	MARCH 2008

	IN THE STORES Casino in France reports that double-digit sales gains for private label contributed to a positive increase in food sales
	MARKET RESEARCH Retailer brands have big opportunity in pet food
	PLMA NEWS Special Conference on Developing Markets to be held 25-26 May in Amsterdam
	EVENTS

Private label’s growth: How will it change retailer-manufacturer relationships?

Private label’s growing market share across Europe is raising new questions about the future shape of retailer-manufacturer relationships. These questions were some of the industry issues examined in presentations at PLMA’s Annual Roundtable Conference, held 27-28 February in Brussels.

   For larger suppliers, there may be shift to more “dual-track” companies that supply both private label and manufacturer brands. Antonella Mei-Pochtler, Boston Consulting Group, predicted there will be a significant increase in the number of “dual-track” manufacturers. She said this is occurring because A-brand suppliers “can no longer ignore” the large and growing business of retailer brands.
   But this trend doesn’t mean that smaller suppliers will be shut out of the market. In fact, one retail buyer at the conference foresees the growth of larger, “private label only” manufacturers. “In the long run, I want to do business with a supplier who is dedicated only to private label”, said Arjan Both, AMS Sourcing. As the retailer brand business becomes bigger and more complex, dedicated suppliers who truly understand the special needs of private label will become more important, he believes.
   Whether large or small, private label suppliers must focus on both innovation and cost control, Karen Bevan from IGD, an international research organisation, told the conference. “Private label penetration will continue to grow”, she said, while “adding value to commoditised categories will remain critical.”

Retailer brands lead organic food growth in Germany

   Private label is benefiting from the surge in organic food sales in Germany, according to new Nielsen data. It shows that German consumers have doubled the number of organic food items they have purchased in the past two years, and retailer brands have gained a larger share of the organic market, thanks to strong sales at Aldi and other hard discounters.
   Last year turnover of organic products was up over 40% and doubled compared to 2005. The impact of Aldi on organic sales is demonstrated in the dairy department. Aldi put products in its assortment last year and industry-wide sales increased by nearly 50%. Almost one quarter of the sales increase can be attributed to Aldi, Nielsen said.
   Supermarkets are also expanding and promoting their organic ranges. Rewe is aggressively advertising its completely redesigned Rewe Bio products. Rewe Bio replaces the twenty year old Füllhorn brand.
   Consumer interest in organics is continuing: 37% of the households say they use organically grown ingredients and fresh herbs as often as possible when cooking. Elderly households without children and single seniors are especially interested in organic products and ingredients, Nielsen reported.

Intermarché aims for higher private label penetration

Intermarché is looking for a major increase in private label penetration this year. Philippe Boutron, the President of ITM Alimentaire France said, “At Intermarché, private label currently accounts for around 50% of sales volume and 36% of our turnover. Our objective is to make our brands perform better with a marketing strategy which involves substituting them for as many national brands as possible as well as reinforcing our brand”.
This year the company will develop more products under the Sélection des Mousquetaires brand. The additions will include a range of fair trade products stamped with the Max Havelaar seal of approval. The range includes 17 products such as tea, sugar, coffee, fruit juice and rice. The retailer will enlarge its organic range and extend its eco-friendly range to include 60 products. The company will also improve its nutritional labelling for its private label via the Nutri Pass system. About 600 products will have the Nutri-pass labelling system by 2009.

EC proposes new cosmetics rules

   The European Commission has proposed substantial changes to current cosmetics legislation that aim to improve safety procedures and simplify current requirements. The EC wants to increase manufacturer responsibility and tighten up procedures in order to ensure product safety. Other objectives are the removal of uncertainties and inconsistencies caused by the patchwork of amendments and the avoidance of national differences that do not contribute to product safety.
   Existing cosmetics legislation requires cosmetic companies to assess the safety of new products before launching them. However, no specific requirements were laid out for the safety assessment leading to “a relatively high degree of non-compliance”, according to the impact assessment report produced after the consultation period. Under the proposals minimum requirements for product safety assessment have been established.

Food Safety Authority evaluates flavourings

The European Food Safety Authority is expecting to complete its evaluation of the safety of 2,800 flavouring substances by April but is seeking for more information from the industry. The European risk assessor was given the task of re-evaluating additives approved for use in the EU by the Commission, since in some cases much time had elapsed — and some new safety information had become available — since they were first cleared for use. European member states identified 2,800 flavourings permitted for use on or in foodstuffs, and these have been divided into 48 groups by their chemical make-up.

UK retailers add beverages

   Two of the largest UK retailers, Tesco and Marks & Spencer are expanding their private label offerings in ales, wines and ciders.
   Tesco has introduced three ales and four ciders under its Finest brand. Ian Targett, Tesco buying manager for ale and cider, said: “We have seen a growing interest from our customers in more sophisticated styles of ales and ciders”.
   Marks & Spencer is launching a range of lower-alcohol wines. Three new wines — a red, a white and a rosé — are made using traditional winemaking techniques but have a naturally lower alcohol content of 9.5%.

Système U has new packaging for organic range

In France, Système U has repackaged its organic private label range of 75 products so that the new logo, U Bio, has more visibility. Products given the Max Havelaar stamp have adopted the name U Bio Fair Trade. The range includes five dry grocery products: two ground coffee varieties from South America, two varieties of cane sugar and coffee powder.

Lidl expands in France, Switzerland

Lidl is increasing its expansion programme. In France the hard discounter has secured a site for a regional distribution centre in the south, located in Béziers, Méditerranée. The warehouse will cover 35,000 square metres and serve around 60 Lidl outlets in the region. Published reports also say Lidl is preparing to open its first outlets in Switzerland this autumn. Industry experts say that around 50 construction projects are currently underway for outlets and distribution centres.

Kesko introduces ready meals

Kesko in Finland has introduced the new (Pick and Cook) meal range under its Pirkka brand. The retailer says this is the most significant launch in the Pirkka product range in the last ten years. The meal range is available at 89 K-food stores in the Helsinki area. The Pirkka Valitse ja valmista! meal range consists of four parts that can be chosen freely –the main ingredient, main garnish, sauce and vegetable garnish.
Kesko is also now offering dairy products as part of its Pirkka private label range.

India retailer aims for 60% private label

In India, Pantaloon Retail is planning to expand the private label products offered at its KB's Fair Price stores. KB’s Fair Price Head Saurabh Chadha said, “Our vision is to make our own brands more prominent at our stores. Going forward, 60% of the brands will be our own”’ The company is focusing on home brands, which include Tasty Treat, Fresh and Pure, and Koryo. Pantaloon operates 26 KB's Fair Price stores in Delhi and plans to set up another three in Mumbai.

IN THE STORES

Casino in France reports that double-digit sales gains for private label contributed to a positive increase in food sales.

Kaufland in Germany is offering a healthy eating range under its umbrella brand, named K-Classic WellYou. Products sold under that label contain less fat, less colourings, as well as no sweeteners, flavour enhancers and preservatives.

Colruyt has fully acquired Dutch packaging specialist Mundipak. Mundipak constructs, imports and exports, and sells packaging and packaging machines.

Monoprix-owned Daily Monop' has introduced a range of fresh soups named either Daily Monop' "Simplement" (classic recipes) and Daily Monop' "Delicieusement" (more innovative). The range includes peas and mint, corn, chorizo and carrot, coconut milk and coriander.

UK grocer Morrisons has launched food and drink products for children. The Kids Smart range has limited sugar, salt and fat levels and is free from artificial colours and flavours and hydrogenated fats.

Edeka is offering a new customer loyalty scheme in Germany, named D-Card. It will replace the Edecard.

Auchan will sell gas and electricity at 45 of its Italian hypermarkets. The service will gradually be rolled out to other stores.

Nisa-Today’s, a UK wholesaler, has launched a range of ready meals under the Heritage Select brand. The range reflects “current trends towards premium quality products and traditional British cuisine.”

German drugstore retailer dm drogerie markt plans to open its first stores in Bulgaria next year.

In South Africa, Woolworths has introduced over 100 organic products, including soya milk, cream and deserts, liquid stocks, reduced sugar jams, pastas and rice.

Norway’s Reitan Group, which operates the 7-Eleven and Rema 1000 chains, plans to expand in Denmark.

The Netto discount chain plans to join ITM Alimentaire, ITM's food division which also includes the Intermarché and Ecomarché chains.

UK retailer Boots is introducing a No7 skin care range for men, with anti-ageing products.

Office Depot is expanding its private label offerings in Europe. The US-based home office retailer has launched of its Foray product line, which includes office supplies such as pens, highlighters and writing pads.

MARKET RESEARCH

Retailer brands have big opportunity in pet food

Private label has a good opportunity for growth in the premium and mid-priced segments of the pet food market, according to a report by Euromonitor. Trends in the category “will first and foremost facilitate the growth of private label sales,” the research company said. “Until now, pet food private label products have been largely confined to the economy segment, but they are beginning to develop a presence in the premium and mid-priced segments”.
Private label also has strong growth prospects in the developing countries, where manufacturer brands are not well established. “Private label products are likely to gain a higher profile in such markets during the forecast period as retail chains proliferate,” Euromonitor predicted. While much activity in developing markets will be in lower priced products, there will be opportunities for the premium and mid-priced items.

Chinese, Russian retailers among top retailers

Retailers from China and Russia entered the list of the world’s 250 largest retailers for the first time, according to a new report, 2008 Global Powers of Retailing, from Deloitte Touche Tohmatsu. Six retailers from the two countries have entered the Top 250 rankings, including Chinese retailer Bailian Group, which entered the list at number 101. The highest-ranked Russian retailer was X5 Retail Group N.V. (X5) at number 191. Bailian was formed in 2003 when the Shanghai municipal government merged several retailing groups in an effort to reduce costs and compete more effectively against foreign companies. X5 was formed in May 2006 through the merger of Pyaterochka and Perekrestok, two leading Russian chains.

PLMA NEWS

Special Conference on Developing Markets to be held 25-26 May in Amsterdam

   A special conference to help companies in developing markets take advantage of the opportunities in private label will be held in conjunction with PLMA’s “World of Private Label” International Trade Show in Amsterdam. The conference features a full schedule of presentations and workshops devoted to fundamental issues such as procurement policies and practices of larger international retailers, export promotion, EU import rules and regulations, trade finance, supplier-retailer relations, social accountability as a tool to build exports, and quality control and risk management.
   After the conference, conference attendees are automatically registered to visit the PLMA’s “World of Private Label,” held 27-28 May at the RAI Centre in Amsterdam. On the trade show floor visitors can see private label products from more than 2,000 companies from 75 countries.
   Registration to attend the conference is 375 euros and includes all conference seminars, trade show admission and show catalogue. The special conference will be held at the Amsterdam Hilton, near the RAI Centre. For more information, contact info@plma.nl.

EVENTS

25-26 May	Conference on Developing Markets Amsterdam

27-28 May	“World of Private Label” Trade Show Amsterdam

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