	June 2009

	IN THE STORES Dm drogerie markt, the drug store retailer, is planning to offer prescription-free brands in its German stores
	MARKET RESEARCH Retailer brands gain in 14 countries, PLMA Yearbook reports
	PLMA NEWS Registration opens for Executive Education, 27-29 October, in Amsterdam
	EVENTS

Suppliers need recession strategies, analyst tells ‘World of Private Label’ seminar

The recession offers a big opportunity for private label growth, but suppliers need to adopt the right mix of marketing and financial strategies to ensure long-term success, a leading industry consultant told a seminar session at PLMA’s “World of Private Label” Trade Show held at Amsterdam’s RAI Centre last month.

   Erik Nanninga, a partner at Deloitte, said there is a good chance that the growing “value focus” by consumers may endure. “Some of the shopper behavior changes with respect to increased consumer purchase of private label may be permanent,” he told the group.
   To take advantage of this opportunity, he recommended new product development focused on innovation. “The days when manufacturer brands dominated product innovation are over,” he believes. At the same time, suppliers need to maintain their financial position by strengthening their balance sheets, improving sales and focusing on “mid-term” competitive success.
   This year’s PLMA “World of Private Label” Trade Show featured more than 3,200 exhibit stands offered by more than 1,700 participating companies. Some 60 countries were represented by exhibiting companies and there also were 39 national or regional exhibitor pavilions, including new entries from Ireland, China, South Korea, Turkey, the Czech Republic and Latvia.

PLMA announces Private Label Pavilion in China on 22-24 Sept. 2009

PLMA is returning to China this year, organizing its second trade show pavilion in conjunction with the Shanghai International Sourcing Fair. PLMA’s Private Label Pavilion will be held 22-24 September at the Shanghai Mart in Shanghai. The Pavilion will be divided into 32 exhibit stands, which will be assigned on a first-come, first-served basis.
The exhibition is designed to help PLMA member manufacturers meet the retailers of China and build business opportunities. PLMA will provide exhibitors with a preliminary list of retail and wholesale buyers about 30 days prior to the show based on registrations of the International Souring Fair. For more information, call PLMA at (31) 20 5753032 or email: info@plma.nl

Retailer brands will gain in France, analysts say

   Retail analysts see more growth ahead for private label in France this year as hypermarkets and supermarkets compete against discounters to win over price-sensitive shoppers. In January and February, private label sales in France increased 5% in volume compared with an average 3% during all of 2008, according to IRI data cited by trade magazine LSA.
   The two biggest retailers in the country, Carrefour and Casino, have announced plans to add more private label products this year. “Both retailers are now boosting their own brand ranges, with the aim of raising profits and winning back increasingly cost-conscious French consumers”, writes Dow Jones.
   “The build-out and better tiering of own label is hoped to help shoppers be able to shop more cheaply while Carrefour will still make money. We can see how more consistency and backing of the Carrefour brand can rejuvenate the top line” noted a Bank of America Merrill Lynch analyst.
   Higher profits are another factor in private label’s gains. Casino’s own brands deliver a gross margin about 700 basis points higher than that of manufacturer brands, Societe Generale said in a research report. Dow Jones adds, “At Casino, where private label already represent about 50% of sales volume, the group’s high penetration of such brands helped the group defy the economic downturn and post a 2.8% rise in earnings despite hypermarkets’ difficult economic environment”.

UK retailers step up private label promotions

   UK retailers are increasing their promotion of private label to meet strong competition from the A-brands. The Grocer magazine reports “After holding relatively steady for several months, the number of own-label products on promotion is once again soaring”.
   “Supermarkets are once again moving their own label lines to aisle ends and other high-profile featured space. The number of own-label promotions has risen 12.9% since last month, and is 28.2% up on this time last year, increasing own-label’s share of total promotions from 16.9% a year ago to 19.4% now”.
   The overall level of promotional activity remains high as supermarkets continue to expand the amount of promotional space available. The total number of promotions this month was 6,472, significantly up on the 5,784 this time last year. The typical discount has fallen slightly - from 33.5% to 32.7% - as more lines are on promotion”.

Tesco tests discount format

Tesco is testing a discount store format in the UK to challenge Aldi, Lidl and other discounters who have been gaining market share. The new store is about 1,400 square metres, located in Scotland, and offers mostly private label and discount brands.
The test of a new format comes after Tesco launched a discount brand. Tesco Chief Executive Terry Leahy says the range, which was introduced in September, is doing “extremely well”.

New EU rules proposed for novel foods

European Union applications for novel foods will be processed more quickly and the definition of what constitutes a novel food broadened, if a proposed regulation is accepted by the European Parliament. Europe’s Novel Foods rule requires any food or ingredient not commonly consumed in the EU prior to May 1997 to undergo safety assessment before it can be sold.
The EP agreed on a simplified authorisation or notification procedure for foods and ingredients from those countries with a safe history of use which could cut processing times from three years or more to around one year. Animal cloning had been left out of the proposed rule change.

Retailer brands increases profits at Delhaize

Delhaize reports that increased private label sales during the first quarter contributed to gross margin gains. The supermarket retail said, “Gross margin increased to 26.1% of revenues (25.3% in 2008) mainly as a result of the continued increase in private brand revenues, better inventory results and lower transportation costs due to the decrease of fuel prices”.
The biggest percentage sales gains during the quarter were posted in the Romania/Indonesia group (+36%), following by Alfa-Beta in Greece (+11%), Belgium (+2%) and the US (+2%).

Metro aims to double private label penetration

Metro plans to double private label penetration, increasing it from 10% to 20%. The shift is part of a larger strategy to improve performance. Metro is cutting back SKUs and lowering prices, especially for basic items.
Metro is also testing a few ‘concept’ stores. A spokesman said the stores are targeting more traditional wholesale customers like hotels, restaurants and caterers by broadening the range of food products, offering more specialist nonfood items like uniforms and work clothes, and also by providing useful small-business services. If the stores are successful, the concept may be rolled out across Europe.

Albert Heijn has new brand for organic, ethical products

   Albert Heijn in the Netherlands has launched the Puur en Eerlijk (Pure and Honest) brand for its organic, Fairtrade and social responsibility products.
   The retailer will double the number of sustainable and fair sourced products by end of 2011 in the Netherlands. Albert Heijn plans to bring 500 ethical products under this brand in five categories: organic, Fairtrade, sustainable fishing, meat raised through ethical breeding, and environmentally friendly. Existing brands and products, such as AH Biologisch, will disappear.
   Albert Heijn also plans to expand its nonfoods assortments, according to John Rishton, CEO of Ahold, the retailer’s parent company.

Private label accounts for 52% of sales at Mercadona

In Spain, Mercadona’s sales from its private label assortment have increased significantly from 2008, and now stand at 52% of sales, according to TNS data. The report covered the period from February to April and excludes fresh products. TNS reports that Mercadona has increased its shopper base by 6%, which represents 12 million more shopping trips. By category, the sale of grocery products has remained stable except milk and ready meals, which grew 1%. The average shopping basket at Mercadona decreased from 33 euros down to 29 euros.
Mercadona recently launched a professional hair care category under the Stylius brand. Developed with hairdresser Tono Sanmartín, the range includes products such as hair masques, thermal protection sprays, strong fix sprays, curl defining creams, and conditioners.

Carrefour brings Dia discount banner to France

Carrefour may convert its Ed discount stores in France to the Dia banner, which the retailer uses in Spain. A few Ed stores have been converted and all the stores may go to the Dia brand later this year. The conversion of Ed to Dia would be in line with Carrefour’s new strategy of consolidating its brand structure.
The French retailer has also signed a preliminary agreement to buy 75% of Russian grocer Sedmoi Kontinent.

Asda redesigns pharmacy and diagnostic SKUs

Asda in the UK has redesigned its range of private label pharmacy and related products. The range includes first aid, cough and cold, indigestion, pain relief, allergy relief and diagnostics items. The core design consists of two wide bands crossing, with an image of a white cross overlapping to signal the health care sector. The product name appears within a white band. Colour coded packaging is used to differentiate between different categories.

Rewe introduces city centre format

Rewe Group is introducing a city centre store format that will be used for 170 Rewe supermarkets in Germany. The stores will have a new Rewe City logo and sales areas of 500-1,000 sqm. About 8,000 products will be offered, with an emphasis on perishables. Rewe Group also plans to open more than 120 Rewe supermarkets, as well as 160 Penny discount stores this year in Germany.

IN THE STORES

Dm drogerie markt, the drug store retailer, is planning to offer prescription-free brands in its German stores. These products had been offered exclusively by pharmacies, according to Lebensmittel Zeitung. The new products are scheduled to be introduced in September.

Swiss Coop has launched the Dermasens brand, consisting of dermatologically tested skin cleansing and care products, targeted at people with sensitive skin. The line has 12 SKUs, all of which have the seal of “Successfully tested at the Dermatology Clinic University Hospital of Zurich”.

Ahold will rebrand all of its Hypernova hypermarkets in the Czech Republic to the Albert banner by the end of June.

Lidl reports that the number of visits by shoppers to its stores in Spain increased by more than 11% during the first quarter of this year compared to the same period last year.

Rewe is to open all new Russian stores under the Biop banner rather than the Billa brand.

Auchan has launched an ad campaign with the theme “Live better. Live cheaper”. The campaign is featured on TV, radio and magazines.

Rossmann, the German drug store retailer, plans to open another 100 stores in Germany and a total of 83 stores in Poland, Hungary, and Czech Republic.

Wal-Mart is testing convenience stores in China, opening three 300 square meter stores in Shenzhen. The retailer now has around 230 stores in the country.

Co-op in the UK has launched a digital television channel that focuses on the co-operative movement and its ethical projects.

MARKET RESEARCH

Retailer brands gain in 14 countries, PLMA Yearbook reports

   PLMA’s 2009 Private Label Yearbook reports that retailer brands made impressive gains across Europe last year as the emerging recession led shoppers to seek more value in their purchases, and retailers responded by expanding their own brand programmes. Market share for retailer brands advanced in 14 of the 20 countries tracked by Nielsen for the Yearbook.
   After years of consistent market share increases, private label now holds its strongest competitive position ever. Retailer brands have achieved at least a 30% market share in 10 countries, the most since the first PLMA Yearbook was published more than a decade ago.
   In two countries, the United Kingdom and Switzerland, private label accounts for one of every two products sold. Market share at the 40% level has been achieved in three countries: Germany, Belgium and Austria. Spain is very close to the 40% mark and France is heading in that direction. A resurgence in the Netherlands indicates that private label there is moving toward 30% market share.
   In some store departments, private label has reached a dominant position. Retailer brands have climbed above the 70% market share mark in the meat-fish-poultry and delicatessen departments in the UK, the paper department in Germany, the frozen department in Spain, and the frozen and fresh departments in Switzerland.

PLMA NEWS

Registration opens for Executive Education, 27-29 October, in Amsterdam

Registration is open for PLMA’s 2009 Executive Education Programme, to be held 27-29 October in Nyenrode Business Universiteit, near Amsterdam. Developed in conjunction with Nyenrode, the program is devoted exclusively to private label. The faculty is drawn from the university as well as industry. Classes are concentrated into a three day schedule of instruction that includes workshops and case studies. The curriculum emphasises basic knowledge from private label history to fundamentals of packaging and promotion.
Enrollment in PLMA’s Executive Education Programme is open to members and their guests. For more information, click here.

EVENTS

27-29 October	Executive Education Programme Amsterdam

15-17 November	US Private Label Trade Show Chicago

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