PLMA E-Scanner – November 2018

November, 2018
Private label beats A-brands, Edeka says

Edeka is looking to its private label products for growth. Supervisory Board Chairman Uwe Kohler told Lebenzmittel Zeitung that he sees growing importance for retailer brands.  He says A-brands are showing a "weak innovation power" and falling behind on product quality.

LZ reports: “After the fiercely negotiated dispute between Edeka and Nestlé, the position of Germany's largest grocery retailer remains clear: ‘Brand products are losing their innovation leadership in some areas.’”

When it comes to product quality, he believes “our price entry brand is at the brand level” and “the Edeka own brand is always better than the A brand” it directly competes against.

In addition to building its private label programme, Edeka is looking to increase its business with smaller manufacturers, especially innovative startup companies. The platform Foodstarter, through which Edeka enables different start-ups to get into business with the group, is becoming increasingly popular.

Tesco launches price ad campaign

Tesco has launched a major in-store campaign to improve its price image, after a major overhaul of its private label range. CEO Dave Lewis told analysts the move was the “coming to fruition of a three-year plan” to catch up with Aldi and Lidl. We’ll be calling out that we now have the most competitive basket we’ve had in Tesco for many, many years. We’re not just price matching, actually we’re price beating and the time has come to start communicating that to customers.”

Tesco bases its claim on a basket of 26 “Exclusively at Tesco” products, its new value tier range, together with milk and bananas, with its basket focused on fruit and vegetables as well as meat, fish and poultry items.The campaign will focus on the new “Exclusively at Tesco” brands, which the supermarket is using to replace its Everyday Value range. Billboards with the strapline “Find our best value brands in store today” will feature heavily on aisle ends and at front of store. Lewis said 80% of the Exclusively at Tesco lineup was in store, with the rest arriving by the end of the year.

Aldi Süd and Aldi Nord cooperate

Aldi Süd and Aldi Nord are planning to coordinate  the procurement of fruit and vegetables across borders, according to published reports.  Lz.net writes “Both companies created new positions for the international business. The topic is secretly underway: both Aldi regions want to bundle purchasing for their fruit business across Europe.

“The companies, it is said, would be working on concepts to distribute the billion-dollar fruit and vegetable package to selected potent suppliers. A corresponding call for tenders has already been placed and, according to industry experts, is in internal evaluation. Fruit and vegetables purchasing is currently the responsibility of each national company. Aldi Süd is currently represented in seven European countries, Aldi Nord in nine.”

Retailers fight EU proposal

Retailers are campaigning against the EU’s policy proposal against unfair trade practices. The motion adopted by the European Parliament aims to ban mergers of retail and wholesale purchasing groups.

Edeka CEO Markus Mosa, says, “With a politically deliberate ban on the merger of retail and wholesale purchasing groups, a disruption of functioning cooperative structures in the food chain is impending. This would ban the business models of companies like Edeka or Rewe.”

Rewe CEO Lionel Souque agrees: “Here, we set the fox to guard the chickens. A directive that was once intended to protect agriculture, should now ban cooperative organised trade.”

The Agriculture Committee of the EU Parliament voted on the proposal for a directive against “unfair trade practices in the food supply chain”. The goal is to create Europe-wide minimum standards for the protection of farmers.

More online retailing activity

There’s been plenty of activity in online retailing across Europe:

Carrefour reports that its food e-commerce sales increased by more than 30% in the third quarter of this year.

Ahold Delhaize announced plans to upgrade the online experience for users of its Albert Heijn and bol.com e-commerce platforms.

Casino has opened a store in Paris that allows customers to pay online with the Casino App or at self-service checkouts.

In Italy Esselunga has extended its online shopping service to Rome, while Coop Italia has introduced ShoppY,  a virtual assistant that helps consumers with their grocery shopping.

Asda is launching a smartphone function to cut waiting times for its click & collect services.

France wants healthier processed foods

A French parliamentary report calls for measures to make processed and ‘ultra-processed’ food healthier, by placing maximum limits on salt, sugar and fat and caps on the number of additives used in products.  The report calls for strict measures to improve the quality of industrial food’ and public health and banning junkfood marketing to children and prohibiting health claims on unhealthy foods.

UK plans to ban plastic straws

The UK is planning to ban the distribution and sale of plastic straws, drinks stirrers and cotton buds to reduce plastic pollution. It is estimated that 4.7 billion plastic straws, 316 million plastic stirrers and 1.8 billion plastic-stemmed cotton buds are used annually, with significant amounts ending up in waterways and oceans. The government intends to introduce a ban on their distribution and sale. This is expected to come into force between October 2019 and October 2020.

Tesco adds plant-based foods

Tesco is more than doubling its ‘Wicked Kitchen’ plant-based food range to meet increasing demand for vegan products. The range, which was launched earlier this year, is being expanded by 26 lines. These include vegan sausage roll, along with pies, sourdough pizzas, chilled desserts, and deli foods. In the last year, sales of chilled vegan foods at Tesco have climbed by 25%,  helping to increase the UK meat-free market to 310m pounds.

Continente launches 300 SKUs

Portuguese supermarket and hypermarket retailer Continente has introduced 300 SKUs under various private label brands in 2018. Pedro Bruno, Commercial Director for Private Label of Sonae MC, said of the 4,000 SKUs sold under its brands, more than 60% are produced in Portugal. The remaining 40% are sourced from more than 20 different markets, with Spain being the second-largest source, accounting for 15% to 20% of the total. Overall, private label accounts for 30% of sales at Continente stores.

Shoppers rate retailer’s private label

Unes, the Italian retailer, has developed a shelf-based product review programme for its Il Viaggiator Goloso premium brand. Consumers submit their votes and comments at the 120 stores trading under the U! Come tu mi vuoi, U2 Supermercato and Il Viaggiator Goloso banners, as well as in Iper, la grande i hypermarkets.

Once the votes are tallied, an average score (between one and five stars) and customer reviews are printed on an electronic label next to the price tag. The retailer says, “Customer reviews positively influence other customer purchases, drive product development and improvement, and inspire offline communications activities”.

In the Stores 

Aldi UK sales climbed by 15% in a recent 12 week period, supported by fresh and chilled product sales, according to Kantar Worldpanel.

Aldi has vowed to cut prices if necessary to take on Jack’s, Tesco’s new discount banner.

Rewe is investing around 1.6bn euros expanding and modernising its store network, opening or relocating around 300 Rewe and Penny stores in Germany.

Ahold Delhaize will be selling Coop Italia’s Fior Fiore products in its US stores.

Migros has introduced three edible insect ranges under the Mi Bugs brand.

Tesco has introduced a range of feminine hygiene products that are either organic or reusable.

Sainsbury’s is testing beauty aisles staffed with specialists in 11 stores around the UK. The retailer also relaunches its Boutique makeup range so that the majority of products are vegan-friendly.

Auchan Retail France has signed a new agreement with Federation of Enterprises and Entrepreneurs of France (FEEF) to cooperate with independent small and medium size suppliers.

Coop Sverige in Sweden is expanding and revamping its Änglamark range of organic products.

Mercadona remains Spain’s largest grocery retailer, with a market share of 25% in the first eight months of the year.

Kaufland has increased its range of GMO-free beef products, including minced meat and burgers.

Albert Heijn has introduced ‘Wine in Tubes’ that enables consumers to have wine tasting sessions in their homes. Each package has six tubes with wine from Albert Heijn's wineries.

Carrefour Belgium has expanded its BIO Fairtrade confectionery range to 113 SKUs.

Dutch retailer Jumbo has added at least 200 wine SKUs to its assortment and now offers around 500 different wines.

Waitrose is launching a range of meat dishes from celebrity chef Heston Blumenthal.

Lidl and Aldi Süd are expanding their baby food business.

Costco plans to expand in Spain over the next three years.

Italian retailer Pam Panorama has added more items to its private label organic products, and has also expanded offering under its Zoa pet food range and Eco home care products.

Aldi in the Netherlands has introduced regional products in its range under the Streekproduct Noaber brand.

Asda has introduced a range of vegetarian and vegan ready meals.

Monoprix plans to expand its partnership with Amazon Prime’s delivery service.

Casino plans to either close or transform 20 underperforming hypermarkets.

Torgservis, the Russian discounter, wants to expand into Germany.

Portuguese conglomerate Sonae has dropped plans to launch an IPO of its food retail business, Sonae MC.

Kesko in Finland reported an all-time-high comparable operating profit of 113m euros in the third quarter.

Greencore , the UK convenience food supplier, is sellling its US operations to an affiliate of Hearthside Food Solutions, for 817m pounds.

Consilia, the Italian private label supplier, reports double-digit sales growth for the first eight months of this year.

Market Research 
What will shoppers pay for?

Most shoppers may love sustainable, local, organic foods, but not all of them are willing to pay extra for these products. IRI reports that 70% of European shoppers identify favourably with companies that demonstrate strong sustainability credentials, but about half (48%) of shoppers  are reluctant to pay more, particularly for locally-sourced and organic food. IRI’s European Shopper Survey reveals consumers in Italy, Greece and Spain relate more closely to retailers who claim to care about the environment.

Across all age groups, many shoppers say they want products with less plastic packaging (43%); more local brands (43%) and higher product quality (38%). Younger millennials (18-24 years) look for improved in-store technology and more convenient, ready-to-eat food and drink products.

UK shoppers like “free from”

UK shoppers are putting more “free from” products in their baskets.  Kantar Worldpanel reports that sales climbed 38% in a recent 52 week period, with shoppers picking up products in the category nearly 20 times a year. The category is also reaching more people, with penetration standing at 92% , up 11% from the previous year.

While A-brands account for about three quarters of sales, private label is growing by nearly 40%, driven by new shoppers. This means over two in three households bought a private label free from product this year.

PLMA News 
PLMA’s 2019 Roundtable Conference, 27-28 February

PLMA’s 2019 Roundtable Conference will be held 27-28 February in Hamburg. The theme of the conference is: “Romancing the Consumer”.  Presentations will focus on what steps retailers across Europe are taking to attract loyal shoppers. There will also be store visits to the major retailers in Hamburg as well as a report on the German retail landscape.

For more information or to register for PLMA’s 2019 Roundtable  Conference, contact PLMA International Council at conferences@plma.nl or at telephone +31 20 575 3032.

Events 
11-13 November 2018

US Private Label Trade Show
Chicago, USA

 

27-28 February 2019

Roundtable Conference
Hamburg, Germany