Private label share has experienced double-digit growth in Eastern Europe this past year. Judith Kolenburg profiles Biedronka, Żabka and other big players.
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Henrik Lund, CEO of Naturli’ and chairman of the Danish Plantbased Food Association, discusses the key drivers of the plant-based philosophy and rising opportunities for private label.
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PLMA e-Scanner – November 2022

November, 2022
New hard discount chain debuted in Denmark

In October, Denmark's largest supermarket retailer Salling Group (Netto, Bilka, Føtex) launched a new hard discount chain under the name of Basalt. The company says the chain is an answer to the sky-high inflation in the country. The stores will sell basic everyday goods and it promises to be 15% cheaper than other discount chains.

Merchandising is very basic. Most products are placed on pallets in the store or directly on the shelf in outer packaging. Basalt’s product range is limited to some 800 SKUs and it does not sell refrigerated or frozen goods. The range includes common basic goods such as pasta, oatmeal, toilet paper, diapers, toothpaste, shelf-stable milk, flour and bread, as well as a basic selection of fruit and vegetables. There are no volume discounts, only fixed low prices every day, and more than 80% of the items will cost less than DKK 20 (€ 2,70) per piece and half will cost DKK 10 or less. To cut costs, the stores will not be open in the evening and the stores have no freezer or refrigerated cabinets. Ten of the stores will open across the country before Christmas.

Buying alliance Epic expands

Epic Partners, the international purchasing group created by Edeka last year, has welcomed two retailers among its shareholders: French Système U and Italian Esselunga. Besides Edeka, Epic consists of Dutch Picnic, Swiss Migros, Jerónimo Martins (Portugal) and Ica (Sweden). Russian retailer Magnit was also part of the alliance at its inception, but the cooperation was suspended in response to Russia’s invasion of Ukraine.

Epic Partners is led by Gianluigi Ferrari, former boss of the Agecore alliance, and negotiates cross-border marketing conditions for members. With the two new partners, the group is covering retailers in over ten countries in Europe. While all members are big players in their own country they do not have a significant international business. So, they don’t really compete with each other and together they are more of a heavyweight player against the large multinational manufacturers.

Kroger and Albertsons announce merger

Two of the largest supermarket chains in the US, Kroger and Albertsons, have announced a plan to merge. The near $25 billion deal would create a company with nearly 5,000 stores across 48 states and over $200 billion in sales. If the agreement gets the green light from the competition authorities, it would be one of the largest mergers in US retail history.

The combined company would become the second largest grocer in terms of market share with 13.5% of the market, according to Morgan Stanley. The first grocer in the US is Walmart with 15.5% market share.

Kroger houses over 10,000 private label items, including Big K and Simple Truth. Albertsons has more than 14,000 own brand products in its portfolio, for example O Organics, Signature and Value Corner. Combined, Kroger and Albertsons sell $43 billion in private label products annually.

The companies said they would spin off nearly 400 stores to form a new rival to gain antitrust clearance. Some analysts have speculated if the government will allow the deal to take place and expect opposition to it. In recent years, the FTC has scrutinized other retail mergers, including the proposed Staples and Office Depot deal, which lead to the companies cancelling the fusion.

In the past, Ahold Delhaize has been associated with Kroger. More recently, another suitable option was added: This summer, it was rumoured that Ahold Delhaize was in talks with Albertsons. Fanatic air traffic followers noticed that two company aircrafts of the American group visited Bedford, not far from the American headquarters of Ahold. And earlier this year, an Ahold plane landed in Boise, Albertson's home base. The announcement of a deal between Kroger and Albertsons seems bad news for Ahold, which will be facing a bigger competitor and sees its chances of merging itself with one of the two companies being limited.

More restructuring looms for 'quick delivery'

According to Bloomberg, Turkish quick delivery company Getir is in advanced talks to take over rival Gorillas. If the talks lead to an agreement, it would be the biggest acquisition in the quick commerce channel until now.

After flourishing and quickly expanding in the two covid years, rapid grocers are forced to rethink their business model. Investors are not so keen anymore to put money into these lossmaking startups now that inflation is making them much more cautious. They demand that the companies become profitable. As a result, there have been vast layoffs in the past months. Gorillas has halved its German headquarters employees and pulled out of several countries in order to concentrate on the few most profitable ones. Getir made a move to franchise its dark stores in Turkey and France and reduced the number of employees globally by fifteen percent.

A consolidation would make sense. It would mean a larger customer base and order volume. In addition, it would decrease the number of players in the market, which experts believe makes the market more sustainable.

Asda pushes convenience format

Asda revealed that it will be opening over 30 standalone convenience stores under a new banner, Asda Express. The first two stores will open before Christmas and the roll out of thirty sites is planned over the coming year. The format will offer 3,000 products across groceries, hot and cold ‘food for now’, coffee to go and also fresh ingredients to cook dinner from scratch.

The retailer has also just completed the acquisition of 132 forecourt-based convenience stores from Co-op. Asda says that the move is part of its strategy to enter the convenience retail space and create an exciting new part of the Asda business that brings the company’s value to more communities. With sales in the convenience sector forecast to grow by 13% to over £50bn by 2027, Asda sees a significant opportunity to grow sales and market share in a sector where it currently had a limited presence.

Supermarkets take measures to save on energy costs

Aldi Nord is closing stores earlier in Germany to contribute to energy savings and to deal with staff shortages. From November, the stores will close at 8 pm, one hour earlier than usual. The measure will apply during the coming winter.

French supermarkets have equally taken measures to save energy: the temperature in supermarkets has been lowered to 17 degrees, the lighting outside has been turned off and fewer lamps are on during opening hours.

In the Stores 

Hofer introduced a new own brand, Rettenswert (worth saving). The retailer saves surpluses from the entire upstream value chain which otherwise would be lost. The excess fruit and vegetables are then processed further and given a second chance in the form of high-quality products like fruit spreads, chutneys, ketchup and pesto.

Eroski is the first retail company in Spain to implement the Planet-Score labeling system in a dozen of its own-brand products. The score communicates impact of the food they purchase to the consumer and thus help them make eco-responsible purchasing decisions.

Online-only grocer Ocado is partnering with tv cook Nigella Lawson to launch new and exclusive recipes on its website to feed a family of four for no more than £1.25 per portion.

Spar Norway is supporting local producers with its new Taste of Norway brand (Smaken av Norge) in Spar and Eurospar stores across the country. The producers use Norwegian ingredients with a clear origin, practice good animal welfare and are innovators in their respective categories.  

Superdrug is freezing prices across all of its own brand vitamins, supplements and cough, cold and flu relief products. The health and beauty retailer has already frozen the prices of over 5,000 other own brand items and beauty essentials.

Esselunga has a new own brand: Cucina Esselunga. The range comprises over 200 ready meals including Italian classics such as lasagna, cannelloni and gnocchi alla romagna as well as recipes from the world like couscous and paella and vegetarian and high-fibre novelties.

Migros is testing the Teo unmanned small-scale store concept in Switzerland. The first fully automated store is open around the clock and two more pilot stores will be added soon. The store offers a basic range of some 800 products, which will be continuously adapted to the shopping behavior of the customers.

Carrefour Poland has a new vegan own brand product range called Sensation Vegetal. Products include cold cuts, plant-based drinks, yoghurts and other dairy substitutes, spreads and tofu.

Lidl announced its Irish supermarket operation has achieved a goal of reducing the consumption of own-brand primary plastic packaging by 20%, one year ahead of the targeted time frame.

Bipa has a new private label line in the dental and oral care category: Bi Life Dent. The range extends from toothpastes and brushes to dental floss sticks. Products are offered for adults as well as for (small) children.

Amazon has expanded its Aplenty grocery brand with more than 100 new food items. Aplenty products are available from Amazon online and in-store at Amazon Fresh supermarkets.

This year, the DIA Group has added more than 500 new items globally to its assortment of private label products, totaling more than 2,700 renewed own-brand items listed since 2020.

Marks & Spencer has launched a new range of vegetarian meals called Veggie to meet growing consumer demand. Developed by the retailer’s in-house chefs, the range includes a choice of 14 meals.

Market Research 
Redefining value

According to Innova Market Insights, the food and beverage trends’ list in 2023 is headed by what it calls ‘redefining value’. Global consumer surveys, market and new product data have shown that cost and value for money have become more important to more than half of consumers worldwide.

Brands, innovators, producers and consumers are wrestling with rising costs and greater instability. Combating this requires a deep understanding of where consumers draw the line on compromise. Strategies such as simple price increases, or flexible ingredient lists to cope with supply chain fluctuations, can work in the short term. However, brands need to be open in their communication and show the benefits they are bringing.

PLMA News 
Executive Education marks its 20th year with a successful programme

PLMA’s 20th Executive Education programme on 26-27 October was sold out with retailer and manufacturer students from 17 countries. Conducted on the campus of Nyenrode Business University, the participants learned and actively discussed private label strategy, the path towards innovation, implementing private label culture, successful retail supplier partnerships, retail trends, supply chain challenges and the use of neuromarketing, a combination of neuroscience and marketing.

Included were two retail case studies. Joost Bous, former Supply Chain director at Action, explained the challenges for the non-food discounter when it grew from a single store in the Netherlands in 1993 to over 2250 stores in ten countries now. The retailer works with a One Store Format and One Store Management system and 95% of its 6,000 SKUs is identical across all of its stores.

The supply chain is a critical element for the retailer, especially over the past two years. While it used to be built around Availability, Cost and Inventory, three new factors entered the game during covid: Resilience, Agility and Sustainability. Scenario planning is also vital for the supply chain of today.

The other case study was on Dutch retail leader Albert Heijn. Henk van Harn, the retailer’s Merchandising and Sourcing Director, explained the company’s private label strategy and priorities. He took the participants on a journey through Heijn’s own brands, from the iconic brands of Perla (coffee), Delicata (chocolate) and Brouwers (beer) to the premium brand Excellent and the mainstream AH brand that is now also partly positioned as the entry price level brand under the umbrella name of Price Favourites.

PLMAs 2022 US Private Label Show attracts near-record number of retailers

Thousands of smiling faces assembled at PLMA's sold-out 2022 US Private Label Trade Show, November 13-15, in Chicago. The Show was themed, "Consumers Are Back In Charge," a nod to the evolving attitudes and demands of post-pandemic shoppers.

The U.S. store brand business has much to be pleased about these days. Sales are up, retailers are doubling down on the products to help Americans cope with inflation, innovation is turbocharged to meet consumer expectations, and there's a surge in store brand non-foods, particularly in health and beauty, household products and nascent categories like hemp-derived CBD.

But most of all, the industry was celebrating its first in-person trade show in three years. And it showed.

"Visitors discovered high-quality, food and non-food store brand products from some 1,400 outstanding suppliers in 2,300 booths. It was a global affair. More than 50 countries were represented on the floor, including more than 500 booths in national pavilions from Europe, Latin America and Asia," comments Anthony Aloia, PLMA's corporate VP. "Overall attendance topped 5,000."

Events 
8-9 March 2023

PLMA's Annual Roundtable Conference
Rotterdam, The Netherlands