PLMA E-Scanner – June 2020

June, 2020
Brian Sharoff, President of PLMA, passed away at 77

Brian Sharoff, President of the Private Label Manufacturers Association, the private label industry’s largest trade organization, passed away after a brief illness. He was 77 years old.

“Today is a sad day for the entire PLMA family,” said Lisa Manzoline, Chairman of the Board of Directors of PLMA. “Under Brian Sharoff’s tremendous focus and dedication, the Private Label Manufacturers Association has grown to become a vital and essential resource for suppliers and retailers around the globe. Brian’s leadership will be greatly missed.”

Brian was named President of PLMA in 1981, shortly after the association was founded. During his tenure the association’s membership grew tremendously, from two hundred manufacturers, suppliers, and brokers in the U.S. to more than 4,400 companies worldwide. 

PLMA’s annual “World of Private Label” International Trade Show, held each May at the RAI Exhibition Centre in Amsterdam has grown to more than 4,500 stands and now represents manufacturers from nearly 75 countries. This show attracts buyers from across Europe, Asia, Africa, and the Middle East.

The PLMA trade show held every November at the Rosemont Convention Center in Chicago draws the largest concentration of private label buyers anywhere in the U.S. Executives from supermarkets, drug chains, hypermarkets and other retailers come to find suppliers and new products.  

In addition to the trade exhibitions, PLMA presents conferences and educational programmes throughout the year and also publishes exclusive research and studies. The association in recent years has also produced a wide range of original video programming, providing news and information for both the industry and consumers.

Retailers defend buying alliances

European retailers are defending themselves against charges that buying alliances hurt competition and are unfair to suppliers. EuroCommerce, which represents the retail and wholesale sector, voiced its support for alliances following an EU inquiry into unfair trading practices.

EuroCommerce director-general, Christian Verschueren, said, “Retailers operate on low margins. The large multinational suppliers operate globally, achieve significant margins and have the power to set conditions in the supply chain. Most retailers are only present in a limited number of countries in Europe and join alliances to help create a reasonable basis of negotiation with these large manufacturers, and pass on the benefit to the consumer.”

Private label gains in France

New data from Nielsen shows that sales of private label products in France have greatly accelerated during the pandemic. The research firm finds that turnover for retailer brands climbed by 16% during one period of the pandemic compared to only a 6% gain for A-brands. The Nielsen results cover sales in all retail channels and most store departments. 

“This rise in private label shows that consumers are starting to monitor their spending, but also that the manufacturers’ sales forces are no longer in stores, the big brands have given way to retailer brands,” says Emmanuel Fournet, director of insight & analytics at Nielsen.

IRI sees private label increases

Private label sales are showing an increase during the pandemic, especially in France and Italy, with a slight acceleration in other countries, according to market researcher IRI. It also found that sales are still high for the frozen food and alcohol, while non-food categories are seeing softer growth than in past weeks. Meanwhile e-commerce continues to show strong growth compared to last year, particularly in Italy, France and Spain. In some countries, while stay-at-home restrictions are starting to loosen, purchasing behaviour has remained largely unchanged.

Schwarz challenges Amazon

Lidl’s parent company Schwarz Group is taking on Amazon by launching its own cloud computing service for third party retailers. Lebensmittel Zeitung reports that Schwarz has acquired a software specialist that brings 70 cloud specialists into a wider group of digital resources.

Meanwhile Amazon is expanding its Prime Now grocery delivery service through partnerships with Morrisons in the UK and DIA in Spain. The service will be available in the UK’s ten largest cities, while in Spain it is offered in Madrid, Valencia, and Barcelona.

Lidl restructures purchasing

Lidl is restructuring its purchasing department. LZ reports that the changes that mean the discounter plans to become even more aggressive as it prepares for the recession that is emerging as a result of the pandemic. Dominika Kubisch has been named in charge of the purchasing organisation in Germany, by far the largest Lidl country. She previously worked as a manager in international purchasing at the Lidl Foundation.

Jan Bock, who had been responsible for purchasing in Germany and has been responsible for upgrading the range in recent years, is moving to international purchasing, where he takes over the support of several countries: the Netherlands, Belgium, Ireland, the Czech Republic and Slovakia. The remaining Lidl countries are divided between the divisional heads Marco Giudici and Adam Miszczyszyn and the managing director Mark Hache.

Walmart likely to resume Asda talks

Walmart says it will likely resume talks to sell a major stake in Asda after the worst of corona virus is behind it. “There’s every possibility they will resume at a point in time but only when Walmart feels that is right,” Asda CEO Roger Burnley told Reuters.

“There’s no reason for that not to come back on the table at the appropriate time when it feels like...we have a new norm and we’re able to embrace that,” he said, adding: “I don’t think at all that interest would have waned.

Carrefour posts sales gains

Carrefour posted strong sales growth figures in all countries in the first quarter. 

Comparable growth was 4.3% in France, 6.1% in the rest of Europe, 17.1% in Latin America and 6.0% in Taiwan. There was a significant contrast between food (+9.9%) and non-food (-3.5%). E-commerce in food improved by as much as 45%, with sales of organic products up 30%.

In France, growth was driven mainly by supermarkets (+8.1%) and proximity stores (+11.0%): hypermarkets experienced limited growth of 0.9%. Belgium achieved quarterly sales of 1.053bn euros, a comparable growth of 6.2%. In other European countries comparable sales were +2.5% in Italy, +6.6% in Spain, +8.8% in Poland and +9.7% in Romania.

Online shopping climbs to 13% in UK

Online grocery sales have climbed to 13% of all UK grocery spend, according to Nielsen. This is almost double the level recorded in the same period last year (7%), and marks a new high point for online grocery in the UK market, according to the research firm.

It said that 7.9 million UK households placed an online grocery order over a four-week period, up from 4.8 million in the same period last year. In addition, 1.1 million of these were new users of online grocery platforms. Nielsen data also showed that store visits were down 24% in the past four weeks, however spend per visit was higher than at Christmas time, up 45% on the same period last year.

Russia wants price controls

The Russian government plans to limit the trading margin for certain products it calls "socially relevant.” These products include a list of basic foodstuffs and everyday items. The proposed legislation would provide for the profit margin for these products to be limited to 20% of the wholesale price or 50% of the manufacturer's selling price. 

Existing legislation has so far only allowed the Russian anti-monopoly agency FAS to set a regional price limit for basic foodstuffs if price increases of more than 30% were found for these articles within a month. 

As a first step, the parliament increased the number of regulated product groups from 24 to just under 50. In addition to food, these also include disinfectants and cleaning agents, personal hygiene articles and baby and animal supplies.

In the Stores 

Tesco's annual private label sales are around 18bn pounds in the UK, nearly a quarter of the market, according to Kantar.

Aldi now holds 12.2% of the private label market in the UK and delivered 8% value growth last year, according to Kantar. The retailer’s premium Specially Selected range has sales of over 1bn pounds.

Casino plans to open 300 convenience stores by next year in France.

Esselunga plans to expand the rollout of its La Esse proximity store format.

Online retailer Ocado reports that its retail revenue soared 40% year-on-year in its second quarter.

Spanish retailer Caprabo plans to open a 24,600 sqm distribution centre for fresh produce in Barcelona. The facility will supply 300 supermarkets in the country. 

Spain’s regulatory agency has approved Eroski’s plan to acquire 10 Simply supermarkets in Bizkaia. Eroski plans to revamp the stores to its Contigo format. 

Lidl is preparing to launch grocery ecommerce in Poland, according to published reports. 

Despar Italia reports that sales of its private label products increased by 5.7% to 354 million euros during the 2019 financial year. The retailer also is adding 16 SKUs to its Despar Enjoy range.

Aldi in the Netherlands is introducing a range of healthy products under the Disney Kitchen brand with packaging that features Disney characters.

In the UK, Waitrose is relaunching its Essential range just over 10 years since its debut. More than 200 products from categories such as skincare, yoghurts and frozen ingredients are being added to the range.

Lidl UK is introducing 10 gins including a seaweed and ocean flavor.

Tesco has launched Fire Pit, a range of eight barbecue-focused marinated fresh meats and sides inspired by the US pitmaster trend.

Spar Austria is now offering five of its beverages in reusable glass bottles.

Dutch retailer Plus has introduced a range of ready to eat fresh meals. The assortment consists of four segments: World Kitchen, Dutch, Oriental and Italian Meals.

Perekrestok’s express delivery now covers all Moscow.

Kaufland has introduced insect-based products in Croatia. 

Polish retailer Żabka has launched a range of healthy, functional beverages under the brand S!.

Asda is launching a range of baking mixes under the Arise Bakery brand.

Lidl Finland will offer a new premium line of pet food under the Pure Taste brand.

Market Research 
Promotions are back

Supermarkets in the UK are increasing their promotional activity as inventories return closer to normal. Market researcher Edge by Ascential, comments: “As the UK lockdown eases, so have the concerns of British consumers, who are less focused on stockpiling grocery items. This has now given many UK supermarkets the confidence to increase their promotional levels.

Edge reported that online grocer Ocado raised its promotional level by as much as 76% in a recent period. It also found increases at Waitrose (+44%) and Tesco (+15%). The firm also monitored the stock levels at supermarkets, revealing that Morrisons, Sainsbury’s, Tesco and Waitrose all had increases in stock levels, with Morrisons having the greatest increase in products by 3.6%.

PLMA News 
PLMA’s 2020 “World of Private Label” to be held 2-3 December

In light of government restrictions prohibiting large events such as trade shows during the Coronavirus crisis, PLMA’s 2020 “World of Private Label”, which was originally scheduled for 26-27 May this year, has been postponed to 2-3 December (Wednesday-Thursday) at the RAI Exhibition Centre in Amsterdam.

“With all government restrictions, lock downs, uncertainties and personal concerns, postponing was unavoidable. The PLMA team and all partners involved will work hard and with maximum enthusiasm and focus towards the new dates in December”, the association said.

Events 
15-17 November

PLMA's US Private Label Trade Show
Chicago

2-3 December

PLMA’s 2020 “World of Private Label”
Amsterdam