In its European “Grocery profitability outlook," consultant firm McKinsey concludes that grocery retail margins are low compared to other industries and have been under pressure. Macroeconomic conditions and industry dynamics have negatively affected hypermarkets and supermarkets over the past five years whereas discounters slightly increased margin.

The average operating profit margin (EBITDA) of food retailers was 7.1 percent between 2009 and 2023. Hypermarkets and supermarkets only post an EBITDA margin of 6.6 percent on average in 2023. According to the researchers, the decrease in the past five years. McKinsey warns that these are averages, as profitability varies considerably between retailers.

For example, over the past five years, Polish Dino has an EBITDA margin of 9.2% and Kesko has 9.1 percent. Axfood reached an 8.6% margin and Ahold Delhaize posted 8.5%. Sonae’s margin was 8.1% and Colruyt 7.9%. For Jeronimo Martins it amounts to 7.5%, for Lidl it is 6.1% and for Carrefour 5.9%. Metro Germany closes the ranks with an EBITDA margin of 4.8%.

McKinsey expects that over the next five years, pressure on grocers’ margins will continue, especially for hyper/supermarkets. If no counter measures are taken, average EBITDA impact could average to a decrease of -0.2 to -2.7 pp for hyper/ supermarkets.

Lion’s mane is quickly gaining traction as a popular functional ingredient in food and beverages. As awareness of its claimed health benefits grows, manufacturers are witnessing a significant rise in demand for products containing this unique mushroom.

Lion’s mane is an edible mushroom native to Asia, Europe, and North America. It is easily recognizable by its long, white, shaggy spines that resemble a lion’s mane, which is how it earned its name. This striking appearance is one of the key features that make it stand out as an ingredient in both culinary and functional products.

Research claims that lion’s mane offers a range of health benefits, including supporting cognitive function, promoting nerve repair, improving cardiovascular health, and even aiding in weight management. These attributes have fuelled consumer interest in incorporating the mushroom into their diets, either through foods, beverages, or supplements.

The versatility of lion’s mane would make it an excellent addition to a variety of products, from risotto, pasta, soup, smoothies and protein shakes to cereal bars. Its unique earthy flavour adds depth to different dishes, allowing it to easily integrate into a wide range of food and beverage formulations.

Discounter Aldi has announced that it plans to open 225 new stores in the US in 2025. This is the most stores Aldi will open in one year in its nearly 50-year US history. Currently, the retailer operates over 2,400 stores there, which is already much more than the approximately 2,000 stores that Aldi has in its home country Germany. The US expansion is part of the next phase of its five-year national growth strategy.

The new stores will open through a combination of organic growth and converting select Winn-Dixie and Harveys Supermarket stores to the Aldi banner. With the move, the retailer is adding to its established footprint in some regions and entering into new regions.

Aldi said that in 2024, 19 million new shoppers were drawn to its stores in the US. In November, Aldi US President Dave Rinaldo spoke at PLMA’s Chicago trade show about Aldi’s growth plans. He also stressed that the time is right for private label growth throughout the industry. "Private label is having a moment. Amid inflation, shoppers discovered they don’t need to sacrifice quality to save money," said Rinaldo. "In fact, 90% of shoppers say they’ll continue to buy private label in the future."

The keys to private label success, Rinaldo added, are "obsessing over quality, innovating to excite shoppers, controlling costs, and keeping our customers at the centre of everything we do.”

The UK Competition and Markets Authority (CMA) has proposed measures to tackle the high cost and limited choice in the baby formula market. These suggestions aim to save parents up to £300 a year by encouraging them to choose lower-priced brands. The proposals include standardising packaging and labelling in hospitals to reduce the influence of branding on new parents, as well as allowing parents to use loyalty points and gift vouchers for formula purchases.

The CMA rejected the idea of a price cap on formula products, citing potential risks such as pushing up prices of cheaper brands. Instead, the CMA recommended providing clearer information in stores, with all brands displayed together, so parents can make informed decisions and easily compare prices. The watchdog also suggested removing restrictions on using loyalty points to buy formula but advised maintaining a ban on advertising formula products to avoid discouraging breastfeeding.

The CMA’s study, which began in November 2023, revealed that manufacturers raised prices by up to 36% in just two years, leading to higher profit margins during the cost-of-living crisis. The three main companies—Danone, Nestlé, and Kendal—control more than 90% of the market.

Belgian retail leader Colruyt has expanded its Eco-score label with a savings programme. The ecolabel, launched in 2021, provides insight into the environmental impact of products.

At PLMA’s Private Label Packaging Conference in January, Greet De Feyter, head of product sustainability, and Ilka Lannau, head of division private label of Colruyt Group, explained how the company stimulates consumers to consciously consume more sustainably with the help of the Eco-score on the packaging and the associated savings programme.

According to the retailer, consumers increasingly attach importance to transparency and sustainable products. Research shows that 90% of consumers consider transparency of brands important in their purchasing decisions. In addition, 75% of consumers would be willing to switch to brands that offer more than just product and nutritional information. 50% of consumers also plan to buy healthy, local or environmentally friendly products more often.