PLMA E-Scanner – April 2017

April, 2017
Who will win Salute to Excellence Awards?

Which retailers are leading the way with innovative private label products? You can find out next month at PLMA’s 2017 “World of Private Label” International Trade Show in Amsterdam. It’s there that the winners of PLMA’s 2017 International Salute to Excellence Awards, honouring retailers for innovation in private label products and packaging, will be announced. The Awards presentation will lead off the pre-show seminar programme held on Monday 15 May at the RAI Exhibition Centre.

The second seminar presentation will be “The Future of Private Label”, by Alexander Kottke, a research analyst at Euromonitor International. He will examine the key trends, such as e-commerce, retail consolidation and discounting, that will have a significant impact on retailer brands in the years ahead.   

“Understanding the Millennial Generation” will be the final presentation at the pre-show seminar programme.  Richard Cope, senior consultant at Mintel, will analyse how retailers and suppliers can successfully appeal to this new generation of shoppers. Admission to the seminars is complimentary to all registered visitors and exhibitors.  Presentations are translated into English, French, German, Italian and Spanish.

The 2017 “World of Private Label” International Trade Show, to be held 16-17 May, will be the largest ever, featuring nearly 2,500 exhibiting companies, including nearly 60 national and regional pavilions on the trade show floor. The theme for this year’s show is “Helping Consumers,” focusing on how retailer brands bring value and innovation to shoppers across Europe and beyond. For more information about PLMA’s 2017 “World of Private Label” Trade Show, click here.

Online competition heats up

Amazon continues to expand in Europe, while brick and mortar grocery retailers invest in their own online programmes.  Amazon launched its Amazon Pantry service in Belgium and France and is now selling thousands of private label products from Tegut, the grocery retailer in Germany. Amazon also is reportedly using the DHL delivery service for its Amazon Fresh food deliveries in Germany. The delivery service begins in Berlin and will spread to other cities. A logistics center for Amazon Fresh is being built in Munich, according to published reports.

Traditional brick and mortar retailers are getting ready for more online competition. Carrefour predicts that its digital sales in food and non-food will triple to 4bn euros by 2020. Dm, the German drug store retailer, said its online sales are up sharply, especially in cosmetics, and it wants to introduce a subscription model. In the UK, Tesco is expanding its same-day grocery click and collect service with a new early collection slot, while Esselunga in Italy is testing click and collect service in Milan and Florence.

Brexit could hurt brands

UK shoppers would abandon A-brands for private label, switch supermarkets and even cut back on chocolate if food prices rise in the wake of Brexit, according to a survey. Most households feel food prices have already risen over the last six months, according to a survey of 2,000 consumers conducted by Retail Economics. Two thirds of those polled expect weekly food shopping bills to rise further over the next six months, with two in five people blaming Brexit as the main cause of food inflation.

Almost half of shoppers (48%) said they would switch to less expensive private label products if their weekly food-shopping bills rose by 3%, the level experts predict food inflation will hit by the end of the year. A further 44% said they would start shopping for a cheaper grocer, while over a third (39%) said they would cut back on chocolate and confectionery, and 11% said they would eat less meat.

Shoppers like fresh and sweet

New Nielsen data shows that products in the fresh and confectionery categories accounted for nearly two-thirds (61%) of the growth in the grocery market across Western Europe last year.  Shoppers spent 4.3bn euros more on fast moving consumer good products at grocery retailers, a growth of just 0.9% from the prior year.

Fresh products accounted for 38% of the overall market growth, followed by confectionery and snacks, which accounted for just under a quarter (23%). Alcoholic beverages category accounted for 20% of overall growth. “Fresh food and confectionery’s growth were primarily driven by consumers buying more items, while alcohol’s was mainly driven by paying higher prices,” Nielsen said.

The data also showed that small and mid-size suppliers outperformed larger companies. Manufacturers outside the 10 biggest firms accounted for 70% of the growth in the Western European grocery market, while retailer brands accounted for the other 30%.

Retailers grow their vegetables

Private label is really tending its vegetable garden, as retailers invest heavily in new products to meet the growing demand for vegetarian products across Europe:

In the Netherlands, Albert Heijn has introduced a line of fresh soups, pasta sauces and curries made of exclusively of vegetables, herbs and spices.

Carrefour Poland launched the organic own brand „BIO warto!” [BIO worth it] from Polish producers of vegetables. The product range includes root vegetables and root crops, derived entirely from Polish certified manufacturers.  

In Spain, Mercadona has launched a line of vegan products.

The Swedish retailer Coop Sverige introduced a range of vegan, vegetarian and free-from food made from Swedish ingredients and manufactured in Sweden.

In the UK, Lidl has introduced a line of ‘fun-sized’ vegetables for children, with names such as Mini Broccoli Trees, Cauliflower Clouds, Sweet Potato Piggies and Unicorn Carrots.

Auchan builds its brand

Auchan will invest 1.3bn euros in a three-year rebranding effort that will place greater emphasis on the Auchan brand in France. This year, the retailer expects 256 Simply Market and A2Pas stores will be rebranded as Auchan Supermarché and MyAuchan.

The retailer also plans to be part of a joint venture with Système U and Schiever, which will be called Alliance. The groups intend to develop a joint buying centre for the organisation in France in the near future, according to published reports.

Dia and Eroski cooperate

Dia and Eroski are cooperating on a new project involving private label. The Spanish retailers said they have signed a statement of intent to start a project focused on improving the overall quality of their private label products, while keeping prices competitive by lowering costs. Fresh products such as oil, milk and eggs would be excluded from the agreement.

This deal gives continuity to the cooperative relationship between the two groups, which began in 2015 with a pact to jointly negotiate “with the big suppliers of national and international brands” with the aim of offering better prices. Traditional fresh products and the local small producers were not part of the negotiation.

Dia and Eroski ended the year with a total of 5,010 stores and a combined market share of almost 21% of the total sales in Spain.

El Corte Inglés launches La Biosfera

El Corte Inglés will introduce La Biosfera, a retail format focused on ecological, bio and organic products. La Biosfera stores will carry a new private label, El Corte Inglés Bio. The stores will be up to 150 sqm. in size. The first stores will be in Valencia, to be followed by others in Barcelona, Madrid and other cities. The retailer expects to have about 20 stores opened by fall and then the Biosfera concept will be introduced in its supermarket and Hipercor formats.

Products will include fresh produce, eggs, dairy, breads, sweets, fish, nuts, baby goods and frozen foods, among others. These products will focus on sourcing from local producers and give consumers the opportunity to buy legumes and other foods in bulk. All of the products will include a seal of approval from the appropriate ecological, bio- and organic-certification bodies.

EMD goes to Australia

European Marketing Distribution (EMD) has entered Australia with a partnership with Woolworths. The retailer will use EMD to source volume for its private label range, for its 1,000 stores in Australia and more than 180 in New Zealand. EMD said the relationship with Woolworths relates initially to private label sourcing only. Woolworths said the “agreement will provide a direct network for Woolworths’ Australian and New Zealand suppliers to maximise investment and growth opportunities with European retailers.” EMD now represents a worldwide turnover of 216bn euros.

Tesco launches Freshpet

Tesco has launched Freshpet, a range of fresh pet foods. The introduction follows a sales uplift of gourmet products for cats and dogs at the retailer. Premium dog and cat food from natural and organic pet food has seen a 20% increase in sales in the past year, with more than two million products sold, Tesco said. There are ten products in the Freshpet range, including Chicken, Vegetable and Brown Rice Dog Food; Chicken Spinach and Potato Dog Food; Chicken, Beef and Vegetable Cat Food. Prices range from 3.50 to 13.50 pounds.

Albert Heijn goes gluten free

Albert Heijn has increased its gluten-free products it offers as part of its ‘Vrij van Gluten’ (Free From Gluten) range. The retailer has introduced 25 products, including bread and baking mixes, pasta, cookies and crackers, in response to what it says is a ‘rapidly-growing’ number of consumers that choose gluten-free products. The products feature new packaging and a Vrij van Gluten logo. Earlier, the Dutch retailer had introduced a range of fresh soups, sauces and curries made exclusively from vegetables, herbs and spices, including no preservatives, as part of its AH Verse (AH Fresh) range.

A Jumbo pop-up supermarket

Jumbo in the Netherlands turned two walls, forming a street corner in Rotterdam, into a virtual pop-up supermarket. The outside walls of the building showed images of popular groceries. The products were depicted on a ‘shelf’, which displayed the product’s bar code. Customers scanned the bar code, using the Jumbo app, to add products to their virtual shopping basket. They could choose to pick up the groceries themselves, at one of the Jumbo Pick Up Points, or have the purchases delivered.

In the Stores 

Intermarché is redesigning packages for all of its 10,000 products and expects to complete the project by the middle of next year.

Two retailers in the UK are expanding their wine assortments. Sainsbury’s has added a range of premium Taste the Difference wines, while Aldi is adding organic wines to seasonal portfolio.

Morrisons in the UK says that higher private label sales have contributed to the retailer’s increase in profits.

Dixy, with more than 2,800 stores in Russia, aims to private label market share to 25% of sales, up from 16%.

Coop Switzerland has launched a range of barbecuing products endorsed by television chef Jamie Oliver.

Albert Heijn has launched a range of healthier snacks, made with natural ingredients such as nuts, seeds and dried fruit.

Rema 1000 in Norway is offering Meatish, a range of non-meat protein based products.

Tesco is introducing its Pro Formula range of cosmetics to its Poland stores.

Carrefour Belgium has launched its meal ingredient box, the ‘Simply You Box’, following a successful trial.

Merkur in Austria has extended its ‘Immer Grün’ (Always Green) range to include cleaning products.

Netto has introduced a free-range line of organic chicken in Denmark.

Sonae in Portugal posted a 7.2% increase in turnover to 5.4bn euros, surpassing the 5bn euro mark for the first time ever.

Albert Heijn stores will remain active in Belgium until at least 2019, Delhaize Ahold announced.

Mercadona plans to invest up to 1.2bn euros to build its business this year.

Rewe Group posted a revenue increase of 5% last year to 54bn euros, led by its German stores.

Coop Sverige says profits have increased due to the success of new retail formats.

Monoprix launched a new loyalty programme.

Casino says its Leader Price stores returned to profitability in 2016, while the Géant hypermarket banner ‘strongly reduced its losses’.

Dia is revamping more than 2,000 of its Dia Market stores.

Lidl in Spain reports a 13% increase in sales and a 40% increase in profits.

Colruyt has launched Xtra, a loyalty card that can be used in over 600 shops, and collection points across nine chains in its group, as well as webshops.

Marks and Spencer has closed all of its stores in China.

Aldi plans to officially launch its Chinese website this month.

Market Research 
Dutch shoppers are loyal

The customer loyalty of Dutch supermarket customers has increased in recent years, according to GfK. In 2008, the average Dutch household visited 4.53 supermarkets annually. In 2016, the figure fell to 4.32 supermarkets. This decrease is mainly explained by the disappearance from the market of C1000 and Super de Boer. In 2008, 53.5% of households shopped sometimes at C1000 and 33.9% at Super de Boer. Albert Heijn has the largest customer base. Of all households in the Netherlands, 87.4% shopped at Albert Heijn in 2016. In 2008, this was 82.9%.

Events 
16-17 May

“World of Private Label” International Trade Show
Amsterdam, The Netherlands