PLMA Live! EU News Desk: And the Winners are...

Food and nonfoods that earned a 2021 Salute to Excellence Award will be on display at PLMA’s World of Private Label Trade Show, December 14 to 15 in Amsterdam. About 600 products were entered into this year’s competition. News anchor Judith Kolenburg shares a behind-the-scenes look at the judging process. Plus, Pascal Kuipers analyzes Russian hard discounter Mere’s disruptive retailing style. Available in English only. Click here to download video.

Brexit Hinders Trade

Exporters in the UK are finding that some of their routes to the EU have become unworkable. Among the products that are hardest hit by the new rules are animal origin products and organics.

Since the new trading rules with the EU went into effect at the beginning of the year, manufacturers have spent hours trying to comply with new regulations. Some companies have been weighing up the balance and are deciding whether to permanently stop the export to certain EU markets.

Then there is the North Ireland Protocol, which is a set of rules agreed between the UK government and the EU to regulate post-Brexit trade to and from Northern Ireland. In order to prevent checks along the Irish border on goods moving between Northern Ireland and the Republic of Ireland, it was decided that the checks should be carried out at Northern Ireland ports, creating an artificial Irish sea border.

In order to give food suppliers and retailers time to adapt to the changes, there is a grace period, which ends in October. According to six supermarkets, the next phase of checks will drive up costs both for them and for Northern Ireland consumers. Representatives from Tesco, Asda, Sainsbury's, Co-op, Iceland and Marks and Spencer have sent a joint letter to the UK government and the European Commission to highlight their concerns.

Big Ham sues Yuka

French application Yuka, installed by 24 million users, allows consumers to check food and cosmetic products on their health score and possible risks. The app provides information on the product’s nutritional value and its impact on the environment from carbon emissions to packaging on a score out of 100.

The Yuka database includes a total of more than 1.5 million food products and more than 500,000 cosmetic items. In addition, 800 new products are added to the database every day. Yuka uses a simple colour code to indicate a product’s impact on health — excellent - green, good - yellow, moderate - orange or poor - red.

Unfavourable Yuka scores have motivated retailer Intermarché to reformulate the recipes of 900 of its private label food products by removing additives or by cutting salt or sugar. Auchan, Monoprix and Leclerc are also working on recipes that result in higher Yuka scores. Beauty brands Caudalie and L’Occitane have removed silicones and PEGs from their products when Yuka started grading cosmetics.

Nevertheless, not everyone is a supporter of the app. Recently, the French butchers and charcuterie sector have sued Yuka because the app assigns low scores to food products that contain nitrates, a preservative that improves shelf life and protects colour. The ham makers won a first court case in Paris after a judge ruled that Yuka had to remove any mention of health risks posed by nitrates from the app. The company plans to appeal.

The actions from companies show just how powerful a popular app such as Yuka can be. After the launch in France in 2017, it has expanded operations to some ten more countries.

Lidl to be climate neutral by 2022

Lidl GB has announced that it has set itself ambitious climate targets: the retailer aims to become carbon neutral by next year. In addition, the company pledges to reduce emissions from its own operations by 80% by 2030 across all countries it operates in.

To achieve this, Lidl will focus on cutting carbon emissions across its stores and distribution centres, including through installing solar panels on all new stores, where permissible, and its continued investment in the latest refrigeration and lighting technologies to improve overall energy efficiency.

To tackle so-called ‘scope 3’ emissions in its supply chain, representing over 98% of total emissions, Lidl will oblige suppliers to develop and work towards their own targets. The obligation will apply to suppliers responsible for 75% of Lidl’s product-related scope 3 emissions. The discounter seeks to achieve this through a comprehensive supplier engagement and learning programme across the group, including supporting farmers to measure their carbon footprint and make reduction plans.

Farm to Fork Code of Conduct

The EU has launched a Code of Conduct for Responsible Food Business and Marketing Practices as part of the European Green Deal and the Farm to Fork Strategy. The Code of Conduct was signed by the Eurocommission together with industry stakeholders such as food manufacturers and retailers, including Ahold Delhaize, Carrefour, Colruyt, Coop Italia, Eroski, ICA Gruppen, Jeronimo Martins, Rewe, Sonae and Tesco.

The Code of Conduct contains a series of voluntary commitments for all parties involved in the middle part of the food chain and aims to promote the shift towards healthier patterns for consumers and more eco-friendly production methods for the environment.

There are seven ambitious goals in the Code that cover the three pillars of sustainability (environmental, social, economic): healthy, balanced and sustainable diets for all European consumers; prevention and reduction of food losses and waste; a climate-neutral food chain in Europe by 2050; an optimized and resource efficient circular food chain, sustained, inclusive and sustainable economic growth, employment and decent work for all; creating sustainable value in the European food supply chain through partnership, and sustainable supply in food supply chains.

Other EU associations and companies in the food sector have been invited to join the Code of Conduct - an initiative that the Commission perceives as a game changer.

Getir, Zapp, Flink, Jokr, Gorillas, Weezy, Jiffy, Cajoo, Dija, etc.

Ultra-fast grocery delivery firms are quickly conquering Europe. The market for the express service they offer is big. With names like Getir, Zapp, Flink, Jokr, Gorillas, Weezy, Jiffy, Cajoo or Dija, they emerge in one country and expand beyond borders at a high speed.

The companies use small, delivery-only grocery stores inside residential neighbourhoods. These dark stores carry a limited inventory and have a limited delivery radius so that orders can be picked, bundled and delivered within minutes.

Some experts doubt whether the complex express delivery with bicycle couriers from small dark stores can ever be operated profitably. The big question for these companies is whether they can scale. On paper, the ability to get last-minute groceries delivered in just minutes is great. But it also needs a certain population density to make the economics work, and it’s to be seen whether those economics scale on a national level. Nevertheless, venture capitalists have embraced the rapid deliverers.

Whether the new companies are a threat to supermarkets or will remain a niche remains to be seen. Some chains are not waiting. Rewe took a stake in Flink and Carrefour just announced it’s taking a stake in express deliverer Cajoo.

PLMA’s Online Executive Education Programme

PLMA’s Executive Education Programme, presented in conjunction with Nyenrode Business Universiteit, will be held online on 26-27 October 2021. The programme is devoted to operational aspects, challenges, and opportunities of the private label industry.

Manufacturers and retailers will be provided with the opportunity to build their private label knowledge by attending lectures and interactive sessions on a variety of subjects. The curriculum covers what executives need to know about private label strategy, manufacturer-retailer relations, new product development, consumer trends, marketing and e-commerce, among other important issues.

To request more information, click here.

M&A to Increase

Consulting firm Kearney expects there will be more takeovers and mergers in the consumer goods and retail sectors. After the first year of the pandemic, in which the numbers of transactions hit an all-time low, 80 percent of the more than 100 top executives surveyed by the company expected a new wave of transactions.

Of the 20 largest companies in the consumer goods industry, three-quarters are expected to be planning major sales. In addition, new topics such as digitization or the move towards the direct-to-consumer business are playing an increasingly important role.
Aging Changes Consumption

According to consumer research by ABN Amro in Germany and The Netherlands, the aging of the population will have a significant impact on the food sector. People over 55 eat less calories, choose different products, have different purchase motives, choose for different nutrients and packaging, and prefer different purchase channels than younger generations.

Baby boomers are less interested in convenience, they mostly have more time to cook a meal, however, the demand for easy to prepare food increases with those aged 75 and up. Both Dutch and Germans over 55 more often consume fresh products such as fish, fruit, cheese and potatoes and less processed products such as meat substitutes and pizzas.

Older generations also need different nutrients, like proteins and vitamin D. Functional foods, which have added vitamins, proteins or fibres, would respond to this need.

Aging also influences food packaging. As the number of single-person households increases, the demand for single-person packaging increases. The motor skills of hands deteriorate and many people experience ‘wrap rage’: the annoyance that packaging does not open or is difficult to open. Packaging labels often contain small print that makes it hard to read the expiry date and other important consumer information.

In terms of purchasing channel, baby boomers are the most frequent visitors of supermarkets of all age groups. Older generations pay less attention to price and more to health.

ABN Amro concludes that “aging” deserves a higher place on the agenda of food manufacturers.

EU Allows Dairy Descriptive Terms for Plant-Based Items

The European Parliament has dropped Amendment 171, a bill which would have censored all use of dairy-related language for plant-based food. Regulations on dairy-free alternatives in the EU are already restrictive. Legislation passed in 2013, means words like “cheese,” or “yoghurt,” can only be used to describe milk-based products which must originate from animals.

This amendment would have gone further and would have prohibited dairy-related packaging formats, such as a carton for plant-based milk, or a block for plant-based butter. In addition, allergen information like “does not contain milk” and descriptive terms like “creamy” or “buttery” would not be allowed.

Plant-based food manufacturers, environmentalists and consumers had heavily criticised the proposed bill. They argue that consumers aren’t confused by descriptions of dairy alternative products and that a more sustainable production and consumption is desirable.