February 2024

Industry and Government News
No surprise, private label sales set new record

In 2023, sales of private label in Europe hit the 340 billion € mark, an all-time record. Private label now makes up 38.5% of the total grocery market value. Private label turnover increased by +13% last year. In the same period, manufacturers’ brands sales grew by less than half that much, at +6%.

More details about private label performance can be found in the new edition of PLMA’s International Private Label Yearbook, for which NielsenIQ surveyed 17 European markets: Austria, Belgium, Czechia, Denmark, France, Germany, Greece, Hungary, Italy, Netherlands, Norway, Poland, Portugal, Spain, Sweden, Switzerland and the UK. The analysis includes some 500 retailers and hundreds of food and non-food supermarket products.

As trade publications and industry experts have been predicting for months, in 2023, consumers massively switched to private labels, as many worry about high inflation rates. In addition, as has happened before during crises, once they found that the quality of the products was equal to or better than familiar manufacturers’ brands, they have stuck with the retailers’ own brand products.

Another 2023 presumption was confirmed: Overall, the grocery market, private label and manufacturers’ brands combined, lost a mere -1% in volume (units). In the majority of the countries, consumers bought less products than in the previous year. Despite the challenging market situation, private label managed to achieve a volume growth of +2%. Manufacturers’ brands registered a decline of -3%.

From a value perspective, the Yearbook clearly shows the impact of inflation. Turnover of all items – brands and private label – increased by 72 billion €, almost 9%, despite the -1% decrease in unit volume sales in Europe. Private label is a true driver of growth: 54% of the total market growth is attributable to private label sales.

In the coming months, food inflation is expected to remain high. As soon as inflation starts to fall and households have more breathing space, it will be the question  whether volumes, which have been under pressure in the past two years, will pick up again. Some experts believe that even then, consumer buying behaviour will remain cautious and frugal.

Aldi Nord centralises purchasing and combines own brands

Discounter Aldi Nord has been restructuring its purchasing organisation. In this remarkable step towards a modern and lean category management, the company is doing away with the separation between category management and purchasing, which was introduced five years ago.

More power will be given to the ones responsible for the category: They are to manage the product range and can make binding agreements with suppliers. The move should make the buyers more involved with the store. In addition, lengthy coordination processes and sometimes conflicting interests between the person who decided on the listing and the person who negotiated the purchasing price are avoided.

In addition, Aldi Nord is standardising its range across countries. Before, 50 to 70 percent of the range was centrally bought, and thus part of the range in stores in all countries. In the future, up to 80 percent of items will be purchased centrally across countries.

Another advantage is that the new structure better matches the buying organisation of Aldi Süd. The companies are in the process of deepening their cooperation. This includes combining their own brands. The retailers will typically first combine own brands in a category in Germany and then slowly spread the new uniform private label over the countries where they operate. At the same time, private label names are changed to internationally ‘understandable’ names.

There is no doubt we will be seeing more synergies among the two Aldis in the future.

Mixed feelings on cultured meat abound in Europe

Countries in Europe have different attitudes towards cultured, cultivated, or lab-grown meat. As the first country in Europe, the Netherlands proudly announced that it is allowing cultured meat tastings. While tastings within companies were already allowed, companies can now apply for external tastings. An independent committee with a toxicologist, microbiologist, doctor, and ethicist will assess applications. Once an application is accepted, companies have the possibility to test whether their ‘meat’ works in a restaurant, or it can have it tested in taste test panels. It is seen as a first step towards towards laboratory meat in the supermarket.

Cultured meat is grown in the laboratory from animal stem cells. The stem cells of only one animal are needed for thousands of kilos of meat. Cultured meat is marketed as being a sustainable and animal friendly alternative to meat.

On the other hand, other countries, for example Italy, Austria and France, do not see lab-grown meat as a sustainable alternative to original agricultural production. They say studies show a poor carbon footprint of laboratory meat due to the energy-intensive process. Italy is banning artificial meat altogether, to ‘protect tradition and culture’. France banned it from company canteens. On the contrary, in the US and Singapore, cultured meat has already been approved for sale.

Before a cultivated meat product can be sold in the EU, it needs to receive pre-market approval by regulators in a process governed by the Novel Foods Regulation. Once EU regulators approve a cultivated meat product, it can be sold across all 27 EU countries. The approval process will include a thorough and evidence-based assessment of the safety and nutritional value of cultivated meat and is estimated to take at least 18 months.

YouGov buys GfK’s Consumer Panel

Research and data analytics group YouGov has completed the acquisition of the Consumer Panel Services from GfK. The Consumer Panel is an established leader in household purchase data, and it operates across 18 European countries, comprising over 100,000 homes. It helps the FMCG sector get insight into consumer behaviour by capturing and analysing consumer purchasing data.

According to YouGov, the deal builds on its long-term growth strategy and expands its presence in the FMCG sector. For GfK, the divestment of its Consumer Panel addresses competition concerns by the European Commission and was a condition for the combination of NIQ and GfK. GfK says that irrespective of the divestment of its consumer panel business, the combined entity NIQ-GfK will continue to focus on consumer and retail measurement analytics.

PLMA Live.eu
The Changing Dynamics of European Retailing

Consumers remain cautious in their buying behaviour yet still demand product innovation. Retailers, in turn, are divided between declining margins and the pressure to increase investment. It is predicted that more will turn to Artificial Intelligence for help. Judith Kolenburg discusses the implications for private label and what to expect from grocery retailers in Europe.

In other news, NoLo drinks — alcohol-free and low-alcoholic beverages — are getting attention. Hans Kraak reports on this upward trend which aligns with consumers' shift towards healthier lifestyle choices. 

Best Practices in Procurement for 2024

Procurement is essential in many aspects other than just cutting costs. Procurement teams are drivers of innovation and growth for retailers because they are meeting with suppliers and developing valuable relationships, says Marijn Overvest, Founder of Procurement Tactics.

In an interview with host Edgar Elzerman, Overvest explains the intricacies of strategic leadership in procurement and the benefits for both retailers and suppliers. AI and sustainability are at the forefront of procurement
trends this year.

In the stores

Carrefour is testing a cooperation with Netflix for its Carrefour Plus subscription programme. In exchange for 5.99 euros per month, customers will not only benefit from a reduction of 10% on 6,000 Carrefour own brand products but also from access to the Netflix Video Streaming programme.

Coop Italia launches four new own brand pet food lines: three premium ranges, Plat du Jour, Es!go and Imprinta and the classic line Amici Speciali which has been totally revised. The campaign to advertise the new ranges includes tv and social media commercials and in store promotions.

Holland & Barrett is set to bring a new own label sports and supplements line to market. The name of the line would be Tri Active and include beverages and isotonic drinks, protein and cereal-based snack bars, and nutritional supplements.

Albert Heijn focuses attention to an extensive range of dishes that are quick and easy to prepare. With a new campaign “Tasty food, nice and fast”, it responds to consumers’ wishes for convenience: the meals have a preparation time of 5-15 minutes.

Marks & Spancer has changed the packaging for sandwiches and toasties sold in its cafes. The new recycled FSC cardboard and paper packaging reduces the plastic used by 79%.

Biedronka has equipped almost all of its stores – over 3,000 of the 3,300 branches – with self-service terminals. Cash registers now also use AI to recognize products. This applies to fresh produce such as fruit and vegetables as well as bread. According to the retailer, on average customers need two minutes to pay.

Crai intends to bring private label turnover from the current almost 350 million to around one billion. The number of products is to go from the current 2,800 pl SKUs to over 3 thousand this year, to then reach 4 thousand in the next few years.

Lidl is investigating the possibility of making its shelves 20 centimeters higher. The pilot project in Belgium aims to increase the space in the store without moving the walls. The retailer is testing shelves placed sideways, cross aisles, in Germany.

Tesco had rolled out a new ‘Tex Mex Feast’ range, offering a variety of ready-to-cook TexMex style meals. The retailer has also upgraded its Plant Chef 100% vegan meals range.

Aldi has introduced an all-vegan range called “MyVay” in Germany. It includes plant-based steak, smoked salmon, yoghurt, cream and spreads, and more, all clearly labeled as vegan to make shopping easier for consumers.

Coop CH is expanding its range of vegetarian and vegan alternative products with the new own brand “Betty Bossi Plant Kitchen”. The range replaces the Coop own brands Délicorn and Yolo and includes exclusive new meat, fish, egg and cheese substitutes as well as dishes that contain these components.

Colruyt has reduced the sugar content in its own brand Boni breakfast cereals by up to 30% without changing the taste.

Iceland Food is continuing the overhaul of its food category by introducing 300 brand new private label fresh and frozen products. New products include additions to its value tier as well as the premium range.

Market research
Gen Z wants self-scanning, self-checkout, checkout-free

A study among 4.000 shoppers in the UK and the US, commissioned by Avery Dennison, found that 52 percent of Gen Z would “switch to another store if their favorite decided to get rid of self-checkout.”

Two-thirds (67%) of those polled would opt for retailers that offer self-scanning at the end of a shop, while almost three-in-five (59%) stated the same about self-scanning as they shop.

Furthermore, 49% would be likely to spend more money with a retailer that has a connected or automated checkout experience, and 52% say connected stores would make them more loyal to a retail brand.

Nine of ten polled have experienced some form of frictionless shopping in the last year including self-scanning, self-checkout, full check-out free stores and try at home before you purchase services.

AI seen as inevitable for retailing

AI is the central digitalisation trend in the industry, according to an EHI survey among German retail marketing managers. 82.4 of respondents see AI as an important marketing trend which has the greatest potential in marketing.  

AI is already used in personalizing communication with customers, for example through chatbots that respond to individual wishes. In addition to creating texts and images, artificial intelligence can also analyze and link customer data. As a result, 
the programmes offer increasingly better opportunities to analyze and predict customer purchasing behavior in order to optimize sales. With over half of respondents say that marketing is moving increasingly towards customer centricity, tools to help focus on individuals become all the more important.

Finally, more than a third of the retail managers feel that AI could change jobs or create new ones, although that would require (new) employees familiar with generative AI.

What is winning innovation for private label?

How will branded companies be attempting to regain lost ground and how may incremental innovation help private label to consolidate its wins?

Cyrille Filott and Sebastiaan Schreijen of Rabobank may not have a crystal ball, but they will take you along in their thoughts on current market dynamics and the opportunities for the right type of innovation during PLMA's upcoming Lunch & Learn series.

This one-hour online Lunch and Learn session entitled "Enhancing Resilience through Incremental Innovation in Private Label" will be led by Rabobank on 27 March 2024 from 12:30-13:30 CET.

It’s free for PLMA member and retailers. A link to register can be requested here.

Whatever happened to PLMA's Roundtable Conference?

It is February when we write this, and some of you will wonder why you haven’t heard from us regarding the annual PLMA Roundtable Conference, which would always take place in this month, rotating between European cities.

Well, don’t worry, we’ve just made some changes, including the timing. We moved the conference to an annual late October event, still moving between European cities and Milan will be our next destination. Also, we changed the name of the conference to “Private Label Summit”, which is a better reflection of what the event is about (and we actually never used a table that was round). So mark your calendars and keep an eye out for our updates on "The Future of Private Label as a Brand" at PLMA's 2024 Annual Private Label Summit on 29-30 October in Milan.