The Future of European Food and Drinks Retailing: Implications of fast growth formats and private label for brand manufacturers

Table of Contents

Chapter 1 Market development 18

• Summary 18
• Introduction 19
• European food retail market value 19
• Consolidation of retailer market share in Europe 21
• Price pressures and regulatory action 24
  • France 25
  • Germany 26
  • Italy 27
  • Sweden 27
  • UK 28
• Leading foreign players 29
• Leading food retailers 31
• Maturity of the European food retail market 33

Chapter 2 Future store formats 38

• Summary 38
• Introduction 39
• Food retail market segmentation 39
• Diversification into convenience stores 41
• Regulation and store opening hours 42
• The growth of discounters 44
• Expansion of product offering 49
  • Fresh produce 49
  • Branded products in store 50
  • The impact on private label 52
• Changes in space allocation 54
• Growth of fresh produce in discounters 56
• Increase in non-food in supermarkets 56
• Expansion of online offering 58
• Online users in Europe 58
• Online offering by retailer 59
• Effect on in stores sales 61
• Case study: The Metro Group's future store 62
• Introduction 62
• The technology 62
  • The personal shopping assistant 62
  • Electronic pricing labels 63
  • Information terminals 64
• Supply chain rationalization 65
• Conclusions 68

Chapter 3 Growth of private label 70

• Summary 70
• Introduction 70
• Private label development 71
• Belgium 72
• France 73
• Germany 74
• Italy 74
• Netherlands 75
• Spain 75
• UK 76
• Promotion and pricing activities 77

Chapter 4 Future private label brands 80

• Summary 80
• Introduction 81
• Discount private label 81
• Premium ranges 83
• Private label and ethical retailing 89
• Nutritional labeling 90
• Salt and fat reduction in private label products 92
• Locally sourced products 95
• Key innovators in local products 96
• Fair Trade 102
• The future of mainstream brands 105

Chapter 5 Conclusions 114

• Summary 114
• Introduction 115
• The future of the European grocery retail market 115
• Leading innovative retailers 115
• Key formats in Europe 117
• Convenience growth strategies for manufacturers 118
  • Develop products for convenience stores 118
  • Supply discount stores 121
• The private label threat 122
• Ethical retailing 123
• Innovate 124
  • Be innovative in product formulation 124
  • Develop innovative packaging 125
• Broaden brand portfolio to target more consumers 126
  • Upgrade to super-premium 126
  • Create value brands to compete with discount private labels 127
• Joint ventures for co-branding 128
• Index 129

List of Figures

• Figure 1.1: European regions that have experienced the most change in the food and drink retail market in the last 5 years 21
• Figure 1.2: Market shares of the top 5 and top 10 retailers in Europe, (%), 2004 22
• Figure 1.3: Forecast growth, (%), 2005-2010 vs. market share of the top 5 retailer, (%), 2004, by country 23
• Figure 1.4: Regulatory analysis by country 25
• Figure 1.5: Maturity and sophistication of the European food retail market by country 34
• Figure 2.6: Food retail market segmentation: % share, by value, 2004 39
• Figure 2.7: The fastest growing formats in terms of market share across Europe over the next 5 years 40
• Figure 2.8: Discounter presence vs. market consolidation 48
• Figure 2.9: The level of impact on sales of private label products with branded products in hard discounters 53
• Figure 2.10: Internet user growth, %, 2000-2005 58
• Figure 2.11: How will the relationship between online and in store retailing change for multiple grocers across Europe in the next 5 years? 61
• Figure 2.12: Technology in the Future Store 63
• Figure 2.13: The smart chip 65
• Figure 2.14: Potential benefits of RFID, from supply chain to after sales 67
• Figure 3.15: Private label sectors that will have the biggest impact on brands across Europe in the next 5 years 71
• Figure 3.16: Private label shares by country, (% value), 2004 72
• Figure 3.17: The level of importance for various promotion/pricing activities in food and drink retailing over the next 5 years 77
• Figure 4.18: Leading European retailer value private labels 81
• Figure 4.19: Factors driving premiumization 85
• Figure 4.20: Leading European retailers premium private labels 87
• Figure 4.21: Warburtons Cranberry Fruit Loaf 88
• Figure 4.22: How important are ethical/ responsible practices to the future success of food and drink retailing? 89
• Figure 4.23: Tesco nutritional labeling 90
• Figure 4.24: Delhaize nutritional labeling 91
• Figure 4.25: Marks & Spencer gourmet additive free crisps 94
• Figure 4.26: Filière Qualit�ECarrefour 96
• Figure 4.27: Reflets de France 97
• Figure 4.28: EU organic logo 100
• Figure 4.29: Organic private label ranges 101
• Figure 4.30: Fair Trade logo 103
• Figure 4.31: Nestle Fair Trade coffee 104
• Figure 4.32: Mainstream brands are being squeezed by premium and discount labels 105
• Figure 4.33: Nativa White Tea 107
• Figure 4.34: % of innovative product launches in each category, 2000-2005 108
• Figure 4.35: Wellness Coca-Cola Functional Drink 109
• Figure 4.36: Gira & Gratta Cheese + Rotary Grinder 110
• Figure 4.37: Tyrrells, Kettle Chips and Walker's Sensations innovative premium snacks 111
• Figure 5.38: Leading examples of products for convenience stores 119
• Figure 5.39: Types of private label products that will experience an increase in sales over the next 5 years 122
• Figure 5.40: Brand manufacturers' labeling initiatives 123
• Figure 5.41: Ty Nant Still Water 125
• Figure 5.42: Varieties of beer under the Kronenbourg brand 126
• Figure 5.43: Nestle have a wide portfolio of brands 127
• Figure 5.44: M�Eler have created joint ventures for added credibility 128

List of Tables

• Table 1.1: Food retail market value by country, $bn, 2005-2010 20
• Table 1.2: Leading foreign players by country, 2004 29
• Table 1.3: Leading grocery retailers, 2005 31
• Table 2.4: Value of convenience store food and drink sales by country, 2005-2010 (US$m) 41
• Table 2.5: European store opening hours 43
• Table 2.6: Discounter presence by country, (%), 2004 44
• Table 2.7: Leading multi-format retailers with discount operations 46
• Table 2.8: UK grocery space data, average (%), 2005 54
• Table 2.9: UK grocery space data, average (%), 2005 (Cont) 55
• Table 2.10: Online offering by retailer 59
• Table 4.11: The value (US$bn) of specialty food and drinks markets, by country, 2005-2010 84
• Table 4.12: Wealth groups in Europe (m) 2000-2005 86
• Table 4.13: Value of the global (Europe and US) organic food and drink markets by key product markets, $bn, 2005-2010 99
• Table 5.14: The leading innovative retailers in food and drinks retailing over the next 5 years 115
• Table 5.15: European regions that will experience the most growth in terms of market share in convenience and discount stores in the next 5 years 118