Sweden is a small but affluent market that punches above its weight in terms of per capita grocery spend and consumer willingness to pay premium prices for quality, organic and sustainably-produced food. With grocery prices approximately 8% above UK levels, the margin arithmetic can work well for the right products.

However, the market presents significant structural challenges. Three retailers control approximately 90% of grocery sales, with ICA alone commanding around 50%. Post-Brexit, the UK sits outside the EU, which means Swedish imports of UK food products now face customs procedures, border controls and additional documentation that did not exist before 2021. While the EU-UK Trade and Cooperation Agreement (TCA) means zero tariffs on qualifying goods, the non-tariff barriers are real and add cost and complexity.

Sweden also has unique characteristics that catch exporters off guard: labels must be in Swedish, organic certification expectations are exceptionally high, and the alcohol market operates through a state monopoly (Systembolaget) that has its own entirely separate listing process.

The Swedish food retail market generated sales of approximately SEK 301 billion (c. £22 billion) in 2024, growing 4.1% year-on-year. This growth was driven primarily by positive volume and mix effects as food price inflation normalised to 1.4% after several years of sharp increases. The market serves a population of 10.5 million, making it roughly one-sixth the size of the UK in consumer terms.

Sweden is the EU's seventh-largest economy by GDP per capita. Consumers are among the most quality-conscious and sustainability-aware in Europe. Organic food penetration is significantly higher than the European average, with the KRAV organic label carrying substantial consumer recognition and trust. "Free from" products, plant-based alternatives, and functional foods all perform well.

The discount segment has been the fastest-growing part of the market, with average annual growth of around 11% between 2018 and 2023, compared to roughly 5% for the market overall. This is driven by price-conscious consumer behaviour following the cost-of-living squeeze, with Lidl and Axfood's Willys chain the primary beneficiaries. E-commerce accounts for approximately 4.1% of grocery sales, growing at 4.9% in 2024 after a post-pandemic pullback.

Sweden's grocery retail market is one of the most concentrated in Europe. Three groups dominate, and breaking in without a relationship with at least one of them is extremely difficult.

ICA operates as a retailer-owned cooperative, meaning individual store owners have some autonomy over ranging decisions, particularly in the larger ICA Maxi and ICA Kvantum formats. This can create opportunities for imported brands to gain a foothold through individual stores before building a case for national listing. ICA's penetration rate is 94% of Swedish households.

Axfood has been the market's big winner in recent years, growing from 16.5% to approximately 25% market share over the past decade. Their acquisition of City Gross in 2024 gave them a hypermarket presence. Their discount chain Willys is the fastest-growing format in Sweden.

Coop is in serious difficulty. It reported an operating loss of SEK 2.7 billion in 2024 and has lost market share consistently over the past decade, falling from 22% in 2014 to 14.2%. Industry commentators have warned about the possibility of insolvency without major restructuring. This instability may create short-term opportunities for suppliers but also carries risk.

The Swedish food distribution landscape is shaped by the dominance of the three major retail groups, each of which has integrated wholesale and importing operations. ICA, Axfood and Coop all import some of their high-volume lines directly, particularly commodities and established international brands. This means the role of independent distributors is more limited than in markets like the UK or Australia.

For a UK food brand entering Sweden, there are essentially three routes. The first is through an independent Swedish importer/distributor who has established relationships with one or more of the big three retailers. Companies such as Di Luca & Di Luca (Mediterranean foods), Gourmet Food (restaurant and retail), and Lazzat Foods (ethnic/Asian foods) operate in this space. The second route is through the retailers' own import operations, though this typically requires an existing brand presence or significant volume commitments. The third is via foodservice wholesalers such as Menigo or Axfood Snabbgross, which can provide a lower-barrier entry point through the restaurant and hotel channel.

The major distribution centres are concentrated in Stockholm, Gothenburg and Malmo. Sweden's geography means logistics costs increase significantly for distribution to northern regions, which is worth factoring into margin calculations.

As an EU member state, Sweden follows EU food safety legislation, including the General Food Law and harmonised standards on hygiene, additives, labelling and contaminants. However, there are important Sweden-specific requirements and, crucially, the post-Brexit reality that the UK is now a "third country" for regulatory purposes.

Labelling is the first major hurdle. All food labels must be in Swedish, including ingredient lists, allergen declarations and nutritional information. Health and nutrition claims are tightly regulated and require evidence-based approval. Country-of-origin labelling is mandatory for meat, fish and fresh produce. For UK exporters, this means a full label redesign, not just a translation exercise.

The Swedish Food Agency (Livsmedelsverket) oversees commercial food imports. Products of animal origin from outside the EU must be checked at the border and require health certificates. Sweden and Finland have special guarantees concerning salmonella that go beyond standard EU requirements, meaning bovine, porcine and poultry meat products face additional testing.

Since Brexit, UK food exports to Sweden require customs declarations, and products must meet EU rules of origin to qualify for zero tariffs under the TCA. Statements of origin must accompany shipments. While the paperwork is manageable, it adds cost, time and a layer of complexity that didn't exist when the UK was in the single market.

VAT on food in Sweden is 12%, lower than the standard 25% rate but higher than the UK's zero-rate on most food items. Alcoholic beverages and tobacco attract the full 25% rate.

Sweden's grocery price index sits at approximately 108 (UK = 100), meaning food prices are around 8% higher than in the UK. This premium, combined with high consumer willingness to pay for quality and provenance, creates a more favourable margin environment than many European markets.

The landed cost equation for UK exporters to Sweden is complicated by the post-Brexit customs procedures but is more straightforward than for non-EU markets in terms of tariffs. Under the TCA, qualifying goods attract zero duty. The key costs to factor in are freight (relatively low for ambient products shipped from the UK to Gothenburg or Stockholm), customs brokerage fees, Swedish VAT at 12%, distributor margins (typically 25-35%), and retailer margins (typically 30-40%).

Sweden uses the Swedish krona (SEK), not the euro. The exchange rate introduces currency risk, though the SEK has been relatively stable against GBP in recent years. Pricing to Swedish retailers is typically done in SEK, which means the UK exporter bears the currency risk unless the distributor agreement specifies otherwise.

Private label penetration has been increasing across all three major retailers, with ICA's private label at approximately 38% of sales and Coop's at over 42%. This is a challenge for imported branded products, particularly in price-sensitive categories.

Swedish business culture is consensus-driven, relationship-oriented and moves at a measured pace. Decision-making tends to involve multiple stakeholders, and buyers expect thorough, well-prepared presentations with clear data to support claims. Aggressive sales tactics do not work; Swedes value trust, transparency and long-term partnerships over transactional relationships.

Sustainability is not a marketing angle in Sweden; it is a baseline expectation. Swedish consumers rank among the most environmentally conscious in Europe, and retailers reflect this. Packaging sustainability, carbon footprint transparency, ethical sourcing and animal welfare credentials all influence buying decisions and listing conversations. Products without credible sustainability credentials will face resistance.

British brands carry moderate recognition in Sweden. There is no particular cultural affinity or antipathy; the UK is viewed as a reliable trading partner with a reputation for quality food innovation. Specific UK categories with strong appeal include tea and biscuits (heritage positioning), craft spirits and beer, premium confectionery, and speciality condiments and sauces.

English proficiency in Sweden is among the highest in the world, which removes the language barrier in business relationships. However, this does not extend to consumer-facing materials; labels, marketing and point-of-sale must be in Swedish.

Key opportunities: High per-capita spend and willingness to pay premium prices. Strong and growing demand for organic, plant-based and functional food products. Gateway to the wider Nordic and Baltic markets through retailer purchasing networks. Foodservice channel provides a lower-barrier entry point. E-commerce growing steadily. Coop's difficulties may create short-term listing opportunities as they seek to refresh their offer. ICA's cooperative structure allows for store-level ranging decisions, enabling targeted market testing.

Key risks: Extreme retail concentration, with ICA alone controlling half the market, creates significant buyer power. Post-Brexit customs and border requirements add cost and complexity versus EU-based competitors. Small population limits volume potential; this is a premium-value play, not a volume play. Growing private label penetration squeezes shelf space for branded imports. Swedish-language labelling requirement means dedicated packaging investment. Currency risk with the SEK. Coop's financial instability creates counterparty risk. Discount segment growth may signal a broader consumer shift toward value that disadvantages imported premium products.