PLMA E-Scanner – February 2019

February, 2019
Big cutbacks at Tesco

Tesco is planning to cut thousands of employees to meet challenges from discount retailers and a possible Brexit downturn. The chain expects that 9,000 jobs in Britain to be eliminated, but half of the workers could be moved to other positions.  

Tesco is looking to simplify its operations in order to remain competitive and better meet consumer expectations. One senior executive explained that shoppers are spending less time in stores and they are less likely to use the fresh food departments with a service counter. For this reason, counters where fish, meat and other fresh foods are sold, will disappear from 90 stores. In 700 other stores the counters will remain in use, although sometimes with limited opening hours.

This reorganisation is part of a four-year plan to save 1.5 bn pounds in expenses. Last year, Tesco cut 1,700 middle management jobs and closed one of its call centres, eliminating 1,100 jobs.

More expansion for Lidl

Lidl is planning aggressive expansion across Europe this year. More store openings have been announced in several markets and new partnerships will enable the retailer to enter new locations.

Lidl has opened its biggest distribution centre to date in the UK, investing 70m pounds in the new 58,000 sqm facility. In Italy, the discounter expects to add 40 stores this year, representing an investment of 350m euros. Some of the stores will reflect the new metropolitan format, with the store being built above a carpark. More space will be given to fresh and chilled ranges, with a focus on products with an Italian origin.

In Sweden, 20 stores could be opening, bringing the total number in the country to 200. The expansion will continue in smaller cities.  Lidl will be investing 120m euros in Greece, with five new stores bringing the total there to 226. Warehouse space will be expanded, and money will be invested in the installation of ovens for bakery products in every single store. In Switzerland, Lidl has signed an agreement with Loeb, a department store retailer, to enter urban locations.

Protests hurt retailers

The ‘yellow vest’ consumer protests in France are hurting retailers. Carrefour said the protests were one factor that its like-for-like sales were down 0.1% in France in the fourth quarter of the financial year. It said that its French hypermarket operation was the most affected by the yellow-vest protests, with the division’s like-for-like sales down 2.2% in the quarter.

Another major French retailer, Casino, also said its sales were lower as a result of the ongoing anti-government protests in the country.

While some analysts expected the protests would help online sales, this may not have been the case.  It has been reported that e-commerce sales accounted for 11% of the overall retail market in December 2018 during the protests, compared to 14% in December 2017.

EU rules against ‘dual quality’

The EU has voted to fine companies that are marketing ‘dual quality’ food up to 10m euros or 4% of annual sales, it says in a bid to protect consumer’s rights.

FoodDrink Europe, the group that represents the interest of food manufacturers, has spoken out against certain aspects of the ruling. It said while it is strongly against any ‘dual quality’ of food, it is not against customising products according to local environments, even within the same country, raw material availability, national regulatory requirements, different national nutrition/health/sustainability strategies, and more.

“Moreover it can lead to problems of unfair competition between multinational operators vis-a-vis local competitors,” it said.

Germany asks for healthier ingredients

The German government is calling for food manufacturers to voluntarily reduce sugar, fats and salts. Food manufacturers are being asked to reduce sugar content in breakfast cereals by 20%, and in soft drinks by 15 to 20%.  The government also asked dairy product manufacturers to improve nutrient composition in food and beverages targeting children and young people. This would include increased levels of dietary fibre in breakfast cereals.

The plan, which relies on voluntary commitments rather than legal measure, is being criticised by consumer groups, which say a voluntary approach is not sufficient.  

Italy proposes food origin bill

The Italian government has proposed a bill, which will make it compulsory for manufacturers to share the geographical origin of ingredients used in food items. According to the bill, the origin of fruit used in juices, preserves or jams, canned legumes or meat used for salami and hams, will be indicated on the product label.

The goal of the initiative is to boost local production and put a check on fake Italian products entering the market. In Italy, the indication of origin is obligatory for peeled tomatoes and concentrates, milk and dairy products, rice, pasta wheat, and chicken. The new bill has not yet been passed by the Italian Parliament.

Tesco and Carrefour trial refillables

Tesco and Carrefour will trial a global online shopping service based on refillable rather than recyclable containers. Empty product containers are collected, cleaned and refilled for reuse.
The system will first be trialled in Paris by Carrefour in the spring and subsequently by Tesco later in the year.

The programme, called Loop, is expected to expand globally.  Initially it will cover products such as toiletries and breakfast cereals. Toothpaste tablets instead of tubes, ice cream in aluminium tubs and body lotion in glass bottles could be coming if the programme succeeds.  Typically, shoppers will pay a small deposit for a product’s container, which will be refunded when it is returned.

Albert Heijn, Delhaize stay in Belgium

Both Albert Heijn and Delhaize retail banners will stay in Belgium. Parent company Ahold Delhaize has determined that both banners are complementary. Delhaize attracts more and more an audience that is attracted to the shopping experience, while Albert Heijn attracts more price-sensitive shoppers, the retailer said.  Over the next three to four years, Delhaize sees a potential to add up to 300 Delhaize stores in Belgium. This might consist of 100 supermarkets and 200 proximity stores. For Albert Heijn, expansion plans call for 30-50 supermarkets spread over three years.

Consumers create Carrefour product

Carrefour has introduced its first private label product that was created with its consumer community site ‘Mon avis le rend gratuit’ [My Opinion makes it free]. The product is a raclette cheese with onions.  The packaging says, « Inspiré par vous » [Inspired by you]. Carrefour reports that other products will be added soon.

Through online questionnaires and test panels, members of the Mon Avis Le Rend Gratuit community are invited to participate in the product creation process, from the selection of the recipe to the packaging.

Korean retailer joins EMD buying group

Korea’s second-largest retailer, Homeplus, has joined the European Marketing Distribution (EMD) buying group. “I cannot imagine a better cooperation partner than the successful and well-connected EMD,” commented Homeplus CEO Lim Il-Soon. “Close cooperation in the private label business opens for us new and interesting purchasing channels in Europe, with an immediate benefit for our customers. Additional growth opportunities will also result for our South Korean suppliers, for which new sales channels in the large distribution area of the EMD members will be made available.”

Conad posts private label gains

Conad reports its private label range achieved a turnover of 3.5 bn euros in 2018, up 7% year-on-year. The retailer brand now accounts for a quarter of the food retailer’s overall sales.

Conad’s private label assortment consists of over 3,600 SKUs, of which 1,400 were launched or refreshed last year. These include the traditional Conad, Verso Natura, Sapori & Dintorni brands, as well as new lines that meet the requirements of modern consumers, such a Conad Alimentum, Conad PiacerSi, Conad Essentiae, Conad Baby. Conad spent around 38m euros on marketing and communication for its private label brands last year.

Eroski uses Nutri-Score labels

Spain’s Eroski has introduced Nutri-Score labelling on some private label products. The Nutri-Score labelling classes foods into five groups, indicated by coloured letters (from A in dark green to E in dark orange), based on the calorie, nutrient and ingredient composition of products. The first SKUs with the new classifications include a crushed tomato conserve and a steam-cooked potato product, both under the Eroski private label brand, and a sun-dried tomato product under the Eroski Seleqita premium private label range.

Netto goes sustainable

Netto Marken-Discount in Germany has launched a sustainable meat products range under the Stallglück brand. The meat used in manufacturing the products is 100% German, and is sourced from animals that feed on GM-free food. The product also comes with the German Animal Welfare Association label. The current range is limited to chicken products, but plans call for pork and beef products to the Stallglück range in the coming months.

Ocado goes palm oil-free

Ocado, the UK online retailer, has added a ‘palm oil-free aisle’ to its website, allowing customers to browse over 5,000 products not containing the ingredient. Products including bread, breakfast cereal, pizza, crisps and toiletries are listed on a dedicated new page which customers can find by searching for ‘palm oil-free’ on the homepage. The move follows a 28% increase in searches for palm oil-free products in 2018.

In the Stores 

Amazon has added the first private label products from Whole Foods to its online grocery range in Germany, Spain, Italy and France. The Whole Foods range is packaged in the UK and includes dry foods such as nuts, couscous, rise and dried fruit.

Leclerc in France has reduced the price on 4,600 Marque Repere private label products and says it will maintain these low prices throughout the year. The reductions are in all its brick and mortar and online stores.

Carrefour plans to open 120 Carrefour bio stores by 2022, according to published reports. Organic product sales climbed 20% for the retailer last year, reaching sales of 1.2 bn euros.

Tesco is increasing the fibre content of private label products under several categories, including pies, pasties, sausage rolls and chilled breads.

Boots in the UK plans to open 31 beauty halls that include ‘magic mirrors’ that allow shoppers to virtually try on new makeup looks.

Morrisons is adding a line of healthier Fresh Ideas SKUs and expanding its Counted calorie-controlled meals into chilled products.

Aldi Nord and Aldi Süd are working with a start-up company to promote innovation in sustainable packaging materials.

ICA in Sweden will launch 50 vegetarian products in the first half of this year.

Edeka has revived its popular ‘Supergeil’ commercials to promote its latest marketing campaign, ‘Supergeile Preise’ (super-cool prices).

Esselunga’s online sales climbed by 28% in the past year.

Système U says its market share in the French market has climbed 10 basis points to 10.7%.

Kaufland Poland plans to introduce a wider range of private label products, and improve its sourcing capabilities for fresh products, especially meat.

Marks & Spencer is trialling more than 90 lines of fresh fruit and vegetables that are free from plastic packaging.

Mercadona is changing the production strategy for its Hacendado, Deliplus, Bosque Verde and Compy brands.

Despar Italia saw 5.4% annual growth in sales of its private-label range during 2018.

Spar Austria is removing palm oil from around 99% of its private label products, replacing it with either domestic sunflower oil, rapeseed oil, or butter.

Lidl is rolling out online grocery home delivery in Ireland and Italy.

Albert Heijn is delivering hot meals to customers’ homes in Amsterdam within 30 minutes.

The Co-operative in the UK plans to open 100 stores this year.

Jerónimo Martins reports that its Biedronka stores in Poland account for 67% of the company’s sales. There are now 2,900 Biedronka stores.

Casino plans to sell 26 stores in the first half of 2019 to an investment group.

Russian retailer Dixy Group will merge with the Krasnoye & Beloye and Bristol retail groups, according to reports.

Market Research 
Big increase in vegan products

There is a big increase in the number of vegan and vegetarian products across Europe.  A Mintel report finds that nearly 10% of food products launched in Europe in 2018 had a vegan or no animal ingredients claim, up from 5% in 2016.  The greatest number of such claims were in the UK and Germany.   

In the UK, one in six of products launched in the UK had a “vegan” or “no animal ingredients” claim, which represents an increase from the 8% Mintel reported in 2015. Mintel said the UK “has seen a huge promotion of vegan choices in restaurants and supermarkets. The most poignant of these is the expansion of supermarket own-label options with dedicated vegan ranges in mainstream stores.”
 

PLMA News 
Registration still open for Hamburg Roundtable, 27-28 February

Registration is still open for PLMA’s 2019 Annual Roundtable Conference.  The event will highlight the ways retailers and their suppliers can increase the appeal of their private label products through packaging, in-store design, television commercials and product concept.

The Roundtable Conference theme is “Romancing the Consumer: How to Increase Private Label Sales”and will be held 27-28 February in Hamburg, Germany. The programme begins on Wednesday 27 February with an overview of the German retailing market followed by a store tour with visits to major retailers in Hamburg.

Host hotel for the 2019 Hamburg Roundtable in le Meridien Hamburg.  For more information, or to register, contact PLMA International Council at conferences@plma.nl or at telephone +31 20 575 3032.

“World of Private Label” to be held 21-22 May in Amsterdam

The world’s biggest private label trade show, PLMA’s 2019 “World of Private Label” International Trade Show will be held 21-22 May at the RAI Exhibition Centre in Amsterdam.  The event will feature more than 2,600 exhibiting companies from around 70 countries, including more than 60 national and regional pavilions. It is expected that the trade show will attract more than 16,000 visitors from more than 120 countries.

Before the trade show floor opens, a seminar programme features presentations by industry experts on current trends and issues.  On the trade show floor, visitors can see innovative private label products at the New Product Expo, Idea Supermarket and Salute to Excellence displays.

For more information about PLMA’s 2019 “World of Private Label” International Trade Show contact PLMA International Council, click here.

Events 
27-28 February

PLMA’s Annual Roundtable Conference
Hamburg, Germany

21-22 May

PLMA’s “World of Private Label” Trade Show
Amsterdam, The Netherlands