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Industry News
PLMA e-Scanner – March 2023
March, 2023
Another reshuffle in Danish retail
Coop Denmark, a leading Danish retailer, will merge the seven banners it now operates into three by the end of this year. The big news for the country is that its iconic supermarket chain Irma, founded in 1886, will disappear from the retail landscape. Last year, Coop phased out its Fakta discount banner, partly converting stores into the 365discount format and closing the remaining ones.
With the launch of a new strategy named “The Coop of the Future,” the retailer is unifying its banners in order to become more efficient, simpler and cheaper for customers. Irma, Kvickly, SuperBrugsen and Dagli’Brugsen will merge into either Coop, 365discount or Brugsen. Coop.dk MAD, Coop’s grocery delivery service, ceased operations last month. Coop will focus on its stores, coop.dk and the app for a strong omnichannel experience.
The news comes as Denmark just witnessed Aldi pulling out of the country and selling 114 of its stores to the Rema1000 discount chain.
Lidl to reduce meat choices
Lidl announced it will reduce the sales of meat and increase the proportion of plant-based food in its assortment. The move is part of a sustainable new business strategy aimed to help the environment and meet the demands of a growing global population. “There is no second planet,” said purchase director Christopher Graf at the International Green Week in Berlin.
The retailer specified it does not intend to dictate how customers live their lives but wants to motivate them to eat plant based. While part of its customer base may not like to see less meat items, it expects that younger generations will be happy to have more options to choose from.
Lidl plans to set up themed weeks to bring the new strategy to consumers. By 2025 at the latest, the share of vegetable protein sources in the company's range must be "demonstrably increased."
Lidl also reports that it has almost completely stopped advertising unhealthy assortments to children since the beginning of this year. Only around holidays like Christmas, Halloween and Easter, the retailer will make an exception to this policy.
For private label sales in the US, 2022 was a record-breaking year
Powered by a double digit increase in sales, private label in the US set new records in annual volume as well as in dollar and unit shares. Month after month, sales climbed steadily. The year began with single digit sales increases in January (up 6.3%), February (7.5%) and March (9.1%). Then the gains rose sharply to double digits in May (up 11.8%) and they never looked back, with the final four months averaging a 13% improvement.
For the full year, private label sales advanced 11.3%, nearly twice the growth of national brands, which were up 6.1%, according to data from IRI Unify. Annual dollar volume increased $23.2bn, setting a new record of $228.6bn. Store brands accounted for 29% of all new dollar sales that flowed into U.S. retailing industry last year. Store brand dollar share came in at 18.9%, up 0.7 points from 18.2% in 2021; unit share was 20.5%, up from 19.9%.
European retailers battle inflation
Throughout Europe, consumers are dealing with inflation and high prices in their grocery stores. In some countries, governments intervene, in others, retailers compete with each other to strengthen their image to consumers of affordability.
In the UK, Tesco has added more private label SKUs to its Aldi Price Match campaign, now including close to 700 products. Competitor Sainsbury’s equally expanded the price match campaign by almost a third to now cover over 300 products. Waitrose is investing £100m this year on cutting the price of hundreds of products including fresh veg, meat and tea, in what the retailer said is a record price cut designed to help shoppers during the cost-of-living crisis.
France’s finance minister has urged food retailers to do more to help consumers cope with high prices, as the government leans on them, voluntarily for now, to agree to sell an anti-inflation basket of everyday essential goods at very low prices. Système U has already launched 150 everyday products, the majority of which are own brands, at cost price. Lidl made a similar move. Auchan doubled the number of products offered at low prices. Carrefour has its own anti-inflation campaign with hundreds of products offered for knockdown prices. Casino uses a price freeze on a range of 550 everyday products.
In Spain, the government has eliminated VAT on staple foods (bread, bread flour, milk, cheese, eggs, fruit, vegetables, legumes, potatoes and cereals), going from 4% to 0% during the first six months of this year. In the same way, it reduces this tax for oil and pasta from 10% to 5%.
The Greece government has enforced a so-called inflation basket on retailers. Products include, amongst others, milk, meat, rice and bread.
Inflation is still high and supermarket prices remain under pressure, not the least because brand manufacturers continue to ask for higher prices. The end of the inflation game is not in sight yet.
UK grocers ration fresh produce
Supermarkets across the UK have been forced to impose purchase limits on fresh produce due to supply shortages. Facing empty shelves, more and more stores are rationing the amount of fruit and vegetables to prevent supplies from going completely bare.
Tesco, Aldi, and Morrisons are among supermarkets that are telling customers they can buy no more than two or three packs of tomatoes, cucumbers, peppers, salad bags, broccoli, or lettuce.
The causes of the scarcity are many. First, bad weather conditions (flooding, storms, unusually low temperatures) in the south of Europe and Northern Africa have disrupted harvests for some items. Within Britain, farmers have to use greenhouses to grow crops. The current sky-high energy prices have forced them to cut back on heating the greenhouses and hence, on production.
The UK domestically produces 35% of its total supply while net imports make up the other 65%, mainly from Spain and Morocco. The supply chain disruption is expected to last until the summer.
In the Stores
Alcampo has added a new private label range of products for seniors to its shelves, aimed at meeting the nutritional needs of the elderly. The products include light creams whose texture is easy to chew.
Albert Heijn will stop flying in fruit and vegetables from 1 June. The chain will only transport goods by water and road. The retailer promises that the new method of transport will not affect the quality of fruit and vegetables.
Auchan has launched a private label called Tavola in Italia. It carries the retailer’s logo on the front of the packaging and will eventually comprise 80 SKUs.
Dunnes Stores has acquired Buymie, the Irish same-day grocery delivery service. Last year, Buymie was ranked as the fastest-growing Irish tech company by Deloitte.
Kaufland has opened an online marketplace in Slovakia and plans to open one in the Czech Republic. The site will offer customers a wide range of products including electronics, garden & DIY, kitchen & household, baby & child, sports and fashion.
Hofer has expanded its range of Rettenswert (worth saving) items. Products include vegetable soups, pesto’s, jam varieties from too small, too big too crooked or too ripe fruit and vegetables.
Department store Bijenkorf is closing its online websites in Germany, Austria, France, Luxembourg, Monaco and Belgium. Within the next few months, the luxury chain will only be available online, and with physical stores, in the Netherlands.
Eroski has developed a new range of own-brand vegan products called Eroski Veggie. The line is made up of about twenty food and fresh products, in addition to four items that were already on the market. It's expected more products will be added this year.
Billa is growing faster than the market in Bulgaria. Rewe wants to invest more in the expansion of the subsidiary's branch network and plans to launch the German Rewe own brands "Ja!" and "Rewe Beste Wahl" to the range.
Aldi is promoting its private label in Poland with a campaign called "Ekspert Aldi poleca" ('Aldi expert recommends'). Aldi specialists of individual categories will talk about the advantages of the chain's private label products in newsletters, on the website and in stores.
Blokker expands the number of stores where Chinese web giant Ochama groceries can be picked up to over fifty. The trial period in a few stores has been successful and more stores will be added in the future.
Colruyt is testing a new AI checkout system that automatically scans products when they're transferred from one shopping cart to the other. The new check-out system speeds up the check-out process by one fifth and works with led lamps and cameras.
Carrefour is testing ChatGPT-generated videos in an attempt to reduce the labor cost of creating customer-facing videos. The company shared a first video made with a ChatGPT-created script and an ultra-realistic human-looking avatar generated by artificial intelligence on Linkedin.
Market Research
Global packaging trends 2023
Mintel has released its Global 2023 Packaging Trends report. Currently, there are many extraordinary outside influences on package innovation and the packaging supply chain. They include pressures from the environmental perspective, the conflict in Ukraine, global inflation, social issues, legal challenges, extended producer responsibility, among other forces. It means packaging must navigate new and more challenging routes to market.
For food and drinks, it says that consumers will find value in affordable food and drink that promises clarity, nutrition, and versatility. Package manufacturers are advised to enable clear communication of added-value nutritional content and provide efficient portioning and product preparation.
In beauty and care, consumers are seeking experimentation, social responsibility, and value from brands in-store and online. To respond to them, package manufacturers could use physical, emotional, visual, digital, and environmental attributes that mesh with consumers’ changing lifestyles.
Household care packaging of the future will be simple design, convenient dispensing, and an overt display of environmental and social responsibility.
In overwhelming numbers, Dutch consumers prefer private label
Research by MSI consultants shows that 70% of Dutch households have bought more private label in supermarkets. Some 78% are as satisfied with the private label as with the A-brand, 17% is even more satisfied with the private label. Because taste and quality are at least as good as the A-brand and much money is saved, going back to A-brands is no option for 90% of the respondents.
The top 5 categories in which consumers say they will change to private label are cleaning products, salty bread spreads, sweet bread spreads, confectionery and snacks.
Of the study's participants, 18 percent say they haven’t bought anything but private label in the past six months, and 52 percent have partially switched. In addition, 16 percent of the remaining part of the respondents say that they have always bought predominantly private label. Only 9 percent say they barely bought private label products six months ago and still do not do so. More than half of the Dutch shoppers expect to save at least 15 percent per week on the costs of groceries now that more private label products end up in the shopping cart.
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After a year of stabilisation, private label market shares are growing again. That trend is expected to hold strong through 2023, with shares greater than 30% in fourteen European countries and greater than 50% in six European countries. Economic and geopolitical circumstances are partially responsible for private label share expansion. However, consumers returning to their pre-pandemic shopping behaviours is the major growth contributor.
As market share grows, so does retailers’ reliance on viable private label suppliers. The establishment of these relationships is what keeps shelves stocked and fosters the awareness for product innovation.
The best place to connect with private label experts is PLMA’s “World of Private Label” International Trade Show. First organised in 1986, the show now brings together more than 2,500 private label manufacturers from over 70 countries with retail and wholesale buyers from more than 80 countries. All over the show floor, exhibitors are displaying innovative products and packaging, food as well as non-food, just waiting to be discovered.
Visit the “World of Private Label” and see for yourself how PLMA helps innovate and expand your company’s private label business. Click here to register.
E-Scanner is a monthly publication of the Private Label Manufacturers Association, Strawinskylaan 1873, 1077 XX Amsterdam, The Netherlands.
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