Dealing with Dutch Food Retail…..
Commercial insights and which pitfalls to
avoid
Board Bia Head Office, Clanwilliam Court, Lower Mount
Street, Dublin 2
22 April 2009
Pim Haasdijk, Green Seed The Netherlands
Table of contents
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The Dutch Retail Scene…..a brief overview
Who are the main players?....brief account profiles
Entering the Dutch market
Ø Setting the Scène
Ø Strategy
Ø (Launch) Preparation
Ø (Trade) Introduction
Ø Launch
How do we work?
The Daniels Group case
Summary: The 9 key drivers for successful exports
Welcome to the world of
The Green Seed Story
Our story began providing help exclusively for British food & drink
companies, as the ‘Food From Britain International Network’.
Since we started business in 1984, we have assisted over a thousand of
clients growing brands and selling products internationally.
Today the ‘Green Seed Group’ services food and drink companies from
around the world. We are a unique network of 12 privately-held sales &
marketing consultancies covering 19 countries across Europe, North
America and Australia.
The Green Seed concept
Through our specialist international
food and drink expertise we create
value for our client’s brands and
products.
Harvest
Grow
Incubate
Seed
We help business to grow,
from the seed to the fruit
offering growth strategies
for each phase of the
product life-cycle
The Dutch retail scene
Developments in Dutch retail
Internationalisation
Increasing concentration
Development Own labels
Innovation → UK
Fascia as brand
Own label is gaining share in many main product groups
Private label value share per supergroup
Food open markets
29.1
30.3
Totaal Gemeten Groepen (1.2%)
20.6
21.4
Houdbaar (0.8%)
16.2
16.5
Dranken Houdbaar (0.3%)
21.7
23.6
Kruidenierswaren (2%)
27.3
27.6
27.8
28.8
Zoetwaren & Snacks (0.3%)
Diepvries (1.1%)
49.1
51.7
Vers (vast gewicht) (2.5%)
23.6
23.7
Drogmetica (0.1%)
5.9
6.3
Personal Care (0.4%)
42.2
42.2
Papier (0%)
20.2
20.6
Home Care (0.4%)
Tabak (-0.4%)
( ) = % growth vs. PY
Source: AC Nielsen 2008
1.1
0.7
2007
2008
Own label developments
OL share rapidly increasing
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Stronger need for retailers to
position store format
Development of premium own labels
Desire of retailers to decrease power
of A-brand suppliers
Characteristics of Dutch supermarkets
Average selling space of 750 m2
– Small assortments
(1 facing → high order frequency)
– Listing means de-listing
– Small outer cases
– Just in time (JIT) logistics
– Short order lead time
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The total supermarket turnover was € 30 bln
4,800 supermarkets
Average turnover of € 7,928 per m2
Retail margins
No listing fees
VAT rate on food products is 6%
19% VAT on non-food and high alcoholic drinks
Formula 1 (other supermarkets)
Formula 2 (Albert Heijn)
(RSP-VAT) – buying price = profit margin
(RSP-VAT) – buying price = profit margin
Profit margin / (RSP-VAT) = profit margin in %
Profit margin / RSP = profit margin in %
Market shares within Retail
Market Share within Total Food Retail NL 2008
Aldi
9%
Lidl
5%
Other
5%
Albert Heijn
30%
Super de Boer
7%
C1000
13%
Super Unie
31%
Source: AC Nielsen 2008
Who are the main players?
100% subsidiary of Ahold
Euro 7,48 billion (+ 7,9%, 2007)
30.0 % market share (2008),
Market Leader / innovator
Growth Success:
Market leader in size and innovation. Strong focus on OL
development à increasing OL segmentation with focus
in Premium
753 stores (2008), 200 franchise
2006: + 23 Konmar stores
2008: + 56 C1000 stores -> market share > 30%
Multi format :
Albert Heijn (686), AH XL (27), AH to go (40)
Positioning
Make everyday grocery affordable and the special available
Up-market full service supermarket
Middle of the market -> improved price image
Pricing is at / slightly above average
Strong focus on fresh products
Wide and deep Assortment (12.000 sku’s)
Customer profile
- High education scale
- 1 + 2-persons HH, focus more on young families with children
- Welfare class A and/or B
Suppliers strategy
- Low & High involvement = Buying & Merchandising
- Euroshopper = international => via AMS
- Exclusive suppliership for OL
Centralized Logistics
- (Nieuwegein, chilled and slow movers; Geldermalsen, slow
movers; Pijnacker, Tilburg, Zaandam, Zwolle, fresh products;
Culemborg, cheese)
- VVM (today for tomorrow)
30.7% market share
- Plus 6.1 %
- Jumbo 5,0%
- Koopcom 4.4 %
Boni-Markten, Boon, Co-op, Deen,
Dekamarkt, Jumbo, Em-Té, Golff,
Hoogvliet, Jan Linders, Nettorama,
Poiesz, Sanders Supermarkten, Sligro,
Spar, Sperwer (Plus), Vomar
Voordeelmarkt
Number of Stores 1910:
- Plus 278 (++)
- Jumbo 117 (+)
- Sligro 200 retail stores (Golff,
Meermarkt + EM-TE) and 50 cash &
carry)
- Koopcom 90 stores
Central buying organisation
2007 : 15 members
July 2008 : new member Koopcom (Drik v/d
Broek bedrijven, +4,4 %, 90 stores)
National and Regional multiples
Multiples regionally very strong
Positioning
- Full service supermarkets + discount
- Every member has its own characteristics
Logistics
- Through warehouses for dry-grocery,
frozen and chilled foods
- Central depots or per member
Euro 4,09 billion
13.2% market share (2008)
2008 : AHOLD sold all 73% shares => got 56
C1000 stores
2008: CVC capital partners
443 stores (2007) -> 387 (2008)
= 90% Independent entrepreneurs (franchise)
Mission; help the customer save money, time and
troubles during the daily shopping in a pleasant
way
Market follower
Full service supermarket
Wide and undeep assortment -> more upgrading :
quality & fresh & innovation -> increasing focus on OL
Customer profile
- families with children -> also more focus 1 + 2 pers. HH
- social class C and D
Logistics
Decentralised → 5 depots
(Gieten, Raalte, Breda, Woerden, Eindhoven)
Central chilled distribution center
Euro 2,08 billion
2008: Laurus -> Super de Boer N.V.
2008: Casino increased their share to a total of 63,3%
2006: Laurus sold off
- Konmar stores to Albert Heijn (29) and Jumbo (12)
- Edah (223) stores to Sperwer (Plus) and Sligro
(EMTE and Golff)
6.8% market share
Number of stores 305
> 50% franchise
Policy
“full service to their shoppers”
Wide and deep assortment
Customer profile
- High education scale
- 2-pers. HH and families with childeren
- Welfare class A and/or B
Logistics
Beilen, Den Bosch, Veenendaal en Drachten
Hard Discount
• (2006) 9.6% ->(2007) 8,9% market share
• 442 stores
• Customer profile:
- social class C and D
- also “Fun” shoppers
• 4. 0% market share
• 249 stores
• Customer profile: social class C and D
• 100% subsidiary of Aldi North, Germany
• Positioning as hard discounter
• Very small and undeep assortment with
many fancy labels (± 800 a 850 SKU’s)
• Logistics - 7 depots
• Largest discounter network of Europe
• Positioning as hard discounter
• Small and undeep assortment
• “Value for money” strategy
• Logistics - 4 depots
Entering the Dutch market
Entering the Dutch market
Setting the scène
Dutch vs. UK Retail scene – similarities:
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High trade concentration – high buying power
Coalition vs. conflict model
Severe price competition
Focus on Adding Value / Category Growth e.g. no
listing fees
• Focus on (Premium) Own Label
• Sophisticated Logistic infra-structure (Central
deliveries, JiT, IT-driven)
• Risk avoiding vs. entrepreneurial attitude
Entering the Dutch market
Setting the scène
Dutch vs. UK Retail scene – differences:
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Clear retail leader vs. followers
More limited resources for Category management
Lower price points
Relative small outlets à impact on assortments,
packaging, logistics
• Importance multiples vs. franchise chains (discipline)
Entering the Dutch market
Setting the scène
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Very open trading mentality à no mental nor logistic barrier
Good (English) language skills
Strong focus on UK developments
High food retail concentration à 5 players > 90% share
Increasing focus on OL (chilled, ambient and frozen)
Diversification in OL (price defensive, standard, Premium &
Organic)
• Clear preference for direct commercial approach
• Exclusive supply vs. non-exclusivity
• Foreign suppliers to adapt to (IT) systems and procedures
Entering the Dutch market
Strategy
• Internal SWOT-analysis à company’s success
drivers
• Customer selection + understanding profile
• Strategic decision OL vs. brand à resources (human,
financial, time path)
• In-direct vs. direct à OL per definition direct
• Logistic infra structure à adapt to local needs
Entering the Dutch market
Preparation
Just knocking on the door is not enough anymore….so
DO YOUR HOMEWORK FIRST à Understanding customer(s) +
commercial environment
1. Market share and mentality
2. Fascia concept + positioning à their consumer, multiple vs.
franchise
3. Commercial strategy à pricing, assortment, promotional,
assortment revision time slots
4. Buying structure + trading conditions
5. Logistics à depot + ordering structures, administration
procedures, EDI / GDSN + crate systems
6. Regulations: VAT, Packaging tax costs etc.
Entering the Dutch market
Preparation
DO YOUR HOMEWORK à Understanding local
consumer in relation to product concept
1. Brand vs. OL
2. Comprehensive market assessment à
– Development of category
– Competition à pricing, investments, outer case
specs
– Available space à assortment, pack design, outer
case specs
3. Product concept testing à qualitative / quantative
Entering the Dutch market
Preparation
DO YOUR HOMEWORK à Simulate commercial
viability
1. Distribution scenarios vs. account investments
2. Rate of sale projections
3. Pricing / margin strategy
4. Sales forecast yr 1, 2 and 3
Profitability analysis per account
Entering the Dutch market
Introduction to Trade
1. Initial contacting
2. You did your home work à Dutch market + retailer
understanding and UK experience…. but NL ≠ UK
3. You understand THEIR concept , problems & needs
4. Company credentials + product concept
5. Present business case based on assumptions:
• Distribution levels
• Assortment composition (no. of SKU’s)
• Investments (support plan)
• Other underlying assumptions e.g. rate of sale, pricing/margin
contribution, product ranking vs. competition etc.
• Trading conditions (payment terms, overriders)
6. Present Supply Chain incl. ordering structure (lead times,
warehousing and data exchange)
Entering the Dutch market
Introduction
While presenting……
1. Be ambitious but realistic in objectives
2. Discuss openly relation between distribution and investments
3. Focus on your added value
4. Rather than just attacking competition ….
5. Convince preferably based on hard facts
While discussion conditions……
1. Include immediately all conditions / costs….avoid surprises
afterwards
2. Keep the lead rather than reacting à defensively
Entering the Dutch market
Launch
1. Base your critical launch time plan on retailer specific
time slots
2. Product administration (GDSN, manual product spec
sheets incl. palletization
3. System set-up:
• EDI + supply chain à build up direct contacts with
logistic managers
• GDSN
• VAT regulation / packaging tax
How do we work?
How to go about in exports?
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Trade & Consumer Insight
Opportunity Assessment
Trends & Developments
Scanner Data (Nielsen)
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Brand Planning
Trade & Consumer Promotion
Event Management
Public Relations
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Market Entry Strategy
Product Proposition Evaluation
Sales & Profitability Projections
Partner Search & Introduction
Sales Strategy & Planning
Broker Selection and Management
Channel & Category Planning
Key Account Management
“We Advise, We Execute & We Deliver”
How does the Green Seed Group assist?
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An international network giving access to key export markets in
Europe, North America and Australia
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A consistent approach for our clients across the different markets
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Sales and marketing is what we do; is what we are good at
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Your commercial international projects:
– we will manage it for you, with you
– you have a direct relationship with your clients
– You score
“We Advise, We Execute & We Deliver”
A case study from the UK
Daniels Group
Launch of freshly
squeezed juices
in leading Dutch
department store HEMA
followed by….chilled
premium cheesecakes
to leading Dutch
retailer ALBERT HEIJN
Who is Daniels Group ?
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Makes chilled, fresh, natural foods without compromising on taste
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Manufactures in brand & private label for major UK & European retailer &
foodservice
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currently operates over 7 owned manufacturing sites
in the UK
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Is committed to growing our Business in Europe both through UK Export & in
potential manufacturing acquisition & set-up on the continent
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Annual turnover > £ 219 million
Daniels Group is committed to developing 5 core categories
1. Chilled Ready Meals
2. Soup
3. Fresh prepared fruit
4. Fresh Drinks
5. Traditional chilled puddings / desserts
Brand & OL
consumer
understanding
Development
expertise
Working with Green Seed offices Daniels has more than doubled
the size of our Export business in two years (previously static)
£7.500
£8.000
£7.000
£6.000
Development plan
with GS Offices
£5.000
PLAN
£3.825
£3.307
£4.000
PLAN
ACT
£3.000
£1.830
£2.000
£1,343
£1.000
Sales
Revenue
£000’s
£1.453
ACT.
ACT.
2005
2006
ACT
£0
2007
2008
2009
2010
Daniels Group
Client briefing
Department store chain Hema changed 2007 strategy within Food
and Beverage, emphasizing more on healthy and fresh concepts.
Hema was interested in finding a chilled juice supplier who was able
to supply according to these new objectives and targets.
Green Seed's response
Utilizing its broad manufacturer’s network, GreenSeed The
Netherlands introduced Hema to Daniels PLC’s drink division.
GreenSeed The Netherlands was asked by Daniels to coordinate
the development and launch of a new juices and smoothies range,
in line with Dutch consumer preferences and Hema’s new strategy.
GreenSeed The Netherlands dealt with the pre-launch preparation,
organising factory visits, labelling, logistics
and marketing for the launch.
The results
A range of currently 10 SKU’s were launched successfully
at Hema in both Retail and Foodservice (in-house restaurants). New
drink line extensions are being prepared to be launched soon.
Albert Heijn tray bakes – launched Sept 08
Same Dutch retailer was looking for something
new & different in mainstream desserts fixture
Key considerations in developing a range of
desserts for the Dutch market
UK & OTHER EUROPEAN DESSERTS INFLU.
AB1
HIGH BASKET SPEND
DRAW TO AH, PREMIUM, INNOVATION
CLASSIC DUTCH DESSERTS
SERVES 2, 4, 6 +
TABLE PRESENTABLE
THAT FINISHING TOUCH / FEEL INVOLVED
DUTCH FAVOURITES
STROOP
WAFFLE
BITTER
KOEKJES
GRIESMEEL
PUDDING
VLA
CONSUMER
DUTCH FRUITS & ING.
FAMILIARITY
OCCASSION
EASTER ’09
SUCCESS / LEARNINGS
EVENT
HOT THE
HOT or COLD
COLD
FAMILIAR
UNKNOWN OR FAMILIAR & APPROACHABLE
MAIN
FOCUS
HISTORIC
AS EXP. HOT
NEW CATEGORY
Albert Heijn Cheesecake – launched Easter into the entire
+700 store estate
Key rules for successful exports
1. Understand your potential customer and the competitive
environment
2. Invest in time and resources
3. Get local advice
4. Go step by step, market by market
5. Invest in sales people, not just linguists
6. International project needs full support from company top
management
7. Develop and implement support programmes: get your product off
the shelf
8. Have patience!
9. Do your homework properly
= Be Committed
Thank you!
“We Advise, We Execute & We Deliver”