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The hen with BIO eggs

24/10/2012 06:39

For many retail networks the organic products are and maybe will still remain for a longtime at stage of niche. The slow rotation of the stocks, the risk of expiry of the products on the shelves, but also the price, make the retailers to avoid them whenever it is about of development of private brands. In other words the organic products do not arise to the required volumes to develop some private brands.

 

And yet they exist within the majority of the large retail networks, and some of them even have brands dedicated to organic products in their portfolio. The explanation is simple and is to be found in the countries of origin of the respective retailers. It is much easier to fill in one shelf with products taken from a strong assortment. No need of volumes and the risk of expiry on shelf is visibly reduced. As concerning the costs of labeling in Romanian language, these are negligible. An equation apparently perfect, where retailer and consumer seem content. Unfortunately the equation did not take into consideration the Romanian producers. For many of them, the negotiation with international networks under above conditions seem impossible. The only solution for selling their products could come from foreign markets, there where the local offer does not succeed to cover the market requirement.

 

The organic eggs - in top of consumers' preference

Out of the long list of organic products coming from the local farms, the eggs appear to be by far consumers' preference. Besides, they can be seen in almost all modern stores under producer's brands. But this was the image of the category almost six months ago. What changed in the meantime? Many - we could say, and we refer here strictly to private brands. If at the beginning of this year the chances for a Romanian producer, even if of organic eggs, to reach the stage of producing under private brands seemed zero, the image of the category is totally different within six months only. We are talking now not about one or two products, but not less than nine items, under brands of five international networks. The category is practically one of the few where the private brands are dominating in number, the producers' brands. How this reversal of the situation was possible?

All started with Carrefour launching. The example of listing two items under their mainstream brand given to retailers, did not pass unnoticed, and the replies did not delay. This is not about actions destined to counterattack the launching, but simply about taking over an idea. And from here, the inspiration and strategy of each retail network separately, have built the rest.

 

 

Shortly after Carrefour, Metro launched in their turn two similar items, also under mainstream brand and Lidl launched a similar item by the beginning of August. We assist to a new first in which a discounter develops an organic personalized item with a Romanian producer.

 

Delhaize Bio - a superior approach

Shortly after Lidl launch, other two new items appeared in the Mega Image stores. They were the same units, boxes of 6 and respectively 10, but with a totally different positioning, superior to precedents. The Mega Image option was directed unequivocally towards their organic brand Delhaize Bio. An inspired choice we could say, the retailer marking thus a first in their turn. Delhaize Bio, a brand apparently closed to Romanian producers because of its extremely stringent selection criteria, was opening the gates for the first time in front of a Romanian product. A precedent was created in the brand strategy, but at the same time the existence of local producers able to produce at superior quality standards was certified. The example given by Mega Image can be considered as a favorable signal to other Romanian producers not yet decided.

Drawing of such a contract for a private brand of superior generation, with a premium positioning, places the retailer-supplier relation on a totally different step. We no longer speak of a standard approach, so common to negotiations on brands of the first and second generations, but we speak about a partnership between the retailer and the producer, based on  principles of equality. A model of win-win, we could say.

 

Nature Bio, or Cora approach

Apparently, after the two products Delhaize Bio were launched, the things seemed well placed, there were seven items private brand at the respective moment, but theoretically the opportunities were not exhausted. The list of retail networks was recently happily completed with another hypermarket: Cora.

Like Mega Image, Cora proposes a superior approach throught an identical positioning, under a BIO brand. Even if we talk about the same standard packing, Cora launching is another clear attempt to differentiate to consumers throught products of superior quality, under a brand of strong international reputation. It is another first here too, by changing the strategy of Nature Bio brand. On the other hand  it is another confirmation that the Romanian producers can raise to superior quality standards, acknowledged at international level.

 

The category of organic eggs under private brand in figures

Five retail networks.

Nine item.

Two mainstream brand (Carrefour and Fine Food).

Two Brands BIO (Delhaize Bio and Nature Bio).

One exclusive item (Lidl).

Four distribution channels: hypermarket (Carrefour and Cora); supermarket (Mega Image); cash&carry (Metro) and discounter(Lidl).

Over 430 selling points at national level.

 

What next?

The launches Delhaize Bio and Nature Bio open new horizons for Romanian producers but also new markets. It is possible that these products are taken over by the retailer and exported in other countries. In the case of the two products Delhaize Bio the things are much simpler, due to relatively short distance to Bulgaria and Greece, countries with subsidiaries of the Delhaize group.

But surely the things will not stop here. There are still opportunities as well as there are retail networks not yet decided. As far as we are concerned, we are confident that throught the speed of evolution of the things, the category of organic products has a lot more to offer.

Florin Frasineanu

 

 

 

 


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