PLMA E-Scanner – December 2017

December, 2017
Aldi revamps its brands

Aldi Süd is working with one of Europe’s largest advertising agencies, Scholz & Friends, to renew its 90 food private label brands, according to Lebensmittel Zeitung. “The overhaul of our own brands is an important step, with which we will be even more customer-oriented and up-to-date in the future,” Sandra Schoofs, the marketing manager of Aldi Süd, told the publication.

The programme is expected to create a more uniform product range. Some brands may be eliminated, others will be repositioned, and packaging design will be updated. Manufacturers are expected to make suggestions for a more customer-oriented and contemporary product range during product development.

The changes in private label are part of a larger strategy. Aldi Süd is reportedly poised to invest around 3.5bn euros in ‘the biggest investment programme in the company’s history’, according to LZ. The publication reported that the investment will be used to bolster the retailer’s German store network by 2019, and is likely to temporarily limit the retailer’s profits.

Online keeps growing

Online retailing keeps making news. Amazon looks ready to launch its meal kits in the UK. It has filed a trademark for the slogan ‘We Prep, You Cook’ to cover prepared food kits. Amazon has also increased its involvement with Spanish retailer DIA, which will offer a range of its private label nonfood products on Amazon’s Marketplace site. The products will be marketed in Germany, Italy, France and the UK.

French supermarket group Casino has signed a deal with British online retailer Ocado to help grow its own online shops. In Switzerland, Migros is participating in an online programme called Emmasbox that operates refrigerated pick-up boxes for online grocery orders. In Germany, Lidl has ended its grocery e-commerce trial and will focus its online efforts on meal boxes and wine.

Retailers want longer relationships

UK retailers are shifting to new, longer term relationships with their suppliers. Sainsbury’s and Co-op appear to be following the lead of Tesco, which earlier announced that it is building fewer but longer relationships to drive more volume.

Co-op CEO Andew Murrells told The Grocer that it has made long-term strategic deals with suppliers a key priority, as it seeks to protect the business from Brexit-related inflation. Meanwhile a Sainsbury’s executive told an industry meeting: “As a general theme, what we’re trying to build is fewer, more strategic long-term relationships.”

Manufacturers shrink their products

Many UK manufacturers are reducing the size of their products to keep prices stable as inflationary pressures increase. Two in five (43%) manufacturers admitted they had already reduced the size of their products but kept retail prices the same, while 56% said they were open to doing this in future, according to research from Lockton, an insurance broker. Only 1% of manufacturers completely ruled out reducing the size of their products.

Product quality also is at risk as margins come under pressure, the report warned. Over two-thirds (72%) of manufacturers surveyed said they would switch to cheaper ingredients if cost pressures continued, while 32% are already looking abroad for cheaper raw materials.

New EU rules for organics

The European Commission approved new legislation designed to simplify organic farming and processing. The new EU rules will go into effect on July 2020. The regulation aims to harmonise the rule on EU production, ensure countries comply with non-EU organic production, reduce red tape for farmers and make it easier for new products to get organic certification. A number of new products, such as salt, cork and essential oils, will be covered under the new rules. It also allows group certificates, making it easier for small farmers to get certified.

The Commission said: “Many of the current rules are more than 20 years old, and need to be updated to reflect the major changes that have taken place in the EU organic sector over the last two decades. Organic is no longer a niche part of the EU agri-food sector as it was when the current rules were first drawn up.” The new rules will also apply to farmers outside the EU, replacing more than 60 standards that were considered equivalent and that applied to imported goods.

EU starts to define vegetarian, vegan food

The European Commission plans to begin the process of establishing a legal definition of vegetarian and vegan food in 2019. The announcement was welcomed by the European Vegetarian Union (EVU), which has been lobbying the EU for a definition since 2008.

“European consumers of vegan and vegetarian foods as well as their suppliers in production and retail will be able to rely on one set of rules for plant-based food. This will improve the positions of all parties involved in the food chain,” it said.

Once the Commission finalises its draft, member state representatives in the Standing Committee will vote for or against its adoption.

France supports labelling scheme

The French government has signed a decree backing the voluntary adoption of the Nutri-Score front-of-pack nutritional labelling programme. The system includes a colour-coded scheme, ranging from dark green to dark orange, associated with letters from A to E.  Products designated with an A have the “best nutritional quality” while products designated with an E have “poorer nutritional quality”.

The labelling system is being introduced on a voluntary basis to remain in line with European Commission single market requirements. Auchan, Leclerc, Intermarche, Fleury Michon, Danone and McCain have said they will put Nutri-Score labelling on their products.

No cashiers in Denmark store

Amazon isn’t the only retailer testing grocery stores with no cashiers. Coop Danmark and Irish retailer Musgrave are each planning to open their own unmanned grocery stores early next year. Coop customers scan their mobile phone when entering the store so that they can be identified. They scan products themselves as they shop, and pay for their purchases via a Beep & Pay app. The store will be monitored by camera surveillance, but employees will only be present for a few hours a day to restock fresh produce.

In the Stores 

Aldi won the gold medal for its Shiraz wine in The Great Australian Shiraz wine competition.

Tesco has introduced five low-alcohol wines, with prices starting at 3 pounds.

Franprix has signed a one-year deal to sell private label products from British grocer Waitrose in its stores.

Morrisons in the UK has launched a range of nearly 1,500 Cook, Home and Stationery products displayed in a “store-within-a-store” area.

Continente in Portugal has introduced a range of snacks under the Madre Mia brand. The products are aimed at young urban consumers.

Auchan has opened its first Auchan bio store in France. The 420sqm store will offer around 4,200 organic products.

Aldi Nord in Poland has introduced a bio assortment in its fruit and vegetable departments.

In Italy, Penny Market is introducing the Free brand, featuring 14 gluten-free and lactose-free products.

Lenta, the Russian retailer, has joined the EMD buying group.

Walmart India says it will focus on growing its two private label brands, Member’s Mark and Right Buy, in the coming years.

Booths, the UK grocer, is looking for a buyer to take over its retail business, according to published reports.

Lidl plans to build a logistics centre in Romania that will supply 50 stores.

Spar Poland is trialing a new Spar Express store in Krakow, as part of the retailer's plans to expand its convenience format in the country.

Spar Austria has introduced Rainbow Juices featuring exotic fruits from countries in Asia, as well as Central & South America.

Hema in the Netherlands plans to open at least seventy stores in Germany over the next three years.

Coop Sweden is adding its Saluhallen (Market Hall) range of more than 1,000 fresh products to its online shopping portal.

Spar International has a new partnership with Burque Group to open its first stores in Pakistan.

Delhaize is reducing prices in Belgium to win back customers from the discounters.

Amazon is closing two Whole Foods Market stores in the UK.

Coop Switzerland has launched an Italian delicatessen store and cafe, Sapori d'Italia, featuring fresh Italian baked goods, meats, cheeses, antipasti, pasta, wines, risottos, sauces and olive oils.

Jumbo in The Netherlands has opened a new compact format store.  

Russian retailer O’Key Group has announced that it is considering the sale of its 37 O’Key supermarkets and focus on developing its hypermarket and discounter stores.

Market Research 
Retail growth in Central and Eastern Europe

Central and Eastern European retailers are expected to post 6.5% growth annually between now and 2022, compared to 3.8% annual growth in the entire European grocery market, a new study by IGD reports. Extensive store opening programmes in markets such as Russia and Romania, where market consolidation is still relatively low, is likely to bolster that growth.

Grocery retail in Western Europe is likely to experience moderate growth of 2.4% annually until 2022, IGD said. It predicts stronger growth in CEE because many local retailers, including X5 Retail Group, Lenta and the discount retailers are planning extensive store opening programmes.

Online grocery grows in Italy

The Italian food e-commerce sector is worth 849m euros in 2017, or 4% of the total of the Italian digital commerce market, a new study has found. This sector registered a growth rate of 43% this year, compared to 2016 volumes, reports news agency Ansa. The value of online food and beverage in Europe amounted to 8.5bn euros in 2016, with an annual growth rate of 13%. This figure is set to reach 15.3bn euros in 2021.

PLMA News 
Dublin Roundtable, 21-22 February, focuses on the future

Where is private label going? It’s a simple question, but a very difficult one to answer. PLMA’s 2018 Roundtable Conference, to be held 21-22 February in Dublin, is devoted to the challenges and opportunities facing manufacturers and retailers in a marketplace that is changing more rapidly than ever.   

“Industry in Transition: What is happening to retailing?” will be the first presentation on Thursday, 22 Februrary. Michael Jary, partner, OC&C Strategy Consultants, will analyse the forces driving retailing and how retailers can cope with the changes. This will be followed by “Industry in Transition: What is happening to private label manufacturers?” by Judith Kolenburg, PLMA’s Research Director. She will discuss the findings of an exclusive PLMA study of suppliers.

These presentations will be followed by a panel discussion focused on “Finding Answers, Finding Solutions.” The panel will be moderated by Edgar Elzerman, Retail Consultant, ECI.

A look at the impact of technology will be examined in a presentation entitled “Meet Alexa and Siri, Voices from your Future,” by Benjamin Gautier, Senior Consultant at Wavestone.
The final presentation looks at “What is new in Product Trends” by David Jago, Director of Innovation & Insight at Mintel.

The Roundtable Conference begins on Wednesday afternoon, 21 February. David Berry, Country Manager, Kantar Worldpanel, will focus on “Retailing and Private Label in Ireland.” This will be followed by a store tour with visits to major retailers in Dublin.

The host hotel for the event is the Intercontinental Dublin. To register or receive more information about the Roundtable Conference, contact PLMA International Council at conferences@plma.nl or telephone +31 20 575 3032.

International Salute to Excellence Wine Awards

The high quality of private label wines will be in the spotlight at PLMA’s 2018 International Salute to Excellence Wine Awards. Next April a blue ribbon panel of judges will meet in Amsterdam, the Netherlands, to evaluate private label wines from retailers around the world.

The panelists include Masters of Wine, sommeliers, wine professionals and journalists as well as manufacturing executives. Wines are judged on the basis of traditional criteria such as color, nose and taste. Wines selected for the judging were either submitted by retailers or purchased off the shelves at stores.

The winning retailers will be announced at the 2018 “World of Private Label” International Trade Show, to be held in Amsterdam 29-30 May at the RAI Convention Centre. 

Events 
21-22 February

Annual Roundtable Conference
Dublin, Ireland

29-30 May

"World of Private Label" International Trade Show
Amsterdam, The Netherlands