PLMA E-Scanner – October 2018

October, 2018
Sainsbury's-Asda may have to sell stores

The UK indicates Sainsbury’s may have to sell off hundreds of stores in order to win approval of its acquisition of Asda. The Competition and Markets Authority (CMA) found a “realistic prospect of a significant lessening of competition” in 463 places in the UK where local supermarkets’ catchment areas overlapped.

The CMA announced that it had referred Sainsbury’s plan to buy Asda to a more in-depth investigation. Its initial investigation indicated overlap within the supply or acquisition of groceries, fuel and homewares. It said the two grocers would account for just over 30% of the groceries sold by the top nine UK supermarket retailers and, alongside the market leader Tesco, would control a total of 60%.

A key factor affecting the outcome would be the CMA’s decision on whether to consider Aldi and Lidl stores, which are generally under 1,400sqm in size, as direct competitors to larger Sainsbury’s and Asda stores. The CMA’s initial analysis of the effect of the merger only took into account potential overlap between the two chains’ medium-sized and largest stores, and those of their four traditional rivals. It did not consider potential competition from convenience stores or Aldi and Lidl.

Aldi appoints new chief executive

There is a new chief executive at Aldi Nord. The retailer has appointed Torsten Hufnagel as chief executive, shortly after the departure of the previous CEO Marc Heussinger. Hufnagel had served as Heussinger’s deputy at Aldi Nord since 2015, and was one of the leading figures in the group’s modernisation programme, dubbed Aniko.

Published reports indicate that the appointment of Hufnagel as chief executive is a clear signal that the modernisation course that Aldi Nord has been on is to be continued and perhaps even accelerated. The retailer is aiming to have refurbished all 2,250 stores it operates in Germany by next year, and then focus on the 2,400 or so stores it runs in other markets.

Retailers add online transparency

Blockchain is coming to some of Europe’s retailers. The online supply chain system is being introduced by Albert Heijn in the Netherlands and Carrefour in Italy. The blockchain mapping system allows shoppers to trace products from their source of origin to the supermarket.  

Albert Heijn is using blockchain for its private label orange juice, supplied by Refresco. The retailer said, “We know all the steps that our products in the chain go through to ensure that they are produced with respect for people, animals, and the environment. We also want to show these steps to our customers, open and transparent.”

Carrefour Italia announced that it is launching its first product mapped with blockchain technology, across all its stores. Chicken under its Filiera Qualità Carrefour will be the first product using the technology. Consumers will be able to digitally verify information about the entire supply chain of the product, from the origin to its arrival at the point of sale by scanning a QR code.

Carrefour tests private label expansion

Carrefour has removed almost all A-brand products and replaced them with private label products in four stores. The experiment is part of the major programme announced by CEO Alexandre Bompard to lift the share of private label turnover to 33%. Published reports say that private label products now represent up to 80% of the facings in the four stores.

Earlier this year, the retailer said “Carrefour-branded products will play a key role in achieving the Group’s ambition in terms of food quality, in particular through a wider range and greater price attractiveness. This is one of the priorities of the company’s strategy, which justifies the redoubling of initiatives to create original and very qualitative Carrefour-branded products, covering both ingredients and recipes.”

Boots goes online in China

Boots is opening an online store in China on Alibaba’s Tmall Global platform. The online store will initially list Boots main brands such as No7, Soap & Glory and Boots Cucumber. The group believes that these will prove popular with Chinese consumers that have “an appetite for high-quality, international beauty brands”.

Boots says: “This is a great opportunity for us to increase the internationalisation of our products and to utilize the many innovative technologies that Alibaba has developed. Earlier this year, Boots parent company Walgreens Boots Alliance completed a deal to acquire a 40% minority stake in GuoDa, China’s largest retail pharmacy chain.

EU wants to curb dual quality

EU members have voted in favour of tougher measures to crack down on the practice of dual quality foods. The EU report calls for swift cross-border cooperation, involving, consumer protection and food authorities, consumer associations and the EU Commission sharing data on potentially non-compliant products. The report will now go to the European Commission for consideration

Politicians also called on manufacturers to add a logo to their products’ packaging that informs consumers that the content and quality of the same brand is the same across EU countries.
Manufacturers say there can be legitimate reasons for changing recipes.

Separately, more than twenty leading retailers and wholesalers have written to the Chair of the EU Agriculture Council protesting the idea currently being promoted by multinational food processors that they need protection against retailers in a  directive currently under consideration by the European Parliament and the Council of Ministers.

Ahold Delhaize introduces new format

Ahold Delhaize has launched a new store format in Belgium, offering fresh ready-to-eat meals and a range of digital services. The retailer plans to open another nine stores in the same format by the end of this year, and 36 more by the end of 2019. Apart from a wider choice of products, the new store offers freshly prepared ready-to-eat meals on a daily basis. The meals are prepared from recipes based on a balanced diet, and fruit juices and soups.

Customers at the new concept store can even order online while shopping at these stores with the help of screens installed at the store. This enables users to choose from a wider range of products, which is over and above the 20,000 items available in the store.

Rewe opens online logistics centre

Rewe opened a logistics centre designed to serve its online grocery business. Rewe has spent about 80m euros on what it describes as "one of the most modern logistic centres" in Europe.

Rewe says its online grocery service climbed over 100m euros of sales last year. The system costs less to operate and should allow for more flexible processes, adding that it hopes eventually to be able to serve online customers with fresh meat and cheese.

In the Stores 

Coop Suisse plans to increase private label market share from 54% to around 60%.

Eroski is expanding its Natur range of sustainably sourced and certified fresh products. It now offers more than 500 SKUs under the range, by including new product categories such as fresh eggs camperos and free-range chicken.

Waitrose in the UK is rebranding to 'Waitrose & Partners', as part of restructuring by its parent John Lewis. There will be new packaging for its private label products.

Metro is looking to sell its 282 Real hypermarkets, according to published reports.

Monoprix has opened its shop on Amazon and is offering more than 6,000 products available for two-hour delivery in Paris.

Alibaba, China’s largest e-commerce firm, looks to expand in Russia, investing in a state fund and two technology firms there.

Italian retailer Esselunga has an agreement with Google to enable its shoppers to order their shopping direct through the Google Assistant service.

Pam Panorama is opening eight Pam Local convenience stores and plans to have 100 stores under the banner by the end of the year.

Lidl plans to open 25 stores in Romania by the end of 2019 and 10 stores in Serbia this year.

A former top Aldi Süd executive, Roman Heini, has joined Lidl, according to published reports.

Finnish retailer Kesko aims to remove micro plastics from its entire range of private label detergents by the end of this year.

Chef and author Jamie Oliver is promoting Tesco’s food products.

Carrefour, Systeme U and E. Leclerc are launching TV ad campaigns.

Mercadona plans to open between eight and ten supermarkets in Portugal next year.

Supermarkets in the Netherlands posted a 4.7% sales gain in the second quarter.

Ocado, the British online grocer, posted a retail sales gain of 11.5% in the latest quarter.

Jumbo in the Netherlands plans to increase the range of sustainable milk products offered under its private label.

Rewe has introduced mineral water bottles made of 100% recycled plastic.

Unes in Italy says private label accounts for about 47% of sales.

Distribuzione Italiana (D.IT) is introducing three brands, the premium range Gusto & Passione, the organic VerdeMio, and the functional and healthy Equilibrio & Piacere.

Lidl Italia says that customers equipped with Android devices are now able to pay for their grocery purchases through the Google Pay app.

Dm in Austria has started a service for business customers.

Market Research 
UK suppliers post big sales increase

UK food and drink suppliers posted their highest sales growth since 2009, but profit margins suffered because of rising input and labour costs. The OC&C/Grocer Top 150 analysis of the UK food and non-alcoholic drinks producer landscape shows a sharp rebound in food price inflation has increased the industry’s top line.  Aggregate revenue growth across the UK’s largest producers jumped back to 7.5% in 2017, having slumped to a 0.8% fall in 2016. Exports contributed to the gains, with the industry posting 14% international sales boost.

Organic food sales climb in Italy

Italian consumer spending on organic food and drink products grew by 6.5% in the first half of this year, after growth of 10% in 2017. A study by Ismea reports on average, nine out of ten families have bought at least one organic product during the last year.

The most popular organic categories include fruit, vegetables, and derivatives from cereals, such as pasta, rice, and flour, which account for more than half of the purchases in value terms.

There has also been a growth in the purchase of organic milk and associated dairy products, as well as eggs, vegetable oils and fats, fresh meat and fish products. The value of the Italian organic market in 2018 is around 5.6bn euros, of which 3.5bn euros accounts for domestic sales.

PLMA News 
US private label trade show takes place 11-13 November

PLMA’s Private Label Trade Show will be held 11-13 November in Chicago. The event is expected to surpass last year’s record numbers for visitor and total exhibit space. The expansion is being driven by strong private label sales, which are growing as much as three times faster than A-brands brands based on recent reports from Nielsen and others.

Buyer and visitor registrations for 2017 reached 5,400 and total trade show participation, including exhibitor personnel, surpassed 11,200.  The show presents more than 2,800 exhibit booths with more than 1,500 companies representing virtually all known consumer products categories in grocery as well as non-foods.  There is significant growth coming from the expansion of international pavilions and exhibitors from more than 50 countries.

For more information about the U.S. Private Label Trade Show, please click here.

Events 
31 October - 1 November

Executive Education Programme
Nyenrode Business Universiteit, Amsterdam

11-13 November

US Private Label Trade Show
Chicago, USA