PLMA E-Scanner – March 2017

March, 2017
Good news for grocery retailers

There are some positive signs that 2017 may be a better year for grocery retailers. The latest quarterly FMCG figures from Nielsen show that the European grocery market increased at its fastest rate in a year. Grocery retailers surveyed in 21 countries reported a 1.8% year-on-year boost in sales of fast-moving consumer goods such as food, drinks, and toiletries. Although the year got off to a slow start, sales increased in the final quarter.

“The value of the shopping basket has increased due to a number of factors including inflationary price rises, people buying more goods and changing their product mix by purchasing more premium and fresh foods,” Nielsen said.

Western Europe saw little momentum in volume sales, affected by unit value deflation in Spain and Italy and low inflation in France and the UK. Sales in Turkey increased 8.8% compared to a year earlier. Poland (+4.7%) and Hungary (+4.5%) also posted strong sales gains.

Ahold Delhaize reports gains

The newly merged Ahold Delhaize is off to a fast start. It reported strong sales growth for its fourth quarter and fiscal full year, saying that the integration of the Ahold and Delhaize groups is making good progress. Total turnover in 2016 reached 62bn euros, a 2.4 % increase over the prior year. Operational profit also grew, up 3.9 % to 1.9bn euros.

Performance was especially strong in the Netherlands, where fourth quarter turnover grew 7.5 % and full-year turnover went up 5 % to 13bn euros. Albert Heijn’s market share grew to over 35% and its Dutch like-for-like turnover climbed 4.1 %.

Results were not as strong in Belgium, Delhaize’s home territory. Fourth quarter turnover dropped 1 % and its full-year turnover increased by only 1.7 % to 4.9bn euros.  Delhaize’s market share remained stable, at slightly over 24%.

Aldi moves up in UK

Aldi is now the UK’s fifth largest grocery retailer. Latest grocery market share figures from Kantar Worldpanel for the 12 weeks ending 29 January 2017 show that the discounter’s sales were up 12.4% year-on-year with its market share increasing by 0.6 percentage points, overtaking the Co-op and clinching the fifth place slot for the first time.

Kantar said: “Just a decade ago Aldi was the UK’s tenth largest food retailer, accounting for less than 2% of the grocery market.  Since then the grocer has grown rapidly, climbing the rankings by an impressive five places to hold a 6.2% market share. Underpinned by an extensive programme of store openings, the past quarter has seen Aldi attract 826,000 more shoppers than during the same period last year.”

Tesco grows organic sales

Britain’s largest grocer is finding success with its organic products. Tesco reports that its total organic product sales increased 15% over the past year, as organic fish and dairy products proved more popular with shoppers. Organic meat and chilled foods sales increased by 13% over the past 12 months. “The popularity of organic food began with fruit and vegetables but are now seeing customers exploring areas such as grocery, fish and dairy, so you can now use organic produce for the whole meal,” Tesco said.

Lidl spends in France

Lidl spent more money on advertising than any other large retailer in France, according to published reports. The retailer posted a 40% like-for-like increase in its advertising budget last year, with a total of 415m euros spent. The next-largest budget for a supermarket retailer was E.Leclerc, with 325m euros.

Rema 1000 cuts brands

Rema 1000, one of Norway’s leading retailers, is removing many major brands from its shelves, in favour of local suppliers and only a few national conglomerates. The retailer’s so-called “best friends” strategy involves developing closer ties with selected suppliers and dropping others on a national basis, to cut costs. With higher volume for the “best friend” brands selected, Rema figures it will be able to sell them at lower prices and resume its position as Norway’s lowest-priced chain, by Norwegian standards. Along with the new strategy, Rema 1000 is introducing the Rema Prima brand.

Edeka extends dairy range

Edeka Group is extending its range of dairy-based products, made with milk from cows that are fed GMO-free feed for a minimum length of time. The newly-launched or rebranded GMO-free milk-based products can be recognised by a green, diamond-shaped 'Ohne Gentechnik' seal, which is issued by the VLOG: the 'Verband Lebensmittel ohne Gentechnik', or the German Association of Foods (produced) without Genetic Engineering.

In addition, Edeka is launching around 40 yoghurt and milk-based products under a new private label brand ‘Good Food’, which represents more sustainable and eco-friendly farming.

To qualify for this label, products need to have been produced with milk from cows fed a GMO-free feed, which was produced in Germany, or at least the EU, as well.

Migros posts gains

Migros reports that its food production unit, M-Industry, posted sales growth across most of its divisions last year, as well as recording a 12% increase in export turnover. The business posted total sales of CHF 6.39bn, a 2.1% increase on the previous year. The best-performing division in terms of sales growth was confectionery, which posted sales of CHF 838m, a 5% increase, and 36% increase in export sales. The retailer said that while the Swiss market will ‘remain challenging’ for M-Industry, the group’s international business will be “further developed organically and through acquisitions in key markets”.

Albert Heijn starts YouTube channel

Dutch retailer Albert Heijn has launched an interactive YouTube channel, ‘Appie Today’, which presents vlogs, shows, reviews and informative features about food, trends and current affairs. The online content will be created in collaboration with customers and employees of Albert Heijn. “The media landscape is fragmenting and the media consumers are increasingly selective in their search for a story that they can connect with. We believe that ‘Appie Today’ offers exactly that,” Albert Heijn said. 

French supplier looks to UK

Agromousquetaires, the food and drink manufacturing division of French conglomerate Groupement de Mousquetaires, is preparing for a move into the UK private label market. Just Food reports the supplier is in advanced talks with some of the UK’s top retailers to offer a range of French appetiser-to-dessert products.

Agromousquetaires CEO Christophe Bonno said the UK is a “key market” for the group’s expansion: “We are not in the UK at present, but it is a big market for French food manufacturers and so we are already prospecting there.” He confirmed talks are already underway with retailers including Tesco, Asda, The Co-operative Group and Marks and Spencer.

Agromousquetaires, which has more than 60 production sites in France, claims to be the leading supplier of private label products in France by market share. Agromousquetaires' turnover in 2015 was 4bn euros, of which three-quarters was generated by sales to its sister grocery business Intermarche. The group supplies 45% of Intermarche's private label products.

In the Stores 

Mercadona remains the largest grocery retailer in Spain with a market share of 22.9%, according to Kantar WorldPanel.

Edeka intends to enter into a long-term partnership with Budni, a pharmacy retailer in Hamburg.

Dia plans to significantly increase the number of franchise stores it has in Portugal.

Axfood in Sweden reports that 2016 was its best year to date, with a consolidated net sales increase of 5.1%, to about 4.5 bn euros.

Super U in France plans to remove or reduce 90 “controversial” substances from its private brands, including palm oil, monosodium glutamate, aspartame, bisphenol A and high-fructose corn syrup.

Albert Heijn in the Netherlands has introduced a range of ready-to-eat foods, including marinated free-range chicken and free-range chicken casseroles, schnitzels and burgers.

Tesco has launched a range of prepared frozen fruit in resealable packs.

Morrisons in the UK has relaunched its healthy eating brand, Eat Smart, with more than 80 products.

Netto in Poland is expanding its range of vegetarian and vegan items.

Dutch retailer Jumbo has introduced a 25 SKU children’s product range, using the popular Dutch cartoon characters Woezel & Pip.

Discounter Lidl has selected Portugal to launch ‘My Lidl Shop’, a game app which allows children to create their own retail business.

Aldi’s Mamia infant care range sales have passed 90m pounds to become Britain’s second-bestselling private label brand after Tesco Loves Baby.

Dixy Group in Russia says its Baby Boom brand, introduced last year, has led to a 30% increase in sales of baby care products.

Colruyt is testing meal boxes for families with children by offering them to employees.

Spar has introduced a range of specialty popcorn in the UK.

Shoprite Holdings and Steinhoff International have dropped their plans for a merger, which would have created the largest retail group in Africa.

Consilia, the private label supplier owned by the Supermercati Uniti Nazionali (SUN) retail consortium, posted sales growth of 22% during January to November 2016.

Blokker, the non-food retailer, will close 69 of its 190 stores in Belgium.

Group Crai in Italy plans to open more large supermarkets under the Crai Extra banner.

Coop Suisse said that its Coop @home online supermarket posed a 7.2% gain in sales.

Plus in the Netherlands plans to replace four distribution centres for perishables with one fully mechanised distribution centre by 2020.

Waitrose was voted the UK’s favourite supermarket for the third year in row in a poll by a consumer group.

Dm, the drugstore retailer, ranked number one in the consumer survey of “Meaningful Brands” in Germany by the Havas Group advertising agency.

Continente, the hypermarket retailer in Portugal, has started delivering fresh products in Lisbon as part of its online service.

Migros has launched Migusto, an online cooking club.

Turnover at Greek supermarkets declined 6.5 percent year-on-year in 2016, according to IRI.

Online UK grocer Ocado is testing a soft robotic hand that can pick fruit and vegetables without damaging them in its warehouses.

Market Research 
“Free-from” and organic foods sales climb
Sales of “free-from” and organic foods keep climbing in Europe, according to new data from Euromonitor International. In Eastern Europe sales of free-from and organic products were up 10.6% and 8.8% respectively in 2016 compared to 2015. In Western Europe, free-from increased 11.5% while sales of organic rose 5.4%. Sales of organic across Europe reached almost 13.8bn euros last year, while free-from totalled just under 7.8bn euros.
 
The products also had a great year worldwide, with organic up 7% to 33.8bn euros and free-from up 6.8% to 30.0bn euros. Globally, free-from gluten (up 12.9%), organic savoury snacks (up 12.7%) and organic soup (up 11.7%) posted the most impressive 2016 sales growth figures in Euromonitor’s analysis. Not far behind were products free-from meat, with sales rising 11.4% to 2.4bn euros last year. Western Europe drove the growth with sales up more than 15% to 960m euros.
French look for balanced diet

French consumers are increasingly concerned about their food, according to a poll of 1,000 consumers by Harris Interactive. French consumers pay attention to their nutritional balance, favouring fresh products and often following a specific diet. For 63% of them, a balanced diet is important and for 21% it is essential.

New food diets are emerging but acceptance is limited. For example, while 95% know about the vegetarian diet, only 5% consume it. The same applies to gluten-free (93% know and 4% practice), vegan (88% know and 4% practice), and paleo (31% know and 4% practice). Fruits and vegetables and fish are consumed more often, while there is a decrease of meat, biscuits, milk and wine.

China slows down

China’s FMCG market in 2016 grew by just 2.9% year-on-year, marking its slowest growth in the last decade, according to Kantar Worldpanel. In contrast, the market grew by 3.5% year-on-year in 2015. Kantar said the growth of modern trade (hypermarkets, supermarkets and convenience stores) slowed to just 0.7%, challenged by both a decelerating economy and a rapidly growing e-commerce channel. Market share for international retailers declined to 11.9%. The report found that 54% of Chinese urban families bought FMCG products online during the year, a 10-percentage points increase on the year.

PLMA News 
“World of Private Label” to be held 16-17 May

PLMA’s 2017 “World of Private Label” International Trade Show will feature over 4,300 exhibit stands, 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. The event will be held 16-17 May at the RAI Exhibition Centre in Amsterdam.  

A special pre-show seminar programme will take place prior to the show. Admission to the seminars is complimentary to all registered visitors and exhibitors. The seminars will be presented at the RAI Centre on Monday, 15 May. Presentations are translated into English, French, German, Italian and Spanish. For more information about PLMA’s 2017 “World of Private Label” Trade Show, click here.

Events 
16-17 May
“World of Private Label” International Trade Show
Amsterdam, The Netherlands