EU supply chain law moves towards adoption

The EU Committee of Permanent Representatives of the Member States voted in favour of the supply chain law. This means the law is one step further in the adoption process. The rules must be voted on in the European Parliament before they come into force.

Now, what is this law about. As reported earlier, the EU has been investigating the possible stopping of goods entering the Union if they were produced using "forced labour." The rules are to provide a framework for communities to sue EU companies for human rights abuses and environmental harm in their supply chains.

A system would be set up in which a list of high-risk areas and sectors would be created. When a company wants to import goods from the list, or produced in areas from the list, the burden to proof that no forced labour was used would fall on the company, not on the authorities.

The process leading up to the approval has meant that many concessions were done. The new agreement now applies to companies with more than 1000 employees, up from 500 and a net turnover of €450m, three times the amount previously agreed. Environmental groups estimate the changes will exclude 70% of the companies the law was meant to cover. 

Is Lidl changing its basics?

Discounters are known for their everyday low-price model. Yes, they do offer weekly promotions. But their permanent range and especially their private label has always been known for the ‘best product for the best price’. 

In France, Lidl seems to be moving away from this motto. It has introduced a new range of ‘mini-prix’ products in its stores. The range includes everyday basics in simple packaging for the lowest price, approximately 25% lower than its regular private label. The range is being introduced gradually and the retailers’ objective would be to eventually have some 80 products.

Competition for price leadership seems to be the driver of this development. Lidl and E. Leclerc, market leader in France, have constantly been claiming to be the cheapest on the market. In today’s inflationary environment, Leclerc gained new market share with its low-cost Eco+ range and, in its own words, has dethroned Lidl from being the number one in price positioning on the French podium. Lidl’s introduction of the ‘mini price’ line seems to be a direct response to that.

Retail industry needs skilled tech personnel

Technology has long been becoming part of the food retail and manufacturing operations, not only in online activities, but also in logistics, ordering processes and on the store floor. Finding skilled personnel is an ongoing challenge for both manufacturers and retailers now that more and more jobs in the sector require technical insight or knowledge of AI and machine learning. For tech students, the retail or fmcg manufacturing business has not been the most logical or attractive choice after graduation.

As a result, companies have been very creative with incentives to lure talented technology specialists, and to retain them. Lidl, for example, is financially supporting personnel in getting their driver’s license. Children of personnel can also participate in the discount. In the UK, the company is doubling the period of paid maternity and adoption leave from 14 to 28 weeks. In addition, the supermarket will be introducing paid leave for staff undergoing fertility treatment. Edeka tries to win over Gen Z to come work with a creative use of typical “money scam” videos, with which young-dynamic success gurus promise their peers simple tricks in order to quickly gain wealth. The guru in Edeka's videos points out the golden opportunities that lie in an apprenticeship at the retailer.

In addition to special recruitment activities, companies in the fmcg industry have set up in house upskilling programmes for existing personnel to teach them how to work with new technologies and programmes. 

 

More franchising ahead

Retailers are increasingly turning to the franchise model in their store operations. Take Carrefour, from origin operating with own stores, started franchising convenience stores in Brazil last year. In Belgium, the majority of its stores are operated by franchisees and expansion here will equally be done through franchising. In France, it is mainly hypermarkets that are seeing a transfer to franchise. 

Alexandre Bompard, CEO of Carrefour, has put the franchise model at the centre of its strategic operations and says that more than 90% of future store openings in Europe will be franchises. The Group will continue to transfer integrated stores to franchise and lease-management in Europe.

Delhaize stirred up the Belgian retail sector last year by announcing that all the stores it owned and operated in Belgium would be franchised. In the meantime, the retailer found buyers for all of the stores and the transfer operation started a few months ago. The goal is that the transformation will be finished by this autumn. Reportedly, the first new openings show encouraging results. 

Auchan, historically owner and operator of all of its stores, embarked on a large development project towards franchising supermarkets. The retailer set itself the goal of achieving one thousand franchised stores in France in the long term. 

Experts see the move towards franchising as a way to keep prices low and preserve margins. Franchisers can respond more quickly to the needs of their customers, with adjustments to the offer and the addition of local products. Work organisation in the store can be managed more flexibly, improving productivity and service.

'Smart' shopping carts being trialled

In Germany, Rewe is testing tablets attached to carts with an AI powered system that allows customers to scan their shopping list. The system can then navigate them to the desired products. On the way there, the screen shows discounted items and special offers.

Conad is testing a project that it calls ‘Genio nel carrello’ (genius in the cart). The smart trolley is able to recognize the items that are placed (or even thrown!) inside. The trolley, thanks to 8 cameras on board, and hardware inside the installed tablet, is able to recognize products with around 95%. Payment with the trolley can take place in three ways: passing through the traditional checkout, using the self-payment area, and the Pass Pay lane – passing without stopping for customers registered with a form of digital payment on the app.

In a first for Belgium, Colruyt is experimenting with a smart shopping cart with a camera, screen, and sensors. The screen shows your shopping list once you scan your loyalty card. Shoppers can leave the store without stopping at a checkout. For now, the test is conducted in one store and with employees only.

Rise of chemicals in fruit & veggies in Europe detected

Europeans are increasingly exposed to PFAS, or ‘forever chemicals’, through their food. PFAS are deliberately sprayed on crops to increase the effectiveness of pesticides, although farmers are not always aware of them because they are not always explicitly stated on the products they use.

‘Forever chemicals’ are almost impossible or very difficult to break down in nature or in our bodies. Some PFAS can damage the immune system and cause cancer and have a harmful effect on the environment. As part of the Green Deal, the European Union wants to phase out the use of PFAS chemicals.

Of the 20 EU countries surveyed, PFAS chemicals were found most often in Belgium and the Netherlands. The volume of fruit contaminated with PFAS grew by 220% between 2011 and 2021.

EU updates cybersecurity regulations for supermarkets and suppliers

To help mitigate the risks of cyber threats to retailers and other industries, the EU has updated its cybersecurity regulation, Network and Information Security (NIS), to NIS2. This EU-wide initiative delivers the framework needed to build better cybersecurity structures across industries that provide essential functions. 

The food sector in the European Union is one of the largest and most important industries, covering every aspect from farming to food processing, packaging, transportation, and retail sales. NIS2 now categorizes the food sector as an “important entity that provides essential functions” and includes food retailers and processors and producers.

Companies covered will have the duty of care and duty to report. Duty of care includes a risk assessment with consequential measures to be taken to guarantee continuation of services as much as possible. Duty to report involves reporting incidents that (can) significantly disrupt the provision of the essential services to the supervising authority within 24 hours. Organisations covered by the NIS2 directive will be under supervision. 

The NIS2 directive also encourages supply chain management as an essential component of cybersecurity. This will require food sector organizations to ensure that their suppliers and partners meet the same cybersecurity standards that they themselves are required to comply with.

The NIS2 directive will come into effect by mid-October 2024.

Russian barebones discounter returns to Western Europe

Mere, the hard discounter from Russia, seems to be in the middle of a relaunch in Western Europe. The chain opened two stores at the end of last year and a third last month in Spain. The company plans to open another six new stores in Spain this year. In Belgium, it opened three stores under the ‘MyPrice’ banner with plans for another three here this year. The discounter announces the opening of eight or nine stores under the MyPrice banner in Germany this year.

It is a remarkable move for a company that did an earlier push into Western Europe a few years ago. The discounter opened one store in Belgium in 2022 and pulled the plug after a few months. It similarly entered and left the UK, Germany, Austria, France and Spain. At the time, it was said that there were supply issues and a lack of interest of the West European consumer.

The Mere and MyPrice banners belong to the Siberian group Svetofor. In Russia the retailer trades under the Svetofor name and is among the top ten food retailers. In Eastern Europe, it has stores under the Mere banner, amongst others, in Czechia, Serbia and Lithuania.

The retailer works with a super simple concept in order to cut costs wherever possible. It sells a changing range of unknown brands displayed on pallets. The stores look like bare containers without any decoration. Goods are sold at prices that are 20 to 30% lower than those of other discounters. The stores operate with a limited workforce and are located at cheap locations outside the cities. It remains to be seen whether the concept will appeal to consumers this time.

Meanwhile, the Belgian Economic Inspectorate is conducting an investigation into the MyPrice chain. It will be examined, among other things, whether it complies with European sanctions against Russia.

France reserves familiar "meat" names for meat only

The French government has published a decree with a list of names reserved for animal products. From now on, it is forbidden to use these names for vegetable protein products. The list includes names like ham, sausage, bacon, steak, prime rib and filet.

The ruling is a response to a long-standing complaint by the meat industry that terms like vegan steak or vegetarian bacon is confusing for consumers. It only applies to plant-based food produced in France: producers elsewhere in the EU can continue to sell vegetarian food with meat names in France.

French producers have one year to clear their existing stock. After that, companies breaking the labelling law can be fined up to 7.500 Euro.

The Italian lower house passed a bill last November to ban the use of meat-related names, such as 'salami' or 'steak', for plant-based meat products. After a wave of outrage in Italy, the third-largest vegan market in the EU, the government postponed the bill.

In EU Law, there already exists a ban on certain terms including “milk” and “yoghurt” for plant-based dairy, even if they are accompanied with qualifiers such as “plant-based” or “vegan”. However, until now, the EU refrains from regulating the use of ‘meaty’ names.

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.