Retailers Adopt Multi-Tier Strategy
Lidl has been particularly active in 2009 with food from other countries, whose promotions include American-style food under the brand McEnnedy and Greek specialties under the Eridanous brand.
As German retailers build their private label ranges, organic and ethnic food options fare well.
The retail landscape in Germany is changing. Rather than just focusing on economy private label ranges as a defense against discounters, most supermarket and hypermarket chains are now building three-level private label ranges, consisting of economy, mid price and also premium-priced ranges, in addition to an organic range. However, these developments are still in an early phase, and while private label ranges are now becoming more distinctive in terms of brand names and being an integral part of the concept and image of a retail fascia, they have yet to become distinctive in terms of choice. For, despite the new names, many of the products are still interchangeable as many of the fruit juice varieties, yogurt or jam flavors, types of müsli and cereal, biscuits and other products can be found across all ranges, often at nearly identical prices. There are few truly unique products that are exclusive to just one range, and specialty food was not a top priority during the initial rollout of the new ranges.
Organic Exception
One major exception is the segment of organic food. All retailers, be they discounters, supermarkets or hypermarkets, now have extensive and growing ranges of organic products that are very competitively priced. Growing acceptance of these products has also meant that in recent years, several supermarkets have fully embraced them and incorporated them into their store brands, rather than using somewhat distancing third brands. Thus Rewe’s Füllhorn became Rewe Bio, Edeka’s Bio Wertkost became Edeka Wertkost and Metro’s Grünes Land became real,- Bio. The strongest discounter organic brands include Aldi’s Bio, Lidl’s Biotrend and PennyMarkt’s Bio Naturgut.
The latest arrival was Kaufland’s K-Bio brand, which was introduced in May 2009, initially comprising some 100 products, sold at every day low prices. However, this is only a small part out of Kaufland’s total organic portfolio, which consists of some 1,000 products with branded products sold at noticeably higher prices. K-Bio includes dairy products such as various packaged semi-hard cheeses, camembert, white cheese and mozzarella, as well as yogurts and milk. The frozen range consists mainly of a small selection of vegetables. Packaged food products include mustard, tomato puree, tinned tomatoes, various oils, dry pasta, pre-baked rolls, jam, honey, stock cubes, cornflakes and muesli. The range includes also a number of hot and cold drinks, such as coffee and various herbal teas, as well as apple, orange and carrot juice.
Ethnic Food
Ethnic food is an area where German supermarkets are currently playing catch-up, with shelf space growing rapidly, but usually messy presentation. Apart from a few isolated products, ethnic food has not yet found its way into the private label ranges of supermarkets and hypermarkets – whereas it is well presented in the portfolio of discounters. Sometimes the reason why discounters can afford to be more varied is because these products are not part of their permanent range, but only available for a limited time, often as little as one week.
Asian products are the theme of the most regularly run Ethnic food promotions, which tend to include products such as coconut milk, sesame and other Asian-style oils, canned soups, frozen products such as spring rolls or samosas, or savory snacks, stir-fry sauce and spices and pastes. Discounters tend to have a uniform design for such ranges, with Aldi Süd simply using Asia as a brand, while Lidl’s brand is Vitasia and PennyMarkt’s is Mei Tai.
Lidl has been particularly active in 2009 with food from other countries, whose promotions include American-style food under the either the American brand or McEnnedy, Greek specialties under the Eridanous brand, Italian specialties under the Italiamo brand and Scandinavian specialties under the Sodergärden brand. In addition Lidl ran a week-long Spanish promotion in September 2009. Without a specific brand, products were sold under the name Espana, and included various types of olives, various chilled tapas, olive oil, cheeses, sauces and pizzas in a Spanish style.
Italian Specialties
The discussion of ethnic food does not really include Italy, as Italian or Italian-style products such as pasta are so familiar to Germans that they would not really consider it ethnic food. All private label ranges include a wide range of dry pasta and pasta sauces, as well as a growing number of chilled products. Nevertheless, there are few brands specifically devoted to Italian products.
The largest Italian-themed range arguably is Aldi Süd’s Cucina. Several core products such as various types of dry and chilled pasta, pasta sauces and tinned tomatoes are always available. In addition, Aldi frequently has an Italy theme to its weekly promotions, when the Cucina range gets expanded significantly. Products offered during such promotions in the past included instant risottos, canned soups such as Italian Spinach Soup or Cream of Courgette, dried meat, an expanded choice of dried pasta and pasta sauces as well as biscuits, bakery products and desserts. Occasionally, the selection of Italian products is widened further by premium products, also sold under the Cucina brand, but with a red rather than a green base color.
Among supermarkets, Edeka was the only chain which traditionally had a brand solely devoted to the cuisine of another region – Bancetto for Italian and Mediterranean products. As part of the revamp of Edeka’s entire PL range, it is now sold as Edeka Bancetto. The original Bancetto range consisted mainly of pasta, pasta sauces, balsamico and tinned tomatoes and also olive oil. On its corporate website, Edeka had announced the extension of this brand also by other Mediterranean products, such as Italian sweet dairy deserts and Spanish sausages. However, these programs are now advertised under two new sub-brands: Edeka Italia and Edeka Espana. Edeka Italia products advertised on the corporate website include the deserts Tiramisu, Tartufo and Panna Cotta, as well as buffalo mozzarella and mascarpone cheese. Meanwhile, the first four products of Edeka Espana are four packaged sausage products – Serrano Ham, Salchichón, Chorizo and Chorizo Pamplona.
Indigenous, regional specialties are not a very hot theme for German retailers. Nevertheless, Aldi Süd occasionally runs Bavarian-themed promotions, for example in September, ahead of the Oktoberfest. Using the Wiesenschmankerl brand, products include canned and packaged sausages, frozen meat cooked in a Bavarian style, Bavarian packaged bread, mustard and Bavarian-style canned vegetables such as gherkins or sauerkraut.
Chilled ready meals
Currently, the only retailer with an extensive range of chilled ready meals is Edeka, which launched the range in the first half of the year. Simply branded Edeka, there is no separate sub-brand for these products, but all products are nevertheless identifiable as belonging to one range through a uniform packaging design. The range is divided into soups, traditional German dishes, international dishes, fish dishes, regional dishes and desserts. Examples of soups include Goulash soup or Italian Tomato Soup, while Stews include Pea, Lentil or Potato Stew with sausage slices. Traditional German dishes include Sausages with Mash, Chicken with Potatoes and vegetables, or smoked meat with mash and sauerkraut. International dishes include several Asian dishes – a type of product which, as chilled product, is still not widely available in Germany. The varieties are Red Thai Chicken Curry, Indonesian Bami Goreng, Sweet and Sour Chicken.
Better For You
Edeka’s new Lust auf Leicht range currently consists of several packaged meat and sausage varieties, while Bio Wertkost is Edeka’s organic range.
Better-for-you food is another area where discounters were the first movers and non-discounters only now are starting to catch up. While leading discounters, including Aldi, Lidl and Pennymarkt, have such a range, most of the supermarkets/hypermarkets have none – the one exception being Kaufland’s new K Classic Well You subbrand. Edeka could soon be the second exception with its Edeka Lust auf Leicht range.
One of the largest ranges is Aldi Süd’s Be Light, while other ranges include Lidl’s Linessa and PennyMarkt’s Line. Products off all three ranges can be found throughout the store, and are easily recognized by their light blue design. The core products in each range includes a number of dairy products such as yogurts, desserts and cheeses, packaged meat and sausage products, various mueslis, savory snacks such as crisps and crackers, and frozen stir fries in varieties such as Mediterranean Pasta and Wild Rice Stir Fry With Chicken.
K Classic Well For You products include dairy products, frozen food, oil, bread, cereal and rice and drinks, confectionery and savory snacks. In contrast to all other better-for-you ranges, its distinctive characteristic is a yellow rather than a light blue design. The dairy range includes more than 25 products and includes smoothies such as Strawberry Smoothie, probiotic yogurt drinks sold in packs of 6x125g, fruit yogurts and probiotic yogurt, various fat-reduced packaged cheeses such as Gouda, Maasdamer or Camembert and a fat-reduced margarine. Frozen food includes ready meals such as Mediterrenean Chicken or Potato &Chicken Stir Fry as well as sweet products such as fat-reduced ice cream. Other products include a rape seed oil, rice, cornflakes, muesli, fruit bars and a soft drink.
Edeka’s new Lust auf Leicht range currently consists of several packaged meat and sausage varieties, packaged fat-reduced cheese such as Maasdamer, Gouda, Mozzarella and grated cheese, muesli yogurts in the flavors Apple & Pear, Strawberry & Lime, Peach and Natural as well as quark-based deserts in the flavors Strawberry and Cherry & Elderflower & Acerola.
Premium ranges
While several retailers have talked about the their intention to launch premium ranges for some time, there has been little activity in that segment so far, with plans possibly delayed by the recession. The only comprehensive range is Hit Gourmet sold in Dohle Group’s Hit hypermarkets. However, Hit is a comparatively smaller player with 90 outlets. Hit Gourmet products include specialty mustards such as Chili Mustard, Fig Mustard or Orange Mustard at EUR0.99 for a 160ml jar; various chilled salads including herring salad, meat salad and cabbage salad; dairy products such as Lassi Yogurt Drinks Mango or Pina Colada; cheeses including camembert, brie, Parmigiano Reggiano; liquid fish, vegetable and meat stock at EUR1.49 per 350ml jar (a product not included in any other private label range and with only few and very expensive branded alternatives); biscuit specialties including varieties such as Nut Nougat, Japonais, Chocolate & Almonds; and canned soups such as Cream Of Mushroom, Cream of Crabs and Tomato Cream.
Other ranges are still in their infancy. For example, Real’s Selection range (launched at the end of 2008) currently only consists of some 20 chocolate products. And in September 2009, Edeka quietly rolled out the first few products of Edeka Selection, which is to become a larger premium range. The first five products were five charcuterie products: Prosciutto di San Daniele, Pata Negra Ham, Truffle Ham, Swiss Bündner Meat and Graved Salmon.
As with most other segments, discounters are already in a position to offer more comprehensive premium own label ranges than supermarkets and hypermarkets, although those products tend to be temporary offers, concentrated around certain periods of the year, most notably the holiday season. For example, Aldi Süd advertised a large number of products under the Gourmet brand last December, including frozen fish and meat, cheeses, pasta, mustards and sauces, olive oils and balsamic, tea and chocolate and frozen cakes and desserts.
