PL Magazine January 2021

Private Label Magazine Private Labels taking up the sustainability challenge Interview with distribution: Coop Italia The role of retailers: the Walmart case 1/2021

PLM - TABLE OF CONTENTS

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3 Editorial Why PLM? Italy's first magazine to showcase private label 4 Cover Story Private Labels taking up the sustainability challenge 16 Interview with distribution Coop Italy, PLs account for 30% of turnover

DM Magazine Monthly supplement of Distribuzione Moderna magazine, a media outlet registered with the Court of Milan Registration No. 52 of 30 January 2007 Editor-in-chief Armando Brescia Editorial director Maria Teresa Manuelli

20 Expertise on field The role of retailers: the Walmart case 24 Markets Private labels are gaining market footholds in fresh dairy

42 International retail Retailer Brand Sustainability: let's talk about Leclerc

44 PL scenario France: the COVID-19 rebound effect

36 Interview with industry Inalpi commits regionally 40 Packaging innovation On behalf of re-life cycling

48 Markets The pandemic spurring homecare products

Contributing Authors Stefano Ghetti, Fabio Massi, Remy Medina, Paolo Palomba, Luca Salomone

Contact Phone 02/20480344 redazionedm@edizionidm.it

Creative Director Silvia Ballarin

Advertising Sales office: commerciale@edizionidm.it Phone: 02/20480344

Editor Edizioni DM Srl - Via A. Costa 2 20131 Milan VAT No. 08954140961

There is no guarantee that we will publish the original versions or any part of submissions (texts, articles, news, images, data, charts, research, etc.) sent by authors outside the Editorial Board. Submissions may, however, be published in a revised form for editorial reasons. It should also be noted that sending a submission constitutes an automatic authorisation by Edizioni DM Srl to publish it free of charge in all its publications.

In attesa di ripartire con la manifestazione fisica BolognaFiere, in collaborazione con ADM, lancia un nuovo progetto digitale - MARCA DIGITAL SESSION - per supportare e potenziare il dialogo tra le insegne di Marca

by BolognaFiere e i loro MDD partner.

MARCA DIGITAL SESSION capitalizza e rafforza il trend di attenzione degli operatori esteri nei confronti della manifestazione e la collaborazione in atto con ICE Agenzia con la quale, da diversi anni, si realizza un’importante campagna di inviti rivolta a category manager e buyer delle maggiori catene internazionali.

Le limitazioni negli spostamenti, imposte dalla pandemia, hanno dato ulteriore spinta alla realizzazione di nuovi strumenti da mettere a disposizione della business community per incrementare i contatti commerciali su scala mondiale. E’ con queto obiettivo che BolognaFiere, in collaborazione con ADM, Associazione Distribuzione Moderna lancia MARCA DIGITAL SESSION che, nei giorni immediatamente precedenti la Fiera – dal 15 al 25 Marzo –, permetterà agli operatori di incontrarsi e confrontarsi sulla piattaforma digitale stabilendo un primo contatto che potrà, poi, esser consolidato nelle giornate di manifestazione, con incontri one to one.

Ahead of the recommencement of the in-person event, BolognaFiere, in collaboration with ADM, the Italian Grocery Retail Association, is launching a new digital project, MARCA DIGITAL SESSION, to support and boost dialogue between the retail groups at Marca by BolognaFiere and their Private Label partners.

MARCA DIGITAL SESSION is capitalizing on and reinforcing foreign operators’ growing interest in the event and the collaboration with ICE - the Italian Trade Agency, which for many years has been running an invitation campaign aimed at category managers and buyers from the leading international chains.

The travel restrictions imposed by the Covid-19 pandemic have provided further reasons to create new tools for the business community and to boost commercial contacts worldwide. And it is with this goal that BolognaFiere, in collaboration with ADM, is launching MARCA DIGITAL SESSION that, on the days immediately preceding the fair – from 15 to 25 March – will enable operators to meet and talk on the digital platform to establish an initial contact that could later be consolidated at the real event with one-to-one meetings.

L’agenda digitale degli incontri b2b tra Espositori e Buyer sarà ospitata dalla piattaforma B2Match, la stessa utilizzata con successo nelle passate edizioni per gli incontri dell’International Buyer Programme. Nell’ultima edizione di Marca by BolognaFiere hanno visitato la Fiera operatori provenienti da 32 Paesi a dimostrazione della forte attrattività del made in Italy sui mercati mondiali. Operatori che ora, grazie a MARCA DIGITAL SESSION, potranno ulteriormente migliorare la programmazione dei propri incontri avendo a disposizione una dettagliata profilatura e filtri di ricerca avanzata per Paese e tipologia di prodotto.

The schedule of digital B2B meetings between exhibitors and buyers will be hosted on the B2Match platform, which has already been used successfully at past editions for meetings as part of the International Buyer Programme. The latest edition of Marca by BolognaFiere played host to operators from 32 different countries, demonstrating the notable attractiveness of ‘made in Italy’ products on global markets. Now, thanks to MARCA DIGITAL SESSION, operators will be better equipped to plan their meetings, being able to count on a detailed profile and advanced search features based on country and product type.

Tre semplici step permetteranno di partecipare a MARCA DIGITAL SESSION: il primo è la Registrazione, buyer ed espositori sono invitati a creare il loro profilo; il secondo la Prenotazione, a partire dal 15 febbraio, i partecipanti alla Digital Session potranno consultare la lista dei partner ai quali richiedere gli appuntamenti e confermare gli incontri, generando così una agenda personalizzata; il terzo e ultimo step è rappresentato dagli Incontri che potranno susseguirsi dal 15 al 25 marzo 2021 on line, attraverso il sistema video integrato nella piattaforma.

Alle aziende espositrici a Marca by BolognaFiere è riservata una tariffa speciale per la partecipazione a MARCA DIGITAL SESSION.

The three simple steps to take part MARCA DIGITAL SESSION. The first is Registration, buyers and exhibitors are invited to create a profile, the second is Reservation: beginning from 15 February, participants at the Digital Session will be able to consult the list of partners with whom to request appointments and confirm meetings, thus generating a personalized schedule. The third and final step is represented by the Meetings that will be able to take place from 15 to 25 March 2021 online, through the video system integrated into the platform.

Exhibitors at Marca by BolognaFiere are entitled to a special rate for taking part in MARCA DIGITAL SESSION.

Organized by:

In collaboration with:

With the support of:

EDITORIAL - PLM

Why PLM? Italy's first magazine to showcase private label Today marks a new addition to the modern distribution landscape. We felt that the time was right to create a magazine dedicated to the developments of a constantly growing sector. PL Magazine is in fact the first and only magazine in Italy entirely dedicated to private label and its protagonists. It was created with the clear objective of rendering visibility, accessibility and relevance to the knowledge, comparisons, analyses, experiences and solutions implemented in the Private Label (PL) business, but also to stimulate challenges, innovations, collaborations and openings at an international level. The empirical and applied style, close in content, language and form to the worlds of the entrepreneurs, managers and passionate readers it addresses, will be characterised by rigour and professionalism. The PL Magazine editorial staff is backed by a qualified Scientific Committee comprising PL experts to assure its authoritativeness, consistency of content, approach and style. It should therefore come as no surprise to see the committee chaired by Partners IPLC Italy - Expertise on Field, The Retailer Brand Specialist, a leading international organisation for Strategic and Management Consulting for the Private Label, Retail and Internationalisation. We have opted to run four issues over this inaugural year but trust that the discussion will liven up in the course of 2021 for an even higher publication frequency. Each issue will also be translated into English. In doing so, we seek not only to focus international attention on Made in Italy and "Italian know-how", but also to invite producers and retailers from outside Italy to join us to shine the spotlight on innovative experiences and practices in this field.

Maria Teresa Manuelli Editorial director

PLM - COVER STORY

Private Labels

taking up the Sustainability Challenge Private label lines have led the charge in terms of dynamics on this issue in recent years. The sector’s 2019 turnover figures in Italy topped €10.8 billion, driving 80% of the food industry’s growth in the last 16 years.

Consumption figures were hard hit in 2020. The COVID altar swept away $12.5 trillion of global GDP in just one year. The most recent forecasts for Italy stand at -10%, and our country will only return to pre-COVID levels in 2023 (or 2025 for the most pessimistic cases). However, the concern Italians have for sustainability remains one of the constants the pandemic has failed to banish. While 35% of the managers interviewed in the survey "Italia 2021, il Next Normal degli italiani" (Italy 2021, the Next Normal for Italians) believe that developing the green economy is one of the trends that will positively characterise the post-COVID era, this sort of national green awareness is nevertheless reflected in related purchases: 27% of the inhabitants of the “Bel Paese” buy more sustainable and eco-friendly products than before COVID (trailed by the French and Spanish at 18%) and 20% buy more from worker-friendly companies. The 2020 Coop Report found that over half of all consumers intend to buy mainly Made in Italy products, preferably sustainable ones, aspects considered important by 53% and 48% of the respondents respectively. The very concept of a sustainable product is now becoming more nuanced, with the concept of local production or production linked to the local area (among other things, 50% combine this with sustainability) and a controlled supply chain (49%) being added to the generic concept of being environmentally friendly.

The principle of fair remuneration for the various actors in the chain also appears (47% of the sample mentioned it in connection with sustainability).

The crisis (and a revival of plastic packaging) notwithstanding, the Italian shopping cart remains quite green, bucking the trend in many other

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COVER STORY - PLM

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PLM - COVER STORY

Values in billions of euros and %, 2003 - 2025E

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COVER STORY - PLM

European countries and the United States. More than one in four consumers (27%) increased their purchase of ecofriendly products and one in five bought them from outlets that promote sustainable consumption (21%). Italians are intent on sticking to this habit in 2021, as 36% of respondents plan to buy even more sustainable food this year and only 6% plan to buy less. Interestingly, over two thirds of those surveyed would gladly change their supermarket of choice to one that is more committed to this issue, offering more sustainable packaging and environmental initiatives.

INCREASING RETAILER ENGAGEMENT It should therefore come to no surprise that retailers, particularly food retailers, explicitly involved in the issue of sustainability with visible and measurable actions: as providers of everyday needs, they see initiatives in this area as an opportunity to gain visibility and distinguish themselves. Within the retailer's house brand (private label) strategy, sustainability in all its forms offers them a unique opportunity to respond to the consumer's quest for 'conscious living'. This was illustrated in "The Race Towards Sustainable Private Label. Carrot, stick or collaboration? How retailers in Europe address sustainability with private label" a research report published last year by IPLC Europe. "The role of private label has changed since the 1980s, when it developed its own momentum. At the beginning, it was all about margin improvement and changing the leadership within the supply chain (retailer in the lead as opposed to brand manufacturers), subsequently switching to differentiation and category management. Nowadays, private label strategies aim for supporting the retailer store image and sustainability objectives offer a unique opportunity to do so. Topics such as the carbon footprint, packaging and waste reduction, responsible fishing, animal welfare, social responsibility and biodiversity can all be directly or indirectly addressed with private label."

PL DRIVING SUSTAINABILIT Y...

It is no coincidence that private label lines had the greatest dynamism in terms of sustainability.

The sector’s 2019 turnover figures in Italy topped ₏10.8 billion, driving 80% of the food industry’s growth in the last 16 years (domestic segment and internal market). Last year, the European House - Ambrosetti and Associazione Distribuzione Moderna (ADM) presented " The Contribution of Private Labels to the Challenge for Sustainable Development and Italian Growth", research proving that sustainability is expressed not only in products that are increasingly in line with new consumer needs but above all in the supply chain: an analysis of suppliers' balance sheets over the last six years shows that companies have better economic, employment and income performance

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COVER STORY - PLM

Daunting challenges for suppliers

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orking jointly with industrial partners in this context proves to be essential to share development projects and thus render an accessible and economically sustainable final product. Producers constantly fret over the conflict between distributors’ demand for lower prices and the need to innovate with new packaging solutions, ingredients, traceability etc. This is by no means a new problem, since it has always been difficult to share the costs of innovation in the supply chain whenever it is deemed that shared choices do not generate new value. It is therefore crucial that the path to sustainability is pursued with a common entrepreneurial vision among private label manufacturers and retailers. “We are working with our supplier partners," explains Pietro Poltronieri, Crai's PL manager, "to take concrete action directly in the choice of materials. For example, we have worked on recycled plastics in categories such as water, liquid detergents and commodities, and in 2021 we have a number of other categories that we will work on, including sliced meats, stuffed pasta and eggs. Another issue to which we are committed is to make our seafood offer more and more connected to the theme of sustainable fishing and protection of the seas."

than other food companies, a dynamism that increases as the share of turnover generated by PL increases. "Virtually 50% of the organic product offer in Italy is made by retailers and private labels who are assuming a leadership role on sustainability: by coordinating and helping supply chain actors towards sustainable practices and products, they enable shoppers and consumers to find a wider sustainable offer on the shelves."

This is how Paolo Palomba, managing partner at Expertise on Field-IPLC Italy, put it. ...BUT THERE IS STILL A LONG WAY TO GO In recent years, retailers have also been encouraged in their efforts by the Italian Alliance for Sustainable Development (ASVIS, founded in 2016), which promotes the adoption of practices aimed at achieving the 17 Sustainable Development Goals of the United Nations.

Retailer commitments and product offerings, however, still fall short of the mark when measured against the scale and urgency of the climate crisis and sustainability agenda. Nielsen noted that 74% of consumers believe that companies are committed to the environment, yet only 16.4% of them offer "green" products, even though over 70% of Italian consumers are willing to pay more for them (Nielsen Sustainable Shopper Report, 2019).

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PLM - COVER STORY

Coop Italia stands among Italy’s most active chains on this front, in terms of projects and communications alike. In this regard, the chain launched the campaign “Con buone scelte di acquisto puoi cambiare il mondo” (With the right shopping decisions, you can change the world) in late 2019. The cooperative is also actively engaged in reducing the use of pesticides, particularly glyphosate in farming, which has led to the largest range of organic products available in Italy under a single brand name: Vivi Verde Coop. "Italy's first organic brand sold in the mass consumer sector tallied a total revenue of over €150 million in 2019 and has not stopped growing during and after the lockdown, with a value trend of +9%," affirmed Maura Latini, managing director of Coop Italia during the presentation of the annual Report. The chain, together with Carrefour, leads the effort in Italy on traceability and transparency for the egg, chicken and citrus fruit supply chains. And finally, Coop also launched the Buoni e Giusti (Good and Fair) campaign, which focuses on buying and selling fruit and vegetables produced without exploiting workers. Another major player, Conad, has pledged to eliminate plastic by 2021 from many branded packages and track plastic and CO2 reductions. For Esselunga, offering sustainable products means measuring and assessing their impacts throughout their life cycle, and secondly, developing sales lines with minimal environmental impact. With this in mind, the company has quantified the environmental impact of all phases of the life cycle of some of its branded products by adopting the Life Cycle Assessment (LCA) methodology. It also started a trial of collecting plastic bottles in its shops.

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COVER STORY - PLM

PRIMARY TARGET: PACKAGING IPLC data show that packaging is among the main targets of European retailers (14%). In response to how much the issue has become relevant and heartfelt, Bennet presented its first sustainability report for 2019 in 2020. The commitment to safeguarding the future has led to significant results in terms of reducing packaging materials (-43.9% in plastics in 2019 vs 2018). The commitment to safeguarding the future has led to significant results in terms of reducing the packaging materials used (-43.9% in the use of plastic in 2019 vs 2018). Where reduction is more difficult today, for technological and food safety reasons, the company has oriented its choice towards 'more sustainable' mono-material packaging, which is easier to dispose of and recycle, towards materials and products obtained from the recycling of plastic waste with the Plastica Seconda Vita (Second Life Plastic) environmental certification marking, towards the use of bioplastics, obtained from material of vegetable origin, which can be disposed of in the organic fraction, towards the use of paper packaging certified with chain of custody (FSC, PEFC, ATICELCA).

Despar follows two central tenets when developing new products: health and well-being on hand, and the environment on the other.

"For some years now," says Michela Cocchi, Brand Manager Despar Italy, "we have been putting icons on our products that simply explain the materials used in the packaging and how to dispose of packaging waste�. Selex (Selex, Vale, Il Gigante) is also focused on packaging, as Luca Vaccaro, PL director, points out: "We are working on reducing packaging, the use of mono-materials, with a preference for recyclable and recycled materials, to reduce overpack with the aim of putting less on the market, simplifying disposal and eliminating the most polluting materials. This is a major project covering all our products, over 5,000 references, and already in the first months of this year we are making changes to many of our packages: ranging from water bottles, which will now be made partly from recycled plastic, to reducing the thickness of bags of fresh-cut salad, and changing the packaging material of biscuits to make it totally disposable in paper."

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The latest market surveys confirm that consumers require sustainable packaging that also preserves the freshness of food.

Eco Packaging System fully meets these needs because: ǻ

it keeps food fresh longer;

ǻ

it avoids any waste;

ǻ

its basic components, paper and treated film, can be easily separated for recycling.

MAKE YOUR CUSTOMERS HAPPY, BOOST SALES FIND OUT MORE

COVER STORY - PLM

DISCOUNTERS NOT LAGGING BEHIND...

The growth of sustainability awareness in discounters is also significant and goes hand in hand with the growth of the channel. “One of the biggest challenges we face," says Alessia Bonifazi, Communications & CSR Manager at Lidl Italy, "is to reduce the use of plastic throughout the supply chain. One of the most prominent of our many initiatives over the years is REset Plastic, the Schwarz Group's international plastics strategy, which Lidl Italy has joined. We are aiming to for a 20% reduction in plastic in own-brand product packaging by 2025 and also make 100% of our own-brand product packaging recyclable by that date. Achieving these goals requires a new holistic approach, from eliminating plastics wherever possible, to designing new, more recyclable packaging, to innovation and public awareness." PL's 'green' vocation is encapsulated in the project “La Buona Spesa non solo a parole” (Good Shopping, not just words). The environmental commitment also extends to the packaging of branded products through precise instructions on proper disposal and implementation of the use of compostable materials. Currently this covers about 80% of products, while 40% of coffee capsules are already compostable. Even the world of frozen food is enticed: in the coming months, vegetable wrappers will be compostable and disposable in the organic sector. The 'flou green' disposable cutlery line is fully compostable, while the Dat5 detergent line uses recycled plastic in its bottles, and even FSC-certified paper.

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PLM - COVER STORY

Partnership against waste â—† Helping retailers with

sustainability practices has come from organisations such as Last Minute Market or the local Caritas organisation, which work with retailers to collect surplus food that is about to expire and make it available to people living in poverty. Apps such as Too Good to Go also offer very cheap products close to their expiry date to consumers who come to the shop to collect them. To help manufacturers and retail companies, the Observatory on Innovative and Sustainable Packaging, founded in 2019 by the Business School of the University of Bologna, helps measure the CO2eq impact of supermarkets' selected ranges, starting with the Life Cycle Assessment of ingredients and packaging.

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COVER STORY - PLM

...WITH PURPOSEFUL INITIATIVES In 2018, just a few months after the first openings in Italy, Aldi launched "Io riciclo!"

(I recycle!), a customer awareness initiative for environmental protection. Thanks to clear and visible icons on the packaging of private label products, consumers receive information on the type of material used in the packaging, simplifying the correct disposal of waste in the municipal collection system. All sales outlets also offer space for disposing unwanted packaging and used batteries. Aldi has also worked to make milk bottles of the 'BonlĂ ' and 'Enjoy Free' brands more sustainable. The new bottles are made from 50% recycled PET (rPET) and are also 100% recyclable. "This will reduce the introduction of new plastic into the environment, saving more than 40 tonnes per year. In addition, all fresh egg references on the shelf are now packaged in a 100% pulp pack and are made of at least 70% recycled material." Within primary packaging, polystyrene (styrofoam) trays have already been phased out and the percentage of rPET and PET packaging as an alternative to other plastics has increased. Aldi is also the first retailer in Italy to support Plastic Bank, a social enterprise committed to collecting and recycling environmentally dispersed plastics that pollute the oceans. In November 2020, it launched the first fruit and vegetable products with food packaging made of 100% Social Plastic in partnership with Carton Pack and Plastic Bank. Penny Market is also increasingly focusing on its commitment to a sustainable future. A concrete example is the inclusion on the packaging of some branded product lines of information on proper waste disposal. "The 'MY Bio bellezze Naturali' line of fruit and vegetables, which ambitiously seeks to tackle the fight against food waste by offering products that are 'Special on the outside but perfect on the inside'," adds Paola Monica Dimaggio, private label manager & sustainability coordinator of Penny Market Italia, "uses only biodegradable and compostable film and netting and 100% recyclable trays."

Maria Teresa Manuelli

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PLM - INTERVIEW… FROM THE DISTRIBUTION SIDE

PLM CATCHES UP WITH COOP ITALIA'S NEW MARKETING AND PRIVATE LABELS DIRECTOR, PAOLO BONSIGNORE

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INTERVIEW… FROM THE DISTRIBUTION SIDE - PLM

Coop Italy,

30% of turnover in PL COOP HAS ALWAYS STOOD FOR QUALITY AND SUSTAINABILITY, INCLUDING FOR THE PL WORLD. IT BOASTS A HIGHLY SIGNIFICANT SHARE OF SALES AND MUCH HIGHER THAN THE 20% AVERAGE ACHIEVED BY THE NATIONAL LARGESCALE ORGANISED DISTRIBUTION THROUGH PL. WE SPOKE WITH PAOLO BONSIGNORE, NEWLY APPOINTED DIRECTOR OF COOP ITALY BRAND PRODUCTS. Let 's start with some figures and performance...

Our figures have remained positive and the overall share of Coop products is roughly 30%, with a turnover of around €3 billion, of which approximately 40% comes from fully traceable supply chains, unique in Italy. Traditional lines such as Vivi Verde (organic and ecological products), Fiorfiore (gourmet excellence) and BeneSì (health products) are consistently performing well and posting double-digit growth rates. The Origine brand, synonymous with total traceability of the supply chain, also performed very well.

Paolo Bonsignore, with over 24 years of experience in the FMCG world, is the new marketing and private label director at Coop Italy. A native of Trieste, Paolo's extensive experience includes managerial positions at Illy, where he was marketing director for over eight years, and Bialetti. He studied in Italy at the Mib Trieste School of Management and in the USA at the Wharton School of the University of Pennsylvania.

He possesses in-depth knowledge of international markets, communication, digital and e-commerce.

Can you share the story of the Coop brand?

Coop's product history began over 70 years ago and is one of consistent growth and success.

We currently have a total of 4,500 products, including the launch of more than a hundred in 2020. A perfect synthesis of Coop's identity, branded products have, since their inception, been characterised by transparency - on food safety, Coop goes well beyond legal obligations and Coop Italy invests more than €5 million a year in this field -, the ethical aspects of the supply chain (adherence to standard Sa8000 is also historic and recently reinvigorated in the 17

PLM - INTERVIEW… FROM THE DISTRIBUTION SIDE

most at-risk supply chains), high quality and convenience: on average -30% compared to the corresponding brand-name industry products.

The pandemic also put private label to the test.

How did Coop handle this?

While COVID has no doubt changed the habits of Italians, it is nevertheless comforting to find, within these very changes, many confirmations of trends that Coop had already been monitoring, and we are strongly tuning into them and distinguishing ourselves from our competitors. The green awareness of Italians first and foremost, in which we are investing heavily and which we have seen reaffirmed by our data even during and after the lockdown. Our organic brand Vivi Verde is Italy's number one selling organic brand in supermarkets, with a turnover of over €150 million in 2019 and a value trend of +9%, which has never had a downturn, either before, during or after the lockdown. But more broadly, when it comes to the relationship between sustainability and food, our product is unrivalled.

What about prices?

I should point out a commitment we have with our partners and consumers, namely to freeze PL prices until the end of September through the 'Operation Strength 10' offer, which includes a basket of 10 of our items with a retail price of 10 euros. The deliberately low price - an average discount of 37% on the normal price - has not detracted from the value of the individual products, all of which have the Coop guarantee, traceability and the addition of unique features (such as antibiotic free or ethical control of the supply chain). The initiative met with high praise and the 10 references recorded sales of €9.5 million in 3 months, with double the quantities of last year and growth peaks of 300% and more.

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INTERVIEW‌ FROM THE DISTRIBUTION SIDE - PLM

The Coop world has many house-brand lines.

How many are there at present?

Coop's private label consists of a dozen brands, covering different price and conceptual positions, catering for multiple areas of need and outperforming many industry products. This wealth is the result of an evolution from the initial 'portfolio management' to the concept of 'private label ownership', i.e. a PL management approach similar to that which industrial brands apply to their products.

You brought up sustainability. Can we dig a little deeper into the relationship between this value and private label?

It is difficult to strike a balance, because it is not free of charge, especially if you have the ambition to intercept positive news. However, we always make choices that add value for consumers and, in this, the concept of sustainability is also very much in focus. For example, when we decided to work on removing antibiotics from our animal supply chains, we chose to do so at no cost and to invest resources that will only pay off in full when the market has found its balance, because we did not pass on the additional cost to our customers.

We are working on an entirely sustainable supply chain, including packaging, which is the last leg of the journey. Here again I would like to mention that the entire Vivi Verde line, Coop's bio, uses recyclable, reusable or compostable packaging: and we are talking about over 750 references.

Let 's conclude with a look at the Coop brand experience with end consumers...

We have an obligation towards our partners and consumers, an obligation from which we do not deviate and which is reflected in the branded product. We are committed to offering the best products on the market at the right price, respecting the parameters of quality, transparency and safety. For Coop, safeguarding workers and the land comes first, and we strive to ensure that our supply chain is free of forced labour, gender discrimination, mafia infiltration, and exploitation of migrants and the environment. Our controls ensure that production standards are met and that all food is good and healthy. While we do not ask our suppliers for perfect products, we do ask for products that are free of antibiotics, pesticides and anything else that compromises the integrity of a good. In Coop brand products, everything is clear and declared and we make sure that each item can be known in detail, narrating its origin and history. This is our way of guaranteeing consumers maximum transparency, and we believe that this explains the success of Coop products. l

3 billion

PL sales for Coop Italy 30% private label share of Coop Italy sales

4,500 Coop brand references

Luca Salomone, professional journalist specialising in consumer goods, distribution, shopping centres and finance.

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PLM - EXPERTISE ON FIELD

The retailer's role in sustainable development:

The Walmart case

In the sustainable development strategy, "[we pursue] a multi-stakeholder approach to business: addressing the needs of customers, associates, suppliers, communities and the planet, [it is possible to create more value] for everyone, including shareholders."

These were the words of Doug McMillon, president and CEO of Walmart, in his "Regeneration Speech", given in September 2020 at the Walmart Sustainability Milestone Summit, an event to inform suppliers, partners and stakeholders on the progress of the strategies, objectives and results of the process undertaken by the group a few years ago.

E

conomic, environmental and social sustainability are addressed in every area, in every action, whether individual or collective, in an integrated way, to generate value for all players in the chain. The approach is methodical, scientific and progressive, not just a mere gamble: “It doesn’t mean either hope or despair; it is action that is courageous and fearless� adds Doug. In the FMCG sector, the social role of retailing, and in particular

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EXPERTISE ON FIELD - PLM

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PLM - EXPERTISE ON FIELD

EXAMPLES OF WALMART'S SUSTAINABILITY GOALS SCOPE

GOAL DESCRIPTION

TARGET DATE

CO2e EMISSIONS

Project Gigaton: reducing 1 billion metric tonnes (a gigatonne) of CO2 emissions, equivalent to 211 million vehicles running for an entire year. By 2020, the target of 240 million was achieved.

2030

CO2e EMISSIONS

Achieving zero greenhouse gas emissions in global operations

2040

FOOD WASTE 10 X 20 X 30

Ten major food retailers (including Walmart) commit with 20 priority suppliers to halve food waste by 2030

2030

SUSTAINABLE PACKAGING From 55% in 2020 to 100% of private label packaging recyclable, reusable or compostable by 2025

BIODIVERSITY DEFORESTATION

Sourcing of palm oil, beef, soya, wood pulp and paper 100% certified "deforestation free".

Compiled by IPLC Italy from Walmart corporate source

2025

2025

EXPERTISE ON FIELD - PLM

Private Labels (PL) in terms of the 'accessibility' of their offerings to consumers, became evident during the pandemic, giving retailers a leading role, almost a mandate, to coordinate, guide and accelerate the implementation of sustainable practices.

Walmart

In recent years, has made this role a cornerstone of its strategy in an original and proactive way. Let's take a brief look at the five main ingredients:

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TOGETHER

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SHARED VALUE

Faced with the relevance, globality and urgency of the problems and opportunities, no one alone, however great, can be effective: the impact is generated collectively. The pandemic taught us a great lesson, only when we acted together could we lower the rate of infection. Who is better positioned in the supply chain to play this role than the distributor?

For associates and companies, this is the reward for contributing to the project, for customers… “sustainability is at the core of our purpose of saving people money and live better lives” (Latriece Watkins EVP, consumables, Walmart US).

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QUICKLY

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WAYS AND MEANS

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COMMUNICATIONS

For engaging, informing and motivating companies, employees and customers.

Action needs to be taken quickly, with a swift deployment of measures. Retailers or retailer associations act upstreamwith several thousand suppliers, downstreamwith several million customers, a potential for unparalleled scalability and impact.

Platforms, systems for calculating and reporting progress, simple and shared guidelines to enable suppliers to choose their targets in a consistent, stated, practised and reported manner. With the Walmart Sustainability Hub platform, the US retailer fulfils this role for its suppliers by offering themaccess, services and support to achieve their goals. Multinational brands such as Unilever, Nestlé, Barilla, Danone, P&Ghave also joined the platform.

Paolo Palomba, Managing Partner IPLC Expertise on Field

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PLM - MARKETS

Private labels are gaining market footholds in

Fresh dairy We’ve been watching private label evolve for some time now and even buck the inextricable past of basic and premium pricing segments, with an increasing presence in premium segments, certified products, regional specialities and innovation in terms of service and packaging.

T

he lockdown and other measures to stem the health emergency gave a big boost to domestic consumption of cheese, especially dairy products of industrial brands and private labels. From January to June 2020, in fact, according to data processed by Iri and Gfk released

by Assolatte, cheese sales in modern distribution increased by 11.6% compared to the same period last year and, among the most consumed products, in first place is mozzarella for cooking (+67.7%), followed by mascarpone (+50.6%), sliced

24

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MARKETS - PLM

Coop Italia ◆ Brand-name fresh cheese sales increased by over 50% during the national lockdown. ◆ Between January and September 2020, sales of fresh cheese at Coop Italia were up 14%, while brand products climbed 26%. ◆ Between January and September 2020, Coop private label dairy products outperformed brand-name products in terms of both value and volume.

25

PLM - MARKETS

processed cheese (+20.7%), cow's milk mozzarella (+18.2%) and string cheese (+17.5%), all well above the industry average. The dairy and cheese market, like many other consumer packaged goods markets, has been evolving for some time now and, in a departure from the past, is no longer restricted to the basic and premium price segments, but is increasingly present in the premium segments, in certified products, in regional specialities and in more innovative products in terms of service and packaging. Today, private labels have achieved a continuously growing share of the cheese and dairy products market in large-scale organised distribution of around 20%, both in terms of value and volume, and this share is very high for various dairy products such as butter, mozzarella, fresh cream, ricotta and low-fat yoghurt.

PL CHEESE CONSUMPTION FUELLED

BY THE LOCKDOWN " The category has been growing strongly in general," says Filippo Capellupo, category manager for the PL fresh sector at Selex, "and private labels are outperforming the market with a consequent increase in their share. The trend towards buying our private label products accelerated in the first months of 2020 and consolidated in the following months. The performance of mozzarella, yoghurt, ricotta and Crescenza cream cheese is particularly impressive, which we interpret as confirmation of consumer awareness of the excellent quality/price ratio of our products. Even at Coop, where the sales performance of cheese and dairy products is managed in two different areas, the retailer's private label products are outperforming the average of their respective categories. "Fresh cheese sales figures have been very positive from January to September 2020," says Danilo Pini, Head of the Cheese Department at Coop Italy, "recording

26

MARKETS - PLM

Carrefour Italy expands its wellness offering

T

he Carrefour Italia brand in dairy products and fresh cheese is performing very well in recent months and is expanding with new products, especially in the wellness segments. "All our private label products, thanks to the service content and the excellent quality/price ratio, are posting significant growth rates," explains Marco Selmo. " We are also working on the category to expand the assortment range, ensuring maximum coverage of units of need, particularly on line extensions such as 'lactose-free' and 'light '. Another extremely important issue for us and one that we are developing is the Italian origin of raw materials and, therefore, the Italian character of the offer within our branded product range."

27

MARKETS - PLM

+14% in both value and volume compared with the same period in 2019, with branded products growing by 26%, contributing significantly to the overall result. Obviously, these figures were significantly affected by the national lockdown, with increases of over 30% and 50% on private label products."

PRIVATE LABEL OUTGROWS BRAND PRODUCTS IN DAIRY The same applies to industrial dairy products, again in Coop, though the dynamics differ across the individual categories. "This sector is performing very well overall," explains Doriana De Pascalis, head of the dairy department at Coop Italy, "with volume trends ranging from +12.6% for fats, +7.2% for vegetable beverages, +3.2% for milk, and +2.5% for yoghurt. The performance of this last category is rather positive in view of the almost total absence of innovation in 2020 and its importance as a sales driver. The numbers are even more remarkable considering the performance of our private label, which is growing more than brand names in terms of value and volume. The sole negative aspect was sales of fresh milk, which fell sharply as a result of the COVID restrictions, though this was largely offset by long-life milk, which grew by around 10% in both volume and value."

TOP 5 PL PRODUCTS IN TERMS OF GROWTH +67.7% cooking mozzarella +50.6% mascarpone +20.7% sliced processed cheese +18.2% cow's milk mozzarella +17.5% stringy cheeses

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MARKETS - PLM

An increasingly green private label for

Coop

Manufacturing its branded products using Italian raw materials with certified suppliers and very strict controls along the entire supply chain for some time, Coop is and has always been environmentally awake and believes in its current communication campaign “Una buona spesa può cambiare il mondo” (Good shopping can change the world). "Our private label product embodies all our values," explains Doriana De Pascalis, "so the environmental aspect will also be given top priority in future developments.

We are working to expand the wellness offer, but also the range of premium and organic and/or local products.

Innovations inevitably also include packaging, which is becoming increasingly sustainable: from compostable milk cartons to rPET plastic, and finally paper yoghurt pots instead of the classic plastic ones, a solution we are presently working on."

COMPARING PRIVATE LABELS

+ PL DAIRY PRODUCTS ALSO POPULAR AS INGREDIENTS The changing buying habits of consumers forced by the health emergency to spend more time at home than in the past has certainly contained the dynamics in the sales of many products with a limited shelf-life, although several references have benefited from the increase in home cooking. "The fresh dairy category is performing well in terms of value and volume this year, both for our own brand and for the market as a whole," says Marco Selmo, Carrefour Italy's fresh free service and frozen food director, "particularly in some of the basic ingredient product segments.

We have a private label in our shops that is growing slightly more than the category as a whole, so we are gaining share with our private label within the various segments."

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PLM - MARKETS

Selex: top dairy products

Selex's private label dairy products in 2020 grew most notably in mozzarella, yoghurt, ricotta and Crescenza cream cheese.

PRIVATE LABEL PURCHASES ALSO AFFECTED BY THE PANDEMIC According to Samanta Brasiello, free service private label buyer at Iper, La Grande I (Finiper Group), it should however be pointed out that, in itself, this period can only be considered as extra-ordinary, subject to very particular spending dynamics given the management of our daily lives and family routines in a totally different way from usual: " There is no doubt, therefore, that the dairy category is also feeling the effects of this unusual purchasing behaviour, and in a positive way. In fact, we are talking about products that are generally part of the household shopping cart. There are positive figures across the board, with some references leading these increases: in particular, there has been a strong growth in sales of UHT milk, which is preferred to fresh milk due to its longer shelf life, cow's milk mozzarella, probably due to an increase in its use in home preparations, and grated hard cheeses. Our private label is perfectly aligned with this growth."

THE ITALIAN ORIGIN OF RAW MATERIALS REMAINS A DECISIVE FACTOR One of the main requirements consumers look for in the fresh dairy products they buy every day, including private label products, is certainly the authenticity of Italian products.

"For some time now we have chosen to use Italian milk for our private labels," says Filippo Capellupo of Selex, "we believe it is important to guarantee and communicate the origin of the raw material, we believe that, now more than ever, Italian origin is a recognised value. Wherever possible, we also try to offer products with packaging that has a lower environmental impact and with reduced weights so that the product purchased is fully utilised: The focus on not wasting food is an increasingly consolidated attitude among consumers."

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MARKETS - PLM

AT THE HEART OF TRADITIONAL ITALIAN CUISINE Respecting our culinary traditions is also a hot topic in the fresh dairy and cheese market. "Our private label fully responds in food sectors that assert their roots in classic Italian cuisine and a more family-oriented character," explains Samanta Brasiello of Iper La Grande I, "including the dairy product category which is absolutely 'mature': milk, butter, yoghurt, cream and cheese are all essential and indispensable items in every household's fridge and pantry, all the more so at a time when shopping lists are getting longer with more established products to reduce visits to the supermarket."

20% Private label's share of the cheese and dairy market (growing steadily)

+11.6%

Cheese sales in large-scale organised distribution in the first half of 2020

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PLM - MARKETS

NOT JUST CONVENIENCE FOR BRAND-NAME DAIRY PRODUCTS

IPER Despite these complicated economic and social times, Iper's private label offering aims to meet the needs and requirements of all its customers. "Our entire assortment is geared towards this," explains Samanta Brasiello, "starting with our Valis brand, which offers an excellent quality/price ratio and completes the range of private label products with a wide spectrum of items that are at the most affordable level on the market. The store brand (Iper) is dedicated to promoting Italian products, which receive significant consumer attention. We have also worked on focusing on lactose-free products that, although dedicated to a specific clientele, are finding great and widespread acceptance. We are also paying particular attention to weights that are consistent with the dynamics of family and single-portion consumption."

Iper: top milk-dairy Iper La Grande I's milk-dairy private label grows especially in UHT milk, cow's milk mozzarella and grated hard cheeses

34

MARKETS - PLM

GROWTH IN “ LOCAL” AND " HEALTHY " Doriana De Pascalis of Coop explains that as consumers are increasingly demanding and have learnt to scrutinize labels, the demand for 100% Italian products is growing, and even more so for "local" foods and, where possible, made from premium raw materials such as mountain or Valtellina milk, yoghurt made from pasture-fed cow's milk etc.: "The demand for wellness and intolerance-friendly products is also growing strongly: 'lactose-free' first and foremost, with a booming kefir segment along with high-protein and lowfat products. Organic products, however, fell slightly across all categories, perhaps due to their relatively higher price compared to equivalent conventional products, especially in a context of great economic uncertainty such as the one we are currently experiencing."

HIGH-SERVICE CONTENT IS ALSO DRIVING PRIVATE LABELS If we were to set the COVID effect aside, Marco Selmo of Carrefour Italy points out that the latest developments in the dairy market are related to high-service products and trends that have been growing in recent years, such as the whole world of snacking and ready-to-cook: "Another type of innovation, if you can call it that, is the extension of product lines that go in the direction of 'lactose-free' or fresh references linked to the 'light' sphere based on alternatives to cow's milk such as goat's milk. Interesting insights also come from requests to reduce product quantities and packaging in an effort to support the fight against food waste. With our private labels, we will develop projects that allow us to follow these market developments."●

Fabio Massi, journalist specialising in retail and mass market issues.

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35

PLM - INTERVIEW… FROM THE INDUSTRY SIDE

PLM SITS DOWN WITH AMBROGIO INVERNIZZI, CHAIRMAN OF INALPI SPA.

Inalpi commits regionally

by Luca Salomone

36

INTERVIEW‌ FROM THE INDUSTRY SIDES - PLM

I

nalpi acquired 100% of the shares in Latterie Alpine in March 2020, pursuing a growth plan to continue along the path it has already begun and increase its value in the region. In September, the company - with a consolidated turnover of â‚Ź172.87 million - entered the organic yoghurt market, concluding the arrangement agreement for the lease of the Ars Food business in Varese Ligure, in the Val Vara 'biodistrict'.

The year was quite complex . How did Inalpi manage?

From an economic and financial point of view, the pandemic-riddled period did not affect the group's performance, which was in line with last year's levels.

The most dynamic products, with record growth, were those under our own brand, from butter to melted cheese slices. This is partly because we launched our first advertising campaign, broadcast from 26 April to 16 May on Rai, Mediaset, Sky, La7 and Discovery and on digital channels. We told about our short, certified supply chain, with 100% Piedmontese milk. The Inalpi school journal initiative also continued, the fifth created in collaboration with Coldiretti Piemonte. Distributed free of charge, it aims, in particular, to make young students more familiar with the milk chain.

What about third-party products?

The success of our brand has not prevented products made for the large-scale organised distribution, which account for 25% of our revenue, from rotating very well. In contrast, industrial customers and, above all, of course, the HoReCa sector, which accounts for around 15% of turnover, were down.

A tradition dating back to 1966, when the Invernizzi (70%) and Barattero (30%) families joined together in Moretta (Cuneo province), the company now offers a wide range of dairy products - sliced and traditional cheeses, butter and milk and prides itself as one of the most prominent examples of the Piedmontese agroindustry.

25%

PL revenue share

37

PLM - INTERVIEW‌ FROM THE INDUSTRY SIDE

What are retailers asking for?

Large-scale organised distribution has moved towards an increasing variety of flavours and functional foods, packaged in sustainable and recyclable packaging. Buyers are interested in novelty. In other words, they are interested in whatever is not already on the shelves. Moreover, distribution is particularly attentive to organic products, where Inalpi already has its own extensive line, which recently incorporated a fondue made in collaboration with chef Gian Piero Vivalda. We are now increasingly investing in organic products and sustainability, which are fundamental for consumers and therefore for a PL that seeks to separate itself from the pure logic of price.

Today Inalpi also means yoghurt. Let 's talk about that...

Sounds good. We collaborated with the Ars Food operation to enter the organic yoghurt market in September, where we are working hard, for example with new, fully recyclable packaging. The performance of our e-commerce, which has grown considerably during COVID, is also remarkable. We are talking about a stronghold, a virtual flagship store, with an annual turnover of 1 million euros. This 'space' is intended above all to meet the needs of anyone looking to have the full range of our products at their fingertips at any time of day.

How important is the foreign market for you?

It is crucial, representing a substantial half of the group's turnover. We believe that foreign markets are mainly the industrial market, while the foreign chains with which we collaborate are still relatively few and are mainly based in France and Germany.

Overseas markets account for 5% of sales of Inalpi-brand products, while the industrial channel accounts for another 40%, thanks to the work done for multinationals. This latter segment was somewhat disrupted by the drop in milk prices and, more marginally, by the inevitable complications created by the pandemic. September and October, however, showed a clear recovery.

38

2019

172,87 million in turnover consolidated

INTERVIEW… FROM THE INDUSTRY SIDES - PLM

40%

INFLUENCE OF THE FOREIGN INDUSTRY CHANNEL

Let 's finish by looking at investments. Which items are you most involved in?

Next to diversification and communication, we are investing mainly in production. In our Piedmont region, we are investing in doubling our milk pulverising capacity and in new dairy facilities that will enable us to produce products exclusively from our supply chain. With an investment of €100 million over the next three years, we aim for complete control over raw materials to ensure even better quality and traceability. Environmental preservation is also a core value for us, and we are implementing and planning sustainability initiatives, such as the protection of water resources, with water recovery and reuse projects, and the production of sustainable energy, thanks to modern, low environmental impact plants. A complex and structured process so that Inalpi can secure a Carbon and Water Footprint certification.

In a nutshell, we are leading the way in investment, not least because we believe that, in these difficult times, businesses must play their part and be key players in the economic recovery.●

39

PLM - PACKAGING INNOVATION IN PL

On behalf of re-life cycling Packaging is relevant in terms of the message it seeks to convey, though it must also protect the product until it becomes waste and enters sustainable circulation.

A significant amount of European consumers (52%) share this sentiment and are willing to forego packaging design, switch brands (46%) for greener packaging and even pay a premium price (27%) for sustainable packaging (Nielsen 2020).

T

he Race Towards Sustainable Private Label (IPLC 2020) research conducted in 8 European countries identified no less than 877 initiatives taken by over 50 European retailers to increase private label sustainability. Of the 20 commitment types, packaging and plastics, in particular, is by far the most important with 138 ongoing activities. In fact, several retailers use plantbased plastic bottles, recycled PET bottles, FSC cardboard boxes, non-coloured polystyrene trays and biodegradable bags to enhance their private label packaging. Here are some recent sustainable packaging innovations in some European players:

40

PACKAGING INNOVATION IN PL - PLM

ENGLAND. In addition to Iceland's relevant commitment to eliminate plastic from the packaging of all products by 2023, the Wrap Plastic Pact, endorsed by 95% of retailers, commits signatories to use only reusable, recyclable or compostable plastic by 2025.

Morrisons, in November 2019, was the first to remove black plastic from trays at its private labels, followed by Asda, with new packaging for fresh meats, and Aldi, which changed trays across several product lines, from fruit to meat, reducing plastic by 88%. Thanks to these innovations, non-recyclable plastics in the UK will be reduced by 19,000 tonnes in 2020 (the equivalent of 1.5 billion trays of ready-to-eat meals).

GERMANY. The message is loud and clear: less packaging and less plastic.

Edeka, Aldi and Lidl will reduce the packaging of their own private label brands by 20-25% by 2025. This point seems no less important than price in terms of how it is communicated in a recent Lidl campaign: The January 2020 "Confezionato Responsabilmente" (Packaged Responsibly) flyer shows the percentage of plastic reduction in packaging for over 170 private labels. The 'Verpackungsmission' (Packaging Mission) campaign seeks to educate the consumer about effective recycling and, Aldi has developed packaging that makes it easy to separate the different components, for example, perforated cardboard around a plastic yoghurt tub or white plastic bottles for easy disposal.

NETHERLANDS. Sustainability is becoming increasingly relevant when deciding what food to buy, all of which requires more transparency and, in late 2019, Albert Heijn and Lidl launched the first biodegradable milk bottle in Europe (bottle, cap and label are made from sugar cane and are fully recyclable).

Stefano Ghetti, Partner IPLCItalia 41

PLM - RETAIL BRAND INTERNATIONAL

Retailer Brand Sustainability:

let’s talk about

Leclerc

French consumers are increasingly concerned about climate change, which has put enormous pressure on the French food supply chain. The 2015 Paris Accord, followed by the recent victories of the Greens in the 2019 European elections and the 2020 local elections, show that French consumers want to actively change their consumption habits. Supporting local producers and farmers is an expression of responsible food consumption. A 2019 Max Havelaar/Opinion Way survey confirms that value sharing is an important issue for consumers across the Atlantic. Environmental protection, in particular through the fight against excessive packaging and food waste, is an important element in the process of conscious consumption, especially among young people.

R

etailers are not surprisingly placing sustainability at the top of their agendas. The COVID situation highlighted the importance of local supply. It gave private labels a great opportunity to state that most of their suppliers are national/local SMEs. While this topic had already begun before the crisis, it resonated greatly in this context. The need for transparency is becoming one of the main criteria in developing a new private label. This is interpreted at 3 levels:

Remy Medina, Partner Iplc France

42

RETAIL BRAND INTERNATIONAL - PLM

Nutritional value transparency: the nutriscore prompted retailers to reformulate their recipe and opt for (even) cleaner labels.

Production transparency: drawing upon the Australian initiative, first Intermarché and then Leclerc began disclosing the origin of production and ingredients.

Waste transparency: especially from the packaging point of view, retailers have already started to work on the eco-concept to implement the 3R strategy (Reduce/ Reuse/Recycle).

To reflect these directions, it is interesting to take a closer look at all of Leclerc’s initiatives in 2020. Here are some examples of Leclerc products that illustrate the impact of its sustainability agenda.

For its Repère Bio Village Puro Juice brand, E.Leclerc is gradually introducing paper straws from sustainably managed forests and produced in France, saving over 8 million plastic straws per year, the equivalent of 2.5 tonnes of plastic.

The E.Leclerc private label Marque Repère is taking concrete steps to reduce its plastic footprint.

“Although the EU imposes a 25% integration of rPET, Marque Repère has set itself a more ambitious 2025 target: that all plastic bottles of our brand include a minimum of 30% rPET by 2025,” said an E.Leclerc spokesperson. To date, already over one third are. On some products, the brand goes further and offers 100% recycled plastic bottles. This summer, Marque Repère bottles for its mountain spring water will be made of 100% recycled plastic (rPET), excluding caps and labels.

This product is a synthesis of all the actions undertaken by Leclerc so far.

From the packaging material, cardboard from responsible sources and sustainably managed forests instead of plastic (14 tonnes of plastic per year saved), production and origin of the ingredients, to nutritional values. These are the potential new standards for the future of the retailer ’s brand in France.

43

PLM - THE PRIVATE LABEL SCENARIO‌ IN FRANCIA

The COVID-19 rebound effect

by Remy Medina

The French food retail market will return to growth in 2020. After 4 consecutive years of declining sales (-1.4% in volume in 2019 and 0.8% in value, Iri Reperes 2020), deconsumption has proven to be a recurring trend. However, excluding the COVID-19 effect, which pushed growth in value to +5.8% and volume to +4.9% (year ending 31 October 2020, Iri).

T

here has been a fierce battle between private labels and industry brands to capture the largest share of this impressive growth (fig 1). The first lockdown massively favoured the private label, which had a +23.4% increase in the March 2020 period.

Levels fell when the lockdown was lifted, but remained higher than in 2019. The brand-name business managed to regain market share, while distributor brands lost the summer battle. This is mainly due to a favourable climate that has strongly influenced sales in categories where the

44

THE PRIVATE LABEL SCENARIO‌ IN FRANCIA - PLM

private label is less present, such as ice cream, beer, beverages and water.

Brand and PL returned to the same level of growth of +10% in the latest period. Overall, the 3 private label levels benefited from the situation (figure 2). Classic PLs, accounting for 85% of the total private label business, contributed the most to growth with a 7% increase in sales over Jan-Sept 2020 compared to +0.7% over the same period in 2019. In the valueadded segment, premium was up 8.3% and organic was up 11.6%. On average, organic products benefited the least from the situation, since in comparison there was an increase of 20.4% in 2019. Lastly, the first price seemed to be rising sharply, but this was mainly due to sales of masks and gels. The total private label market is expected to reach a value share of 33%, returning to the 2017 level. The lockdown, followed by reduced restaurant visits, impacted

CAM (Cumul Annuel Mobile) = Anno su anno CAD (Cumul A Date) = CC (Cumul Courant) = Year to Date

45

PLM - THE PRIVATE LABEL SCENARIO‌ IN FRANCE

certain product categories in the fresh self-service department, such as deli meats, sausages or butchery, where private labels, already in a dominant position, continued to gain market share. However, looking at the categories affected by a very strong or very sudden demand boom, the changes have not played in favour of the private label. Therefore, this year their weight decreased for some food products such as flour and crackers, for example.

T Edited by IPLC France

he sharp increase in the weight of private labels, notable for home and personal care and hygiene, is mainly due to the increase in virus protection products (masks or gels). Excluding these categories, private label share growth in hygiene is much smaller (+0.2 points).

The health crisis has reshaped French consumption patterns and accentuated pre-existing trends. The preference for local or national products has been confirmed. When distributors have to choose, it often benefits SMEs. These changes have an impact on

46

THE PRIVATE LABEL SCENARIO… IN FRANCE - PLM

the visibility of private labels, which in turn affects their performance. This process is notable in e-commerce, where the share of private labels is still growing, albeit at a much slower pace than local/national brands. The situation for organic products differs slightly: after many years of double-digit growth, the category continues its journey, though at a slower pace. Between January and September 2020, the product range grew by “only” +11.6% compared to an impressive +20.4% over the same period in 2019.

W

hile exiting the first wave of the outbreak proved difficult for retailers, the changes brought about by this crisis in the composition of shopping carts may offer opportunities for private label. Indeed, private labels have made it possible for the French to get masks. Similarly, they are well established in popular categories such as commodities, a consequence of the revival of home-made products. The significant increase in time spent at home or the limitation of social interactions still means that private labels can make progress in product categories where they are less well established. Finally, the work done by retailers on their own brand sustainability criteria has helped them to be the real winners in these extraordinary times.●

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PLM - MARKETS

The pandemic spurring

homecare products Disinfectants and bleaches lead the brightest trends

by Fabio Massi

In addition to bringing about a major change in consumer habits, the emergence of the COVID-19 pandemic has undoubtedly prompted Italians to pay more attention to the hygiene of their homes and items of daily contact. This trend has considerably boosted sales of sanitisers and household care and Among the cleaning products, at least in the product categories, first half of this year. According disinfectant preparations to data from the detergent per formed best with a +100% market monitor carried out increase, followed by bleaches

by Assocasa-Federchimica with a +53. 3% increase, then hard in collaboration with Nielsen, sur face cleaners (+37.9%) and the "homecare" sector tex tile auxiliaries (+33.1%), while from 30 December 2019 to pest control products declined (-1. 5%), mainly due 16 February 2020 posted a to a drop in outdoor +1.3% value increase, suddenly activities . jumping to 17.8% growth from the outbreak of the pandemic to 17 May.

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What consumers want ◆ Private label products that have the same characteristics as the big brands, therefore saving money without sacrificing performance; ◆ Sanitising products, mainly disinfectants, yet still effective, easy to use, fast-acting, innovative and fragrant; ◆ More sustainable products with reduced environmental impact, both in formulation and packaging.

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PLM - MARKETS

PROXIMIT Y SHOPPING ALSO FOR HOUSEHOLD DETERGENTS In terms of format, the virus has also shifted purchases to proximity in the case of domestic detergent products, rewarding above all free service, whose performance rose from a pre-COIVID-19 level of -4.8% to the mid-pandemic level of +36.3%. Supermarkets (+29.2%), discount stores (+15.2%) and drug specialists (+10.3%) are also growing strongly, though hypermarkets (+2.7%) are showing less growth. "The ongoing health emergency has profoundly changed the shopping cart," explains Alessia Bonifazi, Head of Communications & CSR at Lidl Italy, "some categories have contracted dramatically, such as fresh and ultra-fresh produce, while others have seen a significant increase in consumption. One of these is certainly the whole area of household care and cleaning, given the frantic emphasis on hygiene in our living environments dictated by the virus. Our private labels are performing well, in line with the rest of our range, over 85% of which is Lidl brand products."

SMALL SURFACE DISINFECTANTS FLYING OFF THE SHELVES Surface cleaners in particular performed best in the first half of this year. Ivan Maccarini, senior buyer at MD, says: "Our shops have seen an increase of well over 50% in products for small areas and commodities such as alcohol, ammonia and muriatic acid, while multipurpose products and bleaches have recorded double-digit increases of 30% and 45% respectively. The latter two segments boosted sales performance the most as a result of the strong need for hygiene following the COVID-19 emergency. In fact, based on the first quarter of 2020 alone, growth rises to +132% for multipurpose and +150% for bleach-based products. Among the best-selling products are sanitisers, hygienic products and disinfectants for medical and surgical equipment and/or biocides."

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MARKETS - PLM

INCREASED PRIVATE LABEL CONTRIBUTION TO THE SEGMENT Nielsen estimates that private label has a 26.4% share of the household cleaning and hygiene products market in volume terms (higher than the national average of 22.3%). Private label has made a significant contribution to the increase in sales in this category, as it has in others, by meeting consumer needs with increasingly innovative and attractive lines. Nicola Hyeraci, PL category manager at D.It, comments: "In recent months, homecare proved to be one of the most dynamic sectors, with an average growth rate in value of +9.2% over the year and a share of total consumer goods packaging of roughly 6.8%. This liveliness is undoubtedly due, as a direct reflection of the current pandemic, to increased consumer demand for items suitable for sanitising and disinfecting rooms and textiles. Our private label, comprising the Sigma, Sisa and Coal brands in the network shops, depending on the partner in charge, continues to grow steadily, with an increase in share of more than 2 percentage points in the category."

Despar revamps its assortment under the banner of sustainability

D

espar's private label offer for household detergents is increasingly comprehensive and eco-friendly, thanks to a production and distribution cycle with low environmental impact and the use of washing substances from renewable vegetable sources. " We have renewed the range of washing machine liquids by developing compositions that reduce their volume while increasing their concentration and the number of washes," explains Calogero Giuliano, "all in favour of reducing plastic. We focus on projects that tend to safeguard environmental aspects: The next steps will be in the direction of doypack refills and the use of recycled plastic on the entire assortment."

51

MERCATI

PRIVATE LABEL OUTPERFORMS INDUSTRIAL BRANDS In Despar shops, the detergent segment is also showing substantial momentum, particularly from private label products. “In general terms, the category grew by 16% in volume in our shops from January to October this year,” says Calogero Giuliano, buyer at Despar, “while the private label in this market posted an overall performance of +29.5% in volume, with an increase of ‘homecare’ of +20.2% in volume, and sanitisers of +58.1%.

Unfortunately, manufacturers were unable to meet all our demands, as the relentless demand outstripped production capacity, which, in some cases, was short-staffed due to the COVID-19 infection.”

MD private labels hinges on two factors: environment and fragrances MD brands will especially target two product types

in the coming months. Ivan Maccarini explains that

“we will place a special

emphasis on user-friendly, concentrated detergents tailored to meet the

demand for green and ecosustainable, and therefore synonymous with

COMPARING PRIVATE LABELS

convenience, practicality and efficiency. We will

also focus on detergents with an intensely

pleasant fragrance, which

enhances their appeal and functionality: fragrance

+

is becoming a powerful

driving force in terms of

consumer choice. The need to sanitise/disinfect the

environment in which we live and work will remain

a part of our daily routine even after the pandemic

subsides. This function will be the focus of multiple projects.”

- PLM

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Best quality CousCous for Private Label

MERCATI

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Top performing products +100% disinfectants +53.3% bleaches +37.9% hard surface cleaners +33.1% auxiliaries for fabrics

MORE THAN JUST SAVINGS FOR DETERGENTS PRIVATE LABEL Even before the pandemic broke out, private label had already demonstrated a certain agility in grasping major household cleaning trends. The Nomisma consumer survey on PL for the 2019 Brand Observatory revealed that Italians look to private label household cleaning and laundry detergents as their first choice: one in four prefer them to industrial brand references. Private label detergents successfully convey values such as responsiveness to consumer needs (29%), quality at the right price (25%) and quality ingredients (24%).

PRODUCTS THAT DELIVER ON THEIR HYGIENE PROMISES Calogero Giuliano of Despar explains that “consumers are becoming more likely to buy private label products that have the same characteristics as the big brands and can therefore save money without sacrificing performance,” going on to say that he “believes that at this juncture, customers first want items to be available on the shelves, and our job is to provide products with a percentage of active ingredients that can deliver on the promise of cleansing and sanitising. Together with our quality control department, we ensure that all products are always in line with the technical production specifications, and we also ask our suppliers to provide bolder forecasts and greater flexibility in organisational production processes so that we can deal with a surge in volumes as quickly as possible.”

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PLM - MERCATI

I NNOVAT I V E , EF F E C T I V E , E A SY TO USE A ND S CENT ED Today’s household cleaning products must be able to meet the needs of families not only in terms of hygiene and cleanliness, but also in other areas. “In this particular moment in history, conditioned by the COVID-19 health emergency,” explains Ivan Maccarini of MD, “the strictest hygiene standards are essential for the cleanliness of all environments. Homecare products are required to be sanitising, especially disinfecting, yet still effective, easy to use, fast-acting, innovative and fragrant. References with these characteristics were among the categories showing growth above the market average: liquid/gel dishwasher detergents, for example, where the trend has been going strong for years thanks to the versatility of the product in terms of dosage, or laundry fragrances, better defined as fragrance boosters, followed by toilet care products, fabric softeners, floor cleaners (particularly sanitisers and disinfectants) and washing machine detergents.”

A whole new line is on its way for D.It In line with emerging trends in the category and consumer feedback, D.It is tackling a new project. Nicola Hyeraci explains that “we are developing a comprehensive range of household and personal items for the coming months that will feature disinfectant action at a level of medical-surgical devices. On top of this, we also have a packaging dimension, which is a strategic area of focus we are gradually addressing: we’re looking to use as much recycled plastic as possible in the composition of the outer packaging and, whenever we cannot, at least seek to reduce the amount of plastic used with a green-oriented approach.”

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- PLM

AN INCREASINGLY GREEN SECTOR Alessia Bonifazi of Lidl feels that the trend in this sector, as in most product categories, is to offer more sustainable products: “For the homecare sector, this primarily means offering products with a reduced environmental impact, both in terms of formulation and packaging. The Schwarz Group, which includes us, is among the world’s largest corporations that have chosen to adopt an environmentally conscious and responsible attitude. With the ‘REset Plastic’ programme, our Group has developed an international strategy that translates into two concrete objectives linked to the products it sells: the first is to reduce the use of plastics by at least 20% by 2025 (a concrete goal that we intend to achieve by redesigning the packaging and repackaging of our private labels), and the second is to make 100% of the plastic packaging of our brand products recyclable.” ●

26.4% volume share of PL in cleaning and household hygiene products

+29.5% private label growth at Despar from January to October 2020

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