Food Marketing in
Western Europe Today
JOHN C. ABBOTT
DECISIONS of Safeway, Inc., to open supermarkets in
I^HE
• Britain is an indication of the interest in the revolution in
food marketing now going on in Western Europe. Any doubts
about self-service and acceptance of prepackaged and other convenience foods which supposedly dominated food traders' ideas as
late as 1957 have now been dispelled.
Among the new developments are self-service retailing, one-stop
shopping, prewrapped food in convenient-sized units, and the use
of canning and freezing to make previously perishable foods continuously available.
These new methods have led to changes in marketing structure,
both at the retail and wholesale level. They also have important
implications for the marketing of food products from farms.
Self-Service Retailing
The advantages of self-service retailing are greatest where the
time of both customer and retail shop employee is highly valued.
The first European countries to have several self-service shops
were Britain, Sweden, and Switzerland. As Table 1 shows, this
growth has been especially rapid since 1956; and in most countries
it still continues. In Sweden, however, with one self-service shop
per 1,560 people, development in terms of numbers may be approaching a maximum.
TABLE 1
GROWTH IN SELF-SERVICE FOOD STORES"
Number of i^elf-service food stores
Coimtry
Food trade In Europe Is
undergoing many changes;
and both retailers and investors seem to be getting
confidence in self-service
supermarkets, prepackaging,
frozen foods, and similar
developments.
But what about public
opinion? What about suitable suppliers and managers? This article gives some
answers to these and related
questions.
VJJf8
Austria
Belgium
Britain
Denmark
Prance
West Germany
Ireland
Netherlands
Norway
Spain
Sweden
Switzerland
3
130
1
1
2
1956
1961
40
120
3,000
375
603
1,380
3
510
1,100
1,480
570
9,000
1,600
2,700
30,680
150
2,860
1,650
450
22
5
3,000
900
6,000
2,000
''Sources: The Economic Perform^ance of Self-Service in Europe
(Paris: Organization for European Economic Cooperation, 1960), p.
16; K. H. Henksmeior "The Situation of Self-Service in Europe," Self
Sirvice 1961 (Cologne: International Self-Service Organization, 1962),
p. 5.
17
18
Journal of Marketing, April, 1963
A more significant measure of growth is the
proportion that self-service sales constitute of total
retail food sales. Estimates for four countries are
shown in Table 2.
Usually the most active food retailing, firms such
as the Migros cooperative in Switzerland are almost
entirely self-service. That the overall proportion of
self-service stores is not higher in such countries
is attributed to lack of opportunity rather than unwillingness to change. Many of the existing stores
are too small to be converted, or conversion would
cost too much. They are likely to continue on rather
uneconomic lines until the present operators retire; then they will be amalgamated into larger
units or disappear. As an example, one forecast is
that the present 24,000 grocery stores in the Netherlands will be replaced in the next few years by
some 8,000 small and 1,500 larger self-service
stores, and 500 supermarkets.^
Supermarkets
Formerly a housewife desiring to buy bread,
sugar, salt, eggs, meat, fish, fruit, vegetables, and
wine might have to go to many different stores.
In Italy, for example, there are different outlets for
four kinds of meat; and in each the customer must
wait for service, pay a bill, and have a separate
package made up. The development of the supermarket in such countries means that the whole
range of food can be obtained on one set of premises,
and paid for at one time at one checkout stand.
A supermarket sells a full range of foods, including fresh vegetables, dairy products, meat, and fish,
plus cleaning materials and other nonfood items in
daily household use; sometimes fresh meat is sold
separately on a concession basis. The store should
also be of a certain size—4,000 square feet is the
minimum agreed upon by the International SelfService Institute of Cologne.
In the above sense, there are now some 160 supermarkets in Italy, 100 in France, several hundred
in Germany, 50 in the Netherlands, and 35 to 40
in Switzerland. The 700 reported for Britain include some of only 2,000 square feet.
The pace of development has quickened markedly
in the last two years. By 1965, there probably will
be 3,000 supermarkets in France. At the current
rate of opening, approximately 300 new supermarkets will be added in Britain this year. The former
mood of cautious experimentation has led to one
of competition for the best available sites. For the
leading firms, the opening of new supermarkets has
become a fairly standardized process which can be
repeated (with local variations) as fast as permission, building dates, and capital will allow.
p . L. Van Muiswinkel, quoted in The Financial
Times, London, August 23, 1961, p. 5.
TABLES 2
SELF-SERVJ CB FOOD SALES AS PEECENTAGES OF
TOTAL BY RETAIL VALUE'
Country
Year
%
Britain
West Germany
Netherlands
Switzerland
1961
1961
1960
1958
15.5
40.0
32.0
22.0
* Sources: Britain—Self-Service Development Association, London, personal communication, January 8,
1962; Germany—H.K. Henksmeier "The Situation of
Self-Service in Europe," Self-Service 1961 (Cologne:
Intemational Self-Service Organization, 1962), p. 11;
Netherlands—Vereniging van Zelfbedienings Bedrijven,
Arnhem, personal communication, December 11, 1961;
Switzerland—The Economic Performance of Self-Serviee in Europe, (Paris, Organization for European Economic Cooperation, 1960), p. 23.
Opening of New Food Retail Outlets
How far has the shift to self-service and supermarket retailing affected the parts played by different kinds of enterprises in the food trade?
Inevitably initiative in adopting new methods and
ability to obtain the necessary finance has varied—
see Table 3. In 1961, 72% of the self-service retail
food outlets in the Netherlands were owned by independent retailers, 23% by chains and department
stores, and 5% by consumer cooperatives. The corresponding percentages for Britain were: independent retailers, 21%; consumer cooperatives, 43%;
chains and department stores, 36%. Here the cooperatives were the first to take up self-service on
a large scale; and this has helped them to maintain
their share of the retail food trade.
Initiative in the establishment of large supermarkets has come in Britain mainly from outside the
grocery trade—from a Canadian biscuit and bread
manufacturer, a large milk chain, and a department store group. In Italy, three-quarters of the
new supermarkets have been set up by retail chains
like Rinascente-Upim and Standa, which were already experienced in the organization of mass distribution but not previously very active in the
food trade. The biggest supermarkets firm in France
is controlled by the Brussels department store
• ABOUT THE AUTHOR. Engaged first
in marketing research and advisory work
at the Agricultural Economics Research
Institute, Oxford University, and then at
the University of California, John C.
Abbott is now Chief of the Markefing
Branch of the Food and Agriculture Organization of the United Nations.
He received his M.A. from Cambridge
University (England) and his Ph.D. from
the University of California, Berkeley. He
is author of MARKETING PROBLEMS A N D IMPROVEMENT
PROGRAMS (Rome, Food and Agriculture Organiiation, I95S)
and other publications on international marketing.
19
Food Marketing in Western Europe Today
TYPES OP RETAIL
Country
Britain
Prance
West Germany
Netherlands
Switzerland
TABLE 3
FOOD STORES AND SELF-SERVICE"
Multiple and
department stores
% selfYear
Total
service
1961
16,000
21
1961
25,600
7
1961
7,200
53
1961
1,280
50
1960/61
1,241
5
Consumer
cooperatives
% self% selfservice
service
Total
2
13,000
30
0.4
8,000
0.3
39
16
9,650
9
900
16
6
4,180
28
Independents
Total
200,000
155,000
150,000
22,000
17,140
" Source: Computed from numbers of self-service food stores of different types reported for December 31, 1961, by K. H. Henksmeier in "The Situation of Self-Service in
Europe," Self-Service 1961, (Cologne: International Self-Service Organization, 1962),
p. 10, and most recent estimates of total numbers of food stores of different types
—for Britain, France, and Germany The Economic Performance of Self-Service in
Europe (Paris, Organization for European Economic Cooperation, 1960), p. 27;
for Netherlands, as supplied by the Vereniging Van Zelfbedienings Bedrijven Arnhem
in a personal communication, December 11, 1961; for Switzerland as reported by
SWEDA Registrierkassen, in Die Selbsbedienung im Schweizer
Lebensmittelkandel
(Zurich, 1962), 4 pp.
rinnovation. In Spain, the first 50 supermarkets
were set up by the government.
Insurance companies now recognize a supermarket building as a sound investment for long-term
capital. The main problem is to find competent
managers; and prior experience in a grocery store
of the traditional counter-service type is not an
adequate qualification. Following a trial-and-error
approach, some of the Italian firms opening supermarkets have appointed and replaced a number of
managers before finding men who could meet their
requirements. Weston in Britain has brought in
experienced Canadians to help start up the new
supermarkets, and a number of the chains have
started special training courses.^
Prepackaging
Food for self-service counters is usually packaged in containers that simplify wholesale and retail handling. The vital self-selling functions which
the package then acquires are becoming fully recognized in Western Europe.
Packaging of durable groceries such as sugar,
tea, dried peas and beans, and rice in units convenient for the average retail purchase has been common practice for some time. By 1956, prepacked
foods amounted to one-half or two-thirds of total
food purchases in Austria, Germany, the Netherlands, and Norway, and one-quarter in Italy.
The prepackaging of fresh foods^meat, fruit,
vegetables, and cheese—has been helped by the improved transparent plastic wraps now available.
However, these foods must be packaged only a short
while before sale to the consumer if they are to
retain quality and appearance.
'^ The Financial Times, London, October 27, 19(;2, p. 10.
Canned Foods
Display of a wide range of canned meats, fruits,
juices, vegetables, and soups is a feature of selfservice retailing in Europe. Imports have long been
available in quantity from the United States, Australia, South Africa, and South America. An increasing volume is now being canned in Europe. In
1960, 622,000 tons of canned vegetables were sold
in Britain and 367,000 tons of canned fruit. In the
rest of Europe, however, canned food consumption
has not approached the per capita levels in the
United States. See Table 4.
Perhaps the fastest growth in canning, can be
expected in Italy, where large- scale operations have
been confined mainly to peeled tomatoes and tomato
paste. With more advanced can-making equipment
and the entry of firms from the United States and
from other parts of Europe, the canning of other
vegetables, fruits, and juices began to increase rapidly in 1961.
TABLE 4
PER CAPITA CONSUMPTION OF CANNED FOOD IN
EUROPEAN COUNTRIES AS A PERCENTAGE OF
THAT I N THE UNITED STATES ( 1 9 6 0 ) "
Fruit
Vege-
Fruit tables Milk
Britain
Belgium
Denmark
France
West Germany
Netherlands
Fish Meat
juice
76
75
33
40
94
15
33
41
42
63
18
4
6
17
27
35
5
22
47
32
29
50
18
88
50
41
3
13
26
127
30
55
n.a.
30
21
" Source: The Financial
1961), p. 6.
Times, London
(April 4,
20
Journal of Marketing, April, 1963
Frozen Foods
Judging by the commercial activity in frozen
food distribution in Northern Europe, a still more
rapid expansion is anticipated in this field than in
sales of canned food. The current European output
of 300,000 tons of frozen foods per year is expected
to reach 1.7 million tons by 1970. Annual per capita
consumption of frozen foods in Sweden is 7 pounds
as compared with 40 pounds in the United States;
Britain comes next with 6 pounds; and the Western
European average is only 2 pounds.
At present the frozen-food industry is dominated
by a few large firms. In Britain, for example,
Unilever's Birds Eye brand has two-thirds of the
market, and Findus (now owned by Nestle) and
Associated Fisheries, one-tenth each. The increasing
trend to combine the marketing of frozen fish and
poultry suggests that chicken, turkey, and tuna
fish will become direct substitutes and competitors
in Europe as in America.
More than one-fifth of the food retailers in Germany had freezer cabinets in 1960. It is estimated
that some 90,000 retail outlets are equipped to sell
frozen food in Britain, but the cabinets are not
large enough to hold the full lines of several competing brands. This results in high-pressure wholesaling and extra allowances to retailers, thus bringing their margins above the usual 20%.
The need for an uninterrupted refrigerated channel of distribution from processor to consumer is
particularly marked in countries such as Italy and
Spain, with very hot summers. High investment
costs and doubts as to consumer acceptance of
frozen foods have slowed down development. However, the refrigeration equipment industry in
Europe is now growing out of the experimental
stage; with large-scale operation and increasing,
competition, purchase costs are tending downward.
New outlets for frozen foods in Northern Europe
are hotels, restaurants, and institutions providing
group meals. In the past, prices of frozen food were
thought too high for this market; but they are now
being accepted, as costs of labor and handling of
other foods rise. There is also interest in automatic
vending machines because of their potential appeal
in countries where late evening and Sunday opening of food stores is rare.*
Convenience foods absorbed 18 to 19% of household expenditure on food by average income families in Britain in I960.* Complete frozen dinners
and dehydrated.meals are now on sale; and sliced
3 For example, comment by J. R. Parratt, Chairman
of Bird's Eye Foods Ltd. reported in The Times,
London, September 25, 1&59, p. 4.
* Ministry of Agriculture, Fisheries and Food, Domestic Food Consumption and Expenditure: 1960
(London: Her Majesty's Stationery Office, 1962),
p. 44.
bread and cheese, prepared sweets, jellies, custards,
and instant puddings are becoming standard retail
items.
Standardization and Continuity of Supplies
For successful self-service supermarket retailing,
there must be easy access to large and regular supplies of produce of uniform type, quality, and size.
But it is difficult to obtain these conveniently from
small distributors or municipal markets which are
characteristic sources of wholesale supplies in many
parts of Europe. The Rinascente-Upim group found
this a major obstacle in undertaking supermarket
retailing in Italy—^the only dependable supply
sources were in other countries.
With 400 retail outlets in Britain, Marks &
Spencer was unable to take up a number of food
lines because of difficulty in controlling quality
standards, particularly of imported products. Suppliers of food for sale under its brand name have
been induced to invest over $16 million in specialized inspection equipment and personnel over the
three years 1959-61.
Recently some of the major European food marketing firms were approached for funds to finance
the coordination of existing food standards through
the Food and Agriculture Organization of the
United Nations and through the Codex Alimentarius (Vienna). The first firm contacted immediately oifered twice the sum needed.
Ability to obtain supplies consistent in type, quality, and form is also influenced by import controls,
tariffs, and subsidies which protect domestic sources
(both farm and trade) against outside competition,
and reduce willingness to adapt to new ways of
marketing. Entry of imported foods may be cut off
abruptly when the price of the home-produced item
falls below a certain level (for example, meat, including processed and canned meats in Germany and
Italy), or when home produce comes onto the market in a certain volume (for example, Britain and
France for fruit and vegetables).
Advertising
Limited personal contact with the self-service
shopper makes effective advertising all important.
The big issue in Europe now is whose brand is put
before the public—^that of the processor wholesaler
or that of the retailer.
Processor advertising of packaged foods offered
for sale on a standard country-wide basis is favored in Europe by national rather than local radio
and television programs and newspapers. Brand
promotion is especially strong with convenience
foods, such as soups, beans, and cooked meats. In
Britain, nearly $3 million was spent in 1960 on the
television promotion of wrapped and branded
Food Marketing in Western Europe Today
bread."' Independent retailers and the managers of
small chains are generally pleased to go along with
this system, because it ensures that the goods they
stock are well known to the public.
The large retail chain or a firm with a number
of supermarkets has more to gain by putting forward its own brand; it buys and sells enough to
justify the promotion cost; and it can then offer
something which is not available in the stores of
rivals and can set its own price. Thus, Marks &
Spencer in Britain prefers to contract with smaller
firms for .supplies which will carry its own brand
name; and Victor Value, with 30 to 40 supermarkets, is sponsoring its own Dairyglen brand of
butter.
Wholesale Purchasing and Supply
The supermarket retailer wants to obtain supplies regularly and easily in large standardized
lots, conveniently and economically packaged, with
clear identification to the consumer. In meeting
these requirements, substantial economies are attainable with size.
In Britain, which imports over half its food supply, wholesale distribution has long been carried
out by relatively fewer and larger firms than in
Europe as a whole. The Cooperative Wholesale Society is one of the world's biggest food buyers, distributing to affiliated outlets almost one-quarter of
all the food consumed. Further large blocks of retail food outlets are supplied by the central wholesale buying departments of large grocery chains.
This contrasts sharply with the position in many
other European countries where most food is produced domestically and is bought from a large number of very small farms.
In France over four-fifths of the food supply is
handled by 285,000 retailers buying independently.
Also 150,000 grocers are supplied by over 1,000
wholesalers; and 40,000 butchers draw from 20,000
slaughterhouses. In Belgium, Germany, and Italy
food has been bought wholesale from a similar
structure of small suppliers. Either retailers have
gone personally to buy in central markets and from
small local wholesalers, or have been visited by a
succession of salesmen.
Retail Buying Groups
The formation of retail buying groups and voluntary chains has enabled many independent retailers
to take advantage of quantity discounts at wholesale. In the Netherlands 70% of the independent
grocers belong to such chains and buy three-quarters of their stock through them. In Germany, the
EDEKA buying group had 42,000 associated retailers
in 1960, and REWE had 12,000.e De Spar, Vege, Cen•>' The Financial Times, London, June 8, 1961, p. 7.
6 The West German Market (Zurich: Contimart,
1960), p. 64.
21
tra, and vivo have branches in several European
countries; and International Spar has 225 wholesale and 30,000 retail members.
Much of the original impetus behind the formation of these retailer buying groups came from the
wholesalers' fears of being "squeezed out" as their
independent retailer customers lost business to the
chains. This threat is being felt again as a new
phase of intensified competition with integrated
supermarkets opens. There is doubt as to whether
the independence of the more loosely organized
buying groups can be maintained in face of new
investment and merchandising requirements. The
result expected in West Germany, for instance, is
the transformation of parts of these groups into
corporate chains. Spar is encouraging its retailer
members to set up supermarkets which though independently owned will carry its name and display
material.
The establishment of cash-and-carry wholesale
food warehouses is another low-cost way of meeting
the supply requirements of small retail grocers who
cannot buy in great bulk.
Buying Arrangements With Agriculture
The ways by which a large wholesale processing
or distributing unit can best obtain supplies from
domestic agriculture with the type, form, and
regularity needed are well known in Europe. Long
before World War II many European farmers were
being supplied with suitable varieties of sugar beet
and canning pea seed on production and sales contracts requiring delivery to processing plants of
specific quantities on specific days.
This approach is now being applied to many mo7e
agricultural products: pigs, poultry, eggs, and a
wide range of fruits and vegetables, with the most
striking developments in frozen broilers. The annual output of broilers in Britain has risen from
5 million birds in 1954 to an estimated 140 million
in 1962.
Meat-cutting, and prepacking plants are being set
up in Britain, Italy, the Netherlands, and other
European countries to meet the demand for large
regular supplies of standard cuts. Often this results
in much more profitable distribution of cuts between
markets with differing demands. Towers, which prepacked and froze one million New Zealand lambs in
1961, sold the legs from one lot in Britain, the
shoulders in Canada, the loins in the United States,
the breasts in Ghana, and the shanks in Honolulu.
Marketing Efficiency
In Europe the retail phase of food marketing
has always taken up a large part of the total margin between producers and consumer—for eggs, 40
to 60% and for beef, 50 to 80%. If new methods
22
Journal of Marketing, April, 1963
and organization can bring about significant savings, this will be a major advance in overall marketing efficiency.
One authority maintains that the average sized
supermarket in Britain achieves savings in labor
over counter service amounting to 2%% of sales, a
significant difference in a total margin of 17 to
18%. And against this must be set increased costs
of wrapping of about 0.4%.^ Extra investment in
equipment is offset by faster turnover of stock; and
now that supermarkets are becoming the vogue,
investment funds can be found fairly easy to
finance the capital cost of the building and lease
it back to the operator.
Level of Competition
How far the benefits of lower costs are passed
on to consumers depends on the level of competition
among supermarkets. During the early stages of a
technological revolution this is usually considerable.
The need for each new supermarket to attract a
high volume of customers in order to achieve low
costs constitutes a strong inducement to price-cutting. Advertisements of "special low prices" for
branded goods in Britain, Germany, and other countries is evidence of willingness to do this. The
general move by European governments against restrictive business practices and resale price maintenance has also helped.
Experience in the United States suggests that
competitive reduction of margins in Europe may
W. G. McLelland, Economic Joumai, Vol. 72 (March,
1962) pp. 162-163.
proceed for some time, as long in fact as the supermarkets are fighting to establish themselves against
the competition of retail traders using traditional
methods.
Benefits to Consumers
There is little doubt about the benefits brought
by the supermarkets to European consumers. While
food traders in France, Italy, and Switzerland, for
example, conceded that self-service would permit
lower retail prices, they thought that credit and
other customary requirements would lead many consumers to prefer the old system.
However, rising levels of income available for
food purchases, and the steady increase in employed women unable to spend much time cooking
and shopping, have changed the character of the
"average" European consumer. With recent rises
in incomes and the movement of rural populations
into new suburbs, this "average consumer" now includes an increasing proportion of the French and
Italians whose tastes and requirements were
thought so different.
In many of the northern European countries, the
influences in favor of packaged ready-to-cook food
have been present since the early 1940s, but only
during the last four or five years have the implications for marketing been recognized. Previously retailers struggled to recruit expensive labor for
time-consuming procedures; and consumers tolerated slow service, incomplete cleaning and preparation, restricted choices, and inconvenient shopping
hours. Neither had realized that the postwar sellers'
market was over.
MARKETING MEMO
What Have We Learned Frotn The Behavorial
Sciences?
The impact of the behavioral sciences on our society is far
greater than most people realize. At one level they are providing
technical solutions for important human problems. But at a
deeper level they are changing, the conception of human nature—
our fundamental ideas about human desires and human possibilities. When such conceptions change, society changes.
In the past few generations, many beliefs about such diverse
matters as intelligence, child rearing, delinquency, sex, public
opinion, and the management of organizations have been greatly
modified by the results of filtering scientific fact and theory
through numerous layers of popularizing translation. The casual
way in which unproved behavioral hypotheses often find widespread acceptance underscores the importance of strengthening
and deepening the behavioral sciences and of securing better
public understanding of what they are and what they are not.
—"Strengthening the Behavorial Sciences," Science (April 20, 1962), pp.
233-234. Reprinted by Permission of
Science.