households in Norway pay for their shopping are directly or indirectly passed on from the government in the form of various taxes. 

The government taxes many things such as sugar, alcohol and tobacco very highly with these taxes driving up the price of everyday products. More indirect costs passed on include toll roads and high fuel taxes which mean high distribution overheads for producers and supermarkets. 

How expensive is food really?          

According to Statistics Norway, people living in Norway spend around 51 percent of their total income on the cost of living. 

READ MORE: What do workers in Norway spend their salaries on?

However, only 11 percent of a person's total income a year is spent on food and non-alcoholic beverages. Compared to most of the rest of Europe, this is lower. The average proportion of wages spent on food across 37 countries around the continent was 18 percent.

Only six of the countries measured had a lower share of income spent on food and non-alcoholic beverages than Norway. 

Statistics Norway said the reason the percentage of wages spent on food was so low was the high salaries and a large amount of disposable income.

"When inhabitants of a country become wealthier, the share of the household budget spent on food and other necessities will normally decrease as consumption of other goods and services increases," Statistics Norway wrote in its report on food prices.