PL Magazine 4/2023 -en by Edizioni DM Srl

Private Label Magazine The ESG to come. The future of sustainability in the private label Ethos Profumerie: the great beauty of PLs Mugue: growing young thoroughbreds in pet care 4/2023

Excellence Wins.

Our private label has earned another significant recognition in the industry. The European Private Label Awards 2023 has affirmed our branded products’ market leadership and value. A panel of experts acknowledged the taste and quality of our 11 Paralleli, Sapori&Idee Conad, and Verso Natura Conad product lines. These products have already gained a strong reputation in Italy, where millions of customers enjoy them every day.

SUMMARY - PLM

Editorial An extraordinary year for private label

22 Interview with distribution Ethos Profumerie: the great beauty of PLs

38 Interview with the industry Mugue: growing young thoroughbreds in pet care

Analysis Dunnhumby: PL in top consumer preferences

28 The private label scenario Innovation and trends of European PLs (2° part)

42 Markets Inflation pushes pet food and pet care market towards PLs

8 PLM Awards The awarded company Third place 10 Cover story The ESG to come. The future of sustainability in the private label industry

34 Companies into play Penny Italia, a PL that is good for your health

PLMagazine Quarterly 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

Translation Jcs - Language Services info@jcslanguage.it

New positioning for Verso Natura by Conad

50 QBerg observatory PLs in Pet Care: flyers and e-commerce websites

Happy anniversary IPLC! Scientific Committee Stefano Ghetti, Managing Partner Expertise on Field/partner IPLC Italy Gianmaria Marzoli, Retail Solutions Vice President Circana Italy Alberto Miraglia, General Manager Retail Institute Italy Paolo Palomba, Managing Partner Expertise on Field/partner IPLC Italy Emanuele Plata, Co-Founder, Past President, Board Advisor PLEF Contributing Authors Federica Bartoli, Stefania Colasuono, Maria Teresa Giannini, Fabio Massi, Fabrizio Pavone, Luca Salomone

Creative Director Silvia Ballarin Editor Edizioni DM Srl - Via A. Costa 2 20131 Milano P. Iva 08954140961 Contact Phone 02/20480344 redazionedm@edizionidm.it Advertising Sales office: commerciale@edizionidm.it Tel: 02/20480344

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.

EDITORIAL - PLM

An extraordinary year for

private label Maria Teresa Manuelli Editorial director

I know we’re still in October and maybe it’s still too soon to take stock of this unpredictable 2023. From now to December many things could happen: in just a few months we found ourselves in the middle of two wars, with crazy markets, and depressed consumption - not to mention the strain on consumers’ finances - and the skyrocketing prices. According to EY (Ceo outlook pulse?) research, the CEOs from all over the world are pessimistic about the near future and expect further market rebounds. Unless other factors disrupt an already unstable situation. But one thing hasn’t changed, was actually confirmed and consolidated. We started this 2023 by pointing out how favorable the changes were for the PLs, both for companies and consumers. Indeed, that feeling we had was confirmed. In the last months, the market research continued (one is, for example at p. 4) and the news only reiterated how PLs are now the favorite in purchasing and in consumers’ hearts. And it’s not just a matter of price. It’s true, PLs do maintain their great value for money, but even many premium lines, priced well above the market leader’s, can now count on an increasingly loyal customer base. Is it because the chains perfectly know their ‘visitors’ - let’s not call them consumers or clients any more and know what it’s best for them? Apart from price and quality, in fact, PLs have the ability to take those socially/environmentally/innovative ‘good actions’ (see the Cover Story of this issue). All this makes us feel part of a community; it makes us feel that, through every purchase, we can contribute to a better world; that, in a world that is falling apart, we could save ourselves with simple daily actions, step by step, one purchase at a time. So, congratulations to the extraordinary ability of these products to evolve, adapt and see o, which from simple initial ‘me to’ , have then supported and widely outdone their own models. Now, it’s up to the brand industry to follow the trend. Or, better, to embark on this journey together, for a truly better world. Step by step, product by product. Also our PL Magazine is evolving and growing: so, see you in January with all the news of 2024.

PLM - ANALYSIS

Nowadays, it is clear that not only are PLs important for customers, but also they have become the most determining factor in their purchases.

Dunnhumby:

PL in top consumer preferences The fourth edition of the Retail Preference Index Italy (Rpi) clearly shows that not only are PLs important for customers, but also they have become the most determining factor in their purchases. The Rpi is the annual study carried out by Dunnhumby that aims to identify consumer preferences in relation to the Italian market food supply and their underlying causes.

“Last year, when we noted that private labels topped consumer preferences in terms of importance - states Marco Metti, Business Development Manager Italy at Dunnhumby - we didn’t know whether it’d be a long-lasting change in consumer behavior or just a short-term reaction to the price increase. Now that private labels are leading shopper preferences for the second year in a row, it’s clear that we’ve entered an era where retailers must have a solid private label product supply if they want to succeed. Retailers who want to capitalize on this opportunity should have a clear structure in mind, steady pricing and consistent positioning in a wide range of categories". As for the ranking, what stands out is first and foremost the soundness of the retailers involved: the first five brands have remained unchanged, which confirms their outstanding leadership and ability to adapt their business policies even following the events of the last few years.

The ranking In terms of retailer performances, as in 2022 - and in the previous two years - Esselunga, Conad, Coop, Eurospin and Lidl top, once again, the ranking of the RPI latest study. In spite of the global pandemic, the war and the lasting crisis caused by the rising cost of living, they managed to maintain their position.

The first positions of the Rpi ranking tell a story of outstanding soundness. The top five brands solidly maintain their positions.

ANALYSIS - PLM

The factors of preferences Private labels are the top priority, now even with a much wider margin. Even though last year PLs and Perceived Prices had virtually the same influence, nowadays private labels prevail over Prices in terms of shopper preferences. As a matter of fact, in their search for value, shoppers focus on PLs, followed by Perceived Value and Shopping Experience. Coop, which ranked second last year, tops the ranking for best reputation of Private labels and Perceived Values are still the most influential in terms PL products. Esselunga has slipped of where to buy. However, PLs have a much greater influence than the down and now ranks second, followed Perceived Value. by Conad, which has replaced Iper-La grande I in the top 3. The Perceived Value has reached the top of the ranking, with MD supplanting both Eurospin and Lidl. After having occupied the top slots last year, these brands have slipped down and now rank second and third respectively. As for other Preference Factors, the minor differences recorded show a behavioral change. The Product Variety - which, in 2021, customers considered as the most important factor - is now sixth. However, noteworthy is that PL Variety is the number one factor overall. This explains why Variety is no longer a top priority. The clear focus on PLs may suggest that as long as retailers supply an adequately wide range of private label products, shoppers will not need to look for alternatives elsewhere. Variety and quality are among the main factors affecting PLs. As for the Perceived Value, affordability and fairness play a key role.

Emotional Connection: Relationships are the road to success The ‘Emotional Connection' between retailers and their customers is a driver of success that can lead to more solid business results. From their seventh position in 2022, in this edition, Relationships rank now fourth. Amidst the Relationship Pillar, three aspects in particular help strengthen the connection between retailers and their customers: ‘useful information’, ‘values conveyed’ and

PROUD OF THE TERRITORY

ANALYSIS - PLM

‘customized promotions’. Esselunga ranks first in both the ‘information‘ and ‘promotions’ categories and has the second highest score in terms of ‘values’. These results help Esselunga top the ranking as far as Relationship is concerned - as well as Emotional Connection.

No discount stores in the upper quartile The Emotional Connection average scores of discount and non-discount stores between 2020 and 2022 followed an almost identical trend. However, this parity seems to have come to an end, as the Emotional Connection average scores of discount stores have recorded a sharp fall in the last year. Although a possible matter of concern for discount stores, for competitors, such as supermarkets and hypermarkets, this is an opportunity to leverage the aspects driving Emotional Connection.

The Emotional Connection average scores of discount stores have recorded a sharp fall in the last year.

Online shopping preference factors

In the last 12 months, shoppers have focused more on the Supply, whereas the interest in the Shopping Experience has slowly declined.

In this study, the Online Supply and the Shopping Experience stand out. Last year, these two aspects had a similar ranking in terms of influence on shoppers. After 12 months, however, it was the Online Supply to hold the upper hand as customer preference. The Shopping Experience ranks second. Perceived Value, Delivery and Environmental and Community impact complete the list of Factors.

Online general ranking: the winners confirm their leadership What comes up from the online ranking is, first and foremost, soundness. Esselunga, Amazon Fresh and Coop again keep a firm grip on the top three. The most significant change affected Alì: after climbing one position, the supermarket is now fourth in the ranking, thereby causing Conad to slip down to fifth.l

PLM - AWARDS

The awarded company Third place Our journey to meet all the protagonists of the PLM Awards continues, the awards that our online magazine PLM and Edizioni DM designed to reward the Italian PL companies that best represent the ideal characteristics for retailers. These companies are selected according to objective criteria of production excellency and reliability. We will now present the companies that ranked third. .

CATEGORY: GROCERY FOOD DE MATTEIS AGROALIMENTARE

✪ It is one of the main wheat pasta producers in Italy, committed to the development of a quality supply chain production, from field to finished product. The plant is in Campania, at the feet of the Apennines, near the main cultivation area of wheat (Irpina, Apulia, Basilicata). The company features an integrated wheat-pasta production cycle. The presence of its own mill ensures the overall control of raw material and of the product quality. https://www.dematteisfood.it/

CATEGORY: BEVERAGE SIMFED

✪ It’s a coffee roaster, Uni En Iso certified, situated in Ragusa (south-east of Sicily). It’s a dynamic, passionate, innovative company, active on the market since 1999, which produces and markets coffee grains, capsules, pods and soluble coffee. It features several plants that produce single-dose coffee, pods and capsules. Its approach to research aims at the quality and excellency of the product in different formats, to enhance its pleasure and taste. https://www.sim-fed.it/

CATEGORY: FRESH EURIAL

✪ It’s the milk division of the cooperative group Agrial and it collects traditional and organic cow and goat milk. Milk is transformed into dairy products and special ingredients, and then distributed to superstores/markets, restaurants and retailers. Thanks to its cooperative values and ethical principles, applied to all its supply chains in Belgio, Spain, Italy, United Kingdom, Germany, Poland and United States, Eurial invested in sustainable agriculture and responsible eating. https://www.eurial.eu/

AWARDS - PLM

CATEGORY: COLD SURGITAL

✪ A company with great values based on the tradition and love for Emilia-Romagna, a land of vast culinary culture. For Surgital, its business means opening up to the world and welcoming change, but without giving up on hand-made artisanal fresh pasta values and rules. The company meets the needs of the industry, large-scale distribution and private label, by providing its expertise, good flexibility on the production plants and advanced techniques in the field of frozen food. It designs and produces customized dishes and procuts fulfilling every need. https://www.surgital.it/

CATEGORY: HOME CARE RAYS

✪ Working with passion to develop professional devices for health and safety: this is Stefano Marconi’s vision for his important entrepreneurial project. In 1992, in fact, the decision to implement this ambitious project, that is the origin of Rays Health & Safety brand. It’s a 100% Italian company, now also a reference point in the medical, pharmacological, accident-prevention, organized and large-scale distribution, Diy and cleaning industry. https://www.rays.it/

CATEGORY: PERSONAL CARE ROLLY BRUSH

✪ A Parma-based company that has been designing, manufacturing, and marketing personal care products for over 16 years. Its flagship is the innovative Rolly Mini Toothbrush, small and discrete, it is possible to use it in every moment of the day, wherever you are. It’s ideal for those who love traveling or are out home for work and want a fresh breath and clean mouth and teeth. https://www.rollybrush.com/

CATEGORY: PET CARE MUGUE

✪ Pet care and house care leader, it produces unique, effective, high quality products, characterized by innovation and scientific research. Set up in 1966, producing and marketing house cleaning products, it’s now specialized in high-quality adhesive brushes and lint rollers with strong adhesive sheets, which can remove up to 99.24% of dust mites, 90% of bacteria, 100% of moths. https://www.mugue.it/

OTHER NON-FOOD PRODUCTS TAM TAM

✪ Leader of made-in-Italy, it works in the house freshener and cleaning industry. Based in Avigliana (Tourin), where all the products are produced, the company provides apart from its own brands - PL and subcontracting services, supporting its clients throughout all the production phases, through its prompt service and a daily high-quality production capacity. https://www.camomillatorino.it/

PLM - COVER STORY

The ESG to come. The future of sustainability in the private label industry

La crescita dal periodo pre-Covid è inconfutabile, quello che invece è molto meno sicuro è che essa stia continuando nel 2023, con la fase emergenziale ormai alle spalle. for sustainability is a trend, or rather, customers’ actual The demand Ecco leresponse soluzioni le toecurrent issues (Russia- Ukraine war, inflationary spiral, strategie deicommodity retailer. prices, wage erosion...). And it should come to no rising surprise that brands are increasingly taking them into account, although each in its own way. 10

COVER STORY - PLM

ccording to a Google survey carried out for the Italian market, the word 'sustainability' had been among the most searched online as early as 2022, with 31% of customers convinced that this should be preferred over design and style, as far as shopping is concerned. In more recent times, the latest Coop Report revealed that in August 2023, 25% of the sampled individuals stated they would adopt sustainable behavior and habits over the following 12-18 months. Private labels seem to be functional to this end: 55% of the interviewees consider them to be environmentally-friendly, and 51% believe they address ethical and social issues. Brands, therefore, are gearing up to ride this wave (now and in the future), from raw material supply to the shortening of supply chains and cuts in CO2 emissions.

'MANI COLORATE' association against black market labor Founded in 2017 in Nereto countryside out of the protest of a group of farmhands, the association has been welcoming and integrating foreign laborers (especially seasonal farmhands) into society for 26 years, by protecting them against illegal recruitment. In Apulia, Campania and Calabria, where the association is mainly active, it helps laborers to find a house or a place to spend the night (in collaboration with Caritas), it drives them to work and ensures that everything is done in compliance with the law.

COOP ITALIA: THE TWO PILLARS OF WORKER

WELLBEING AND SAFEGUARD OF BIODIVERSITY If it is true that the principle of sustainability lies on three ‘pillars’ of healthy products, social well-being and biodiversity, then it is worth mentioning Coop Italia, starting from the initiative that involves the cooperative itself and the No-Cap association. The effect of this union can be seen on shelves, with products picked under working conditions that preserve human health and dignity: at weekends, fruit is delivered to the largest Coop points of sales in Italy and 5%-10% of their earnings are donated to the association. The organic strawberries of “La Montella bio” farm in Frignano (Caserta), as well as apricots, cherries and potatoes grown by other farms now part of the production chain, bore the logo with colored hands until July 2023. Yet, other collaborations may arise. “This year we’ve managed to find a purchasing method that helps producers be better organized and enhance their goods in our stores - states Claudio Mazzini, Fruit and Vegetables Sales Manager at Coop Italia - We achieved our goal, so the next step will be to consolidate the initiative.” In spring 2023, the 'Every bee matters' campaign, through which 2 billion Mason and Western

COVER STORY - PLM

25 % of Coop sampled individuals considered to adopt sustainable behaviors and habits over the following 12-18 months

ALL FOR ONE (SAME GOAL) Albert Heijn has launched AH Terra, 200 plant-based products. The goal is to increase the number of these references from 44% to 50% by 2025 and to 60% by 2030. Carrefour Spanish project, instead, is a vital part of the ‘Zero Food Waste’ policy and was developed in collaboration with the Helios company. Finally, Spar Croatia’s initiative is supported by the local food business Vindija, which, so far, has revived a range of yogurts by reducing their sugar content by 15% and, consequently, ‘saving’ 26 thousand kg of sugar annually. As for its Vindija juices, it has reduced the sugar content by 231,700 kg yearly.

Honey bees have been safeguarded since 2021, restarted. The campaign also helped to integrate 70 thousand solitary bees into farms under the Coop Italia brand. Over the years, the project has involved the University of Bologna, Conapi, Lifegate, the private label supply chain, members, consumers, and 17 activists under- 30, chosen from the Coop community, who, every year, describe the restart of the activities in the bee yards and the hatching of beehives happening in summer. With 150 beehives placed in different educational institutes and 80 in urban oasis, schools and cities were also given a prominent role. The campaign bore its fruit in 2023 too, with beehives hatching in different bee hotels around the country. To further foster the safeguard of bees, small wooden bee yards can be found in Coop POS. If placed on balconies or in gardens, bees find in them a safe place to take shelter in.

PLM - COVER STORY

31 % of consumers value sustainability more than design and style (Google research)

COAL: TECHNICAL DOCUMENTS, SHORT SUPPLY CHAIN AND NEW

PACKAGING FOR CONCRETE SUSTAINABILITY Boosting sustainable actions is a cross-sectional trend that brings together major local and national players, whose choice to bet on private labels should not be taken for granted. Coal is an example. “The company has an all-round approach to sustainability - explained Marco Cortucci, Head of Marketing and PL -. Since we’ve developed our own brand in 2007, which replaced the one of the national purchasing organization, we haven’t focused on the width of the assortment but on the quality of our products. Since 2022 we’ve embarked on a journey that sees us working on several fronts. We’ve mainly committed to choosing our suppliers and technical documents. As for packaging, next year Coal's mainstream line will be completely restyled. This will be an opportunity to start a dialogue with our partners aimed at promoting the use of environmentally friendly packaging. Furthermore, for our PLs

COVER STORY - PLM

55 % believe that PLs are attentive to sustainability

where possible, we favor Italian and local businesses for our activities, both for the Coal’s mainstream line and ‘Le Tentazioni del Buongustaio’ premium one. This choice proved to be successful and made us win the trust of consumers over time. For the immediate future, our main project is to shorten the supply chain for products like meat, fruit, and vegetables with the help of our new Industrial platform, Coal Agroalimentare. We are also working on building a farm to be able to provide actual Km-0 food and to significantly reduce road transport.”

COVER STORY - PLM

51 % believe that PLs are attentive to social and ethical issues

ALDI: FISHING BUT SAYING NO TO THE EXPLOITATION OF THE SEA

Within its ‘Today for tomorrow’ strategy, the German label, in Italy since 2018, has undertaken to supply its over 160 POS with seafood products obtained without excessively impoverishing the marine ecosystem. To do so, it relies on the most important certificates in the industry: for instance, the vacuum-sealed yellowfin-tuna filets that have no skin or bone of the ‘Gourmet’ line, bear the MSC (Marine Stewardship Council) label. This label certifies fishing that maintains balance in oceans. In addition to that, the Norwegian salmon bites or the salmon filets available in three types of the ‘Almare Seafood’ brand bear the Ggn label of Global G.a.p., which certifies traceability and aquaculture good practices. Last but not least. Aldi’s ‘Golden Seafood’ label, the fully cleaned and ready-to-cook seabass or sea-bream filets, and the gratinéed Alaskan cod filets, besides the Msc and Ggn labels, now also bear the Asc (Aquaculture Stewardship Council). ASC promotes environmentally-friendly fish farming to protect the environment and the rights of local workers.

RELAMPING IN CONAD NORTH-WEST Significant steps forward in terms of LED relamping: after the distribution center in Montopoli and Pistoia, also the North-Western cooperative, Conad,has successfully fully replaced the lightning system in its distribution center in Civitavecchia (-3,500 tons of CO2).

COVER STORY - PLM

CONAD: CUTTING EMISSIONS

IN THE NORTH-WESTERN REGIONS, AUTOMATION AND IMPROVEMENTS IN THE SOUTH-EASTERN AREA The Gordian Knot to untie and move towards greater sustainability is that of energy saving and emissions. After all, if we look at food largescale distribution (Mediobanca observatory, March 2023), in the 2 years between 2019 and 2021, both the running energy and the emission carbon intensity had already recorded a reduction. Conad, for instance, has implemented several actions in the field of logistics and transport to optimize the routes and load of its vehicles: with pallet pooling, this Nord-Ovest cooperative was able to nip the emission of 3.3 thousand tons of CO2 in the bud in 2022, equal to 4,287 trees, in addition to ensuring benefits by using Cpr boxes. Still with regards to logistics, Conad Adriatico has installed a new ammonia refrigeration system in its distribution center in Montopoli (Potenza) (-5,180 tons of CO2 annually) and an automated system of a fruit and vegetable section (automated picking), which is the first in Italy. Overall, the cooperative has invested about 134 million euros - in terms of innovation and sustainability - in 11 new openings and in the modernization of 32 POS.

PENNY ITALIA: BETTING ON HY-

DROPONICS The German label, which has been present in Italy for about 30 years, has recently launched its own line, 'Pianetiamo', dedicated to aeroponics: a farming technique that involves growing plants vertically, with no soil and with roots suspended in the air. This method uses 95% less water than traditional farming and no pesticides, within a very short and all-Italian supply chain. For its launch phase, the 'Pianetiamo' line will include IV range references, such as lettuce, and two mixes, Balsamica and Piccantina, under the ‘Natura è’ brand, Penny’s sustain-

COVER STORY - PLM

able fruit and vegetable line. “With regards to our #Viviamosostenibile campaign, with the ‘Pianetiamo’ line we’re able to supply our customers with high quality fresh products, resulting from innovation and responsible technology - commented Monica Dimaggio, Head of Private Labels and Sustainability at Penny. We’re currently the one and only brand with a private label dedicated to vertical farming.”

LIDL: A STANCE TOWARDS ‘UGLY FRUIT’

Since July 2023, the Stuttgart-based discount has made available to its customers the ‘zero waste’ bag in all its Italian points of sales. This bag contains fruit and vegetables with aesthetic (or packaging) imperfections, yet tasty and safe for consumption. These bags, which can be found in a shopping cart behind the check-outs, are prepared daily by the staff. For this reason, they may vary in number from store to store according to their daily availability. “The introduction of zero waste bags is part of a wider project, ‘Too Good To Waste’, launched in 2019. The idea is to offer discounts and incentivize the purchase of products that are about to expire - Lidl explained - By doing so, consumers act in a more environmentally-friendly way, and save money.” NOT ONLY PRODUCTS: THE GREENEST ENERGY IN CONAD ADRIATICO Conad Adriatico and Engie Italia have signed an agreement that will see 21 Conad private label POS in Marche, Apulia and Abruzzo to autonomously produce 50% of their energy demand through a photovoltaic system. The plant will be fully operating by 2024 and will have an overall power of 4.3 MW. Not only will the system prevent about 100 tons of CO2 to be released in the atmosphere every year in each site, but it will also lead to a reduction in structural costs in the medium term, as explained by Lucia Grandoni, Head of Development at Conad Adriatico.

CONCLUSIONS

In Europe, the Dutch brand, Albert Heijin, has launched a new range of plant-based PL products to replace animal protein as much as possible. In Croatia, Spar has been working to reduce the sugar content in 36 PL references. In its stores in Madrid, Carrefour Spain started producing zero-waste jams to prevent fruit that is high-quality but too ripe to be soldfrom being wasted. As previously described, the attention of consumers towards sustainability, and, therefore, the interest of brands, has been on the rise in Italy too (it is to remind that private labels in Italy currently amount to 29.3%, +1.3% compared to 2022 and +6.7% compared to 2020). Having a lot of blank pages to draft their own strategy, perhaps, is not that bad after all.l

Watch the Report Sustainability and Territory of

Menz&Gasser

Maria Teresa Giannini, Professional Journalist specialized in Large-scale Distribution.

PLM - INTERVIEW …. FROM THE DISTRIBUTION’S POINT OF VIEW

IT’S NOW MARA ZANOTTO DIRETTRICE GENERALE ETHOS PROFUMERIE, TO TALK WITH PL MAGAZINE.

INTERVIEW …. FROM THE DISTRIBUTION’S POINT OF VIEW - PLM

Ethos Profumerie: the great beauty of PLs

Food and Private label, large-scale distribution and private label: these are not synonyms, since non-food - even classy non food - is increasingly following PLs. Personal care and cosmetics are among the ‘non-suspects’.

ith 306 points of sale in Italy and 116 company names, Ethos Profumerie is a Consortium company that has gone for PLs for some time now, proving that it embraces, in different ways, all the retail industry, as its General Manager, Mara Zanotto, says.

INTERVIEW …. FROM THE DISTRIBUTION’S POINT OF VIEW - PLM

ETHOS PROFUMERIE IDENTITY CARD FOUNDATION YEAR

1995

TOTAL OF POINTS OF SALE

306

ASSOCIATED COMPANY NAMES

116

VAR. % SELL OUT 2022/2021

TOTAL + 22.2% VS 2021 ALCOHOLIC + 30.9%, COSMETICS + 18.4%, MAKEUP +21.5% ( LIKE FOR LIKE DATA)

PRIVATE LABELS

ARIA NOTE D’AUTORE ETHOS PROFUMERIE

TOTAL OF ARIA REFERENCES

TOTAL OF NOTE D’AUTORE REFERENCES

TOTAL OF ETHOS PROFUMERIE

What’s the story of your brands?

About six years ago, we decided to also invest in this direction, thanks to the brand Aria, a personal and not private label, which today has 19 references. The project started as a trial, to penetrate the market through six references. Our entrepreneurs realized the product was appreciated, and positioned it in a price range that, despite being different from that of the supermarket prices, is still very interesting and hard to find in classical perfumery. In fact, we range from €19.90 - for anti age eye contour cream, 15 ml - to €2.90 - for hand sanitizer - with an average of not more than €7-8. We wanted to fill a gap, however, with a high-quality product to guarantee its sales.

And then?

Then, our success led us to expand and diversify our supply, by adding shower gels and body lotions, and many others: creams, micellar water and other make-up removers, anti age products, masks, moisturizers, eye contour… All production stages are made in Italy, while our group is fully in charge of the design and graphics of the packaging. And we’re particularly proud of this since Aria is always our top sale in different segments. Among others, our biphasic make-up remover, is absolutely the most sought after biphasic prod-

PLM - INTERVIEW …. FROM THE DISTRIBUTION’S POINT OF VIEW

uct in our Ethos’s pos. This proves it was appreciated by our customers, and also by our partners, who experienced first-hand the margins obtained, which were much higher - almost four times higher- compared to a product of the brand industry’s.

And then, did you diversify your supply again?

Indeed: we added ‘Note d’autore’ in three fragrances - female, male and unisex - following the same ‘rules’ adopted by Aria, from its Italian spirit to internal planning. The alcoholic line is, however, a difficult market to compete in, since many brands are true icons.

How important are PLs to your sales?

Around 1%, but we have to consider that, when it comes to perfumery, the number of products and references is potentially enormous. As a consequence, competition is as high as the investment in advertising of many manufacturers.

Too difficult?

Difficult, yet thrilling. Competition, in fact, never discouraged us. So, in October, Ethos Profumerie was set up. Entirely dedicated to accessories, it includes brushes, scissors, cosmetic sponges, produced by eight different highly specialized companies. This is because only one supplier would have led to savings , but it couldn’t have had the right technologies to produce high quality products. Also, there are no accessories in our stores.

INTERVIEW …. FROM THE DISTRIBUTION’S POINT OF VIEW - PLM

And in the future?

Between the end of 2023 and the beginning of 2024, there will be a full restyling of Aria: different packaging, formulas more aligned with the demand of natural, organic products ... plus, all we have learned from our challenging research work.

Communication: how’s your group turning to PLs?

If on the one hand tv commercials are still too expensive for PLs, social media is a good choice for sure. So, we collaborate with influencers specialized in the beauty industry and we promote hashtags dedicated to our products to reach the consumer who doesn’t know us yet. On the other hand, for those who are already our clients, we've planned in-store activities: boards, spots and other digital tools... in addition to press campaigns, Crm activities, holiday promotions, for example Saint Valentine’s Day and Mother's Day.

PLs seem to be many more than expected in your industry. What’s your opinion about it? I agree. Even if for us PLs will never be essential, since our focus is on famous brands, I've noticed that the contracting cosmetic industry is strong, as the exclusive products of a certain distributor are. So, if we include single brand selling , we realize that PLs - and similar - account for a large share of the market. I also have to admit that fantasy brands are much more present than PLs because, as I said before, the beauty industry is full of iconic and historical names.

Are your relationships with the suppliers long-lasting?

Actually, we look for high-quality partners who are therefore meant to stay and work with us. This is the reason why for the alcoholic line, we relied on Mavive, while for Aria we have a partnership with Rudy Profumi and HCS. However, at the same time, we continue to go scouting, especially to find niche, highly specialized companies.l

Luca Salomone Professional Journalist specialized in Consumer Goods, Distribution, Shopping Centres and Finance.

PLM - THE PRIVATE LABEL SCENARIO

Innovation and trends of European PLs (2° part) In these pages the continuation of the IPLC research, which analyzes PL product innovation and their 2023 trends.

Innovation and product trends

The situation does not help manufacturers and retailers. The consumer today It has changed and is more unfaithful to product brands and retailers. Prioritize pricing options and consume less. TOP 3 DIFFICULTIES Q2 2023

The Companies They run the risk of focusing on the short term: Boost sales, protect the margin and brake the effects of inflation. TOP 3 PRIORITIES Q2 2023

Decrease in volume sales.

Boost sales.

The current inflationary situation.

Protect the income statement.

Uncertainty about the behaviour of the shopper.

Minimise the impact of inflation.

THE PRIVATE LABEL SCENARIO - PLM

Innovation and product trends

Which brands are consumers turning to today?

Nielsen IQ Retail Measurement Services - 2022 Nielsen Consumer LLC

Innovation and product trends

European private label are much more dynamic than top 30 manufacturers Since September 2022

PLM - THE PRIVATE LABEL SCENARIO

Innovation and product trends

The consumer puts the handbrake on innovation The inflationary escalation does not help the consumer in his purchase of new products. In the last year the percentage of consumers who try new product has fallen 10 points. The price is the main brake when considering that the novelties are somewhat more expensive. This data, together with the fact that 1 in 4 does not find items that meet their needs, does not help innovation to become an engine of value creation. Consumers prioritize the purchase of innovative products in perfumery and cosmetics, precisely one of the sectors resilient to the effect of inflation. It is interesting to see what this sector has done so that the consumer sees in its offer a real contribution of value and has in turn one of the lowest retailer brand purchase rates, leaving aside the pressure of the price factor. Likewise, 69% of consumers demand that brands launch more healthy options. However, in the analysis of the latest new products purchased and best valued, innovations linked to indulgence appear, which shows us that bipolarity between what we think and what we really do as consumers. The truth is that getting the consumer right at the present time is a very complicated subject. Source: AECOC Shopper-view and Gelt Data Facts 2023

Innovation and product trends in 2023

In which categories it is most important to find new products. Non-food categories lead innovation demands

Health Beauty Care

Household products

AECOC Shopper View 2022

Fresh products

Consumer Packaged Products

Beverages

THE PRIVATE LABEL SCENARIO - PLM

Innovation and product trends in 2023

It is a priority that companies continue to innovate in the main market trends:

HEALTHY

NATURAL INGREDIENTS

SUSTAINABILITY

AECOC Shopper View 2022

Innovation and product trends

Needs not satisfied by innovation One in four consumers can’t find items that cover their needs of … Healthy food at an affordable price Products that allow to save Less processed, less additives, more nutrients products Reduction of packaging

Source: AECOC Shopper-view and Gelt Data Facts 2023

After the flood: Orva’s logistic hub project

ADVERTISING

After the terrible floods that hit our region, especially in our area, we gathered some data about how Orva S.p.A. managed to help the families in need. In such a delicate and difficult moment, Orva (that also was hit by the floods) managed to organise a logistic hub, making its warehouse available to stock all the products coming from the company’s clients and suppliers as well as other sources. More than 1.000 pallets of goods have been managed. Around 750.000 Kg of products were collected: pasta, biscuits, breakfast goods, Gluten free products, water, condiments, snacks, bread substitutes and new furniture to restore bedrooms. Orva’s employees started a “second job” outside normal working hours by tirelessly distributing goods to those in need, using the company’s cars as well as their own, working mornings, evenings and weekends. Thanks to municipalities and a correct use of social networks, a solidarity grid was created to efficiently and effectively distribute goods to all the places that were hit. Help reached the areas of Bagnacavallo, Solarolo, Cotignola, Russi, Forlì, Fornace Zarattini, Bagnara di Romagna, Lugo, Sant’ Agata Sul Santerno, Conselice, Imola, Castel Bolognese, Traversara, Boncellino, Fusignano, Faenza. Working closely with local dioceses and volunteer associations proved to be fundamental to provide the best distribution of goods. The data we collected tell that this “Logistic Hub” project reached more than a hundred flooded sites thanks to a capillary distribution network that involved both private citizens and no profit associations. We are happy to pride ourselves in being a key player behind all these numbers and to confirm once again that our company is “made of real people”, people that in case of social need are not afraid of lending a helping hand.

www.orva.it

THE PRIVATE LABEL SCENARIO - PLM

Innovation and product trends

Types of Innovation

Success rate

Different innovations, different treatments To work together on innovation, companies must first free themselves from some barriers. An existing problem is what we consider innovation; all are necessary and have a certain role, but we have to be clear about what we are talking about and what we want to achieve with each of them in the category management.

Line / brand extension: It is a flavor, a variant... New for the brand but not for the category Expansion into other categories: It is a new product for the brand, but not for the category

Innovation by renewal: Significant improvements in formulations that cover a need or provide a benefit to the consumer.

Assortment expansion: It bring a new feature to the brand but not to the category

Disruptive innovation: It covers a new need, and does not previously exist in the market. A key clue to this type of innovation is when we don't know which linear to place it on. It can respond to a new need that is not covered (e.g. Plant based) or they can be a new way to cover an existing need in the market (e.g. coffee capsules)

Disruption: IT bring a new feature to the category

Innovation and product trends

5 steps that 'objectify' the innovation speech When we presenting innovation, it is important that expectations are clear, and according to retailer’s correct action plan. For aligning expectations and arguments and focusing work on 5 key points to better work on innovation and extract its full potential: Consumer. It is about defining the type of innovation to be launched, specifying whether it is assortment expansion or disruption. In this case, it is essential to focus the discourse on topics as relevant as what need it covers in the category, what trend is being worked on, what new target is directed or what new use it has, among others. Market. The next step is to define the value provided by this innovation in the market, quantifying it in value, volume, contribution of growth in the category…. Retailer. It is about arguing what this launch can mean: value, growth in customers, profitability… Activation. According to the type of innovation will be the activation plan of the same, in which levers will be key: distribution plan (in which stores and on which shelf); activation plan (promotion and visibility) and media plan (omnichannel). Result. It is important to agree when the assessment of the launch will be made, something very uncommon today.

PLM - COMPANIES INTO PLAY

Penny Italia, a PL that is good for your health A new chapter of the partnership between the retailer and the Italian Fondazione Airc for cancer research. 12 new references and an international project. by Maria Teresa Manuelli

he partnership between Penny Italia and Fondazione Airc is starting a new chapter. The project aims to raise consumers' awareness of the importance of prevention and engage them in cancer research. We asked Marcello Caldarella, Corporate Communications Manager at Penny Italia for an insight into a project that involves the first retailer in Italy - maybe even in Europe - with 12 PL references in collaborations with nutrition experts in cancer research.

What are the main features of these references?

The references, included in the 'Welless 34

COMPANIES INTO PLAY

- PLM

line' - already developed in the brand for ‘eating healthy but without giving up on taste’ - took inspiration from simple principles such as reducing salt and sugar, increasing the fiber intake, opting for simple recipes, with few ingredients, to build varied and balanced eating habits. The partnership, established in February 2023 with ‘Arance della Salute’ (TN: Oranges for our Health), was later consolidated by the #arrotondaedona (TN:#roundanddonate) initiative to support Airc’s commitment to cancer research and raise awareness on the topic. Today, it boasts a new important element, where Penny PL is on stage for product innovation, in line with the sustainability pathof #viviamosostenibile (TN:#livingsustainble).

So, eating healthy to be healthy. What's more?

Thanks to its clients’ choices, Penny supports the work of Airc researchers: a percentage of the proceeds from the sales of the products developed within collaboration will be devoted to Fondazione. This collaboration is something new also for Airc: it's the first time they have suggested products.

When are we going to find these products and what are they?

The products will be in more than 440 Penny’s POS all over Italy from October 26, enriching the well-known quality and convenience of the brand. The references embrace every moment of the day, beginning with our breakfast cookies.

What’s the underlying logic of their development?

We worked for months side by side with Airc researchers. Once we got the ideal recipe we had to carefully select our suppliers, because many of our suppliers weren't able to make such simple and natural recipes, with little or no salt and fats, and healthy ingredients.

What’s the future of this collaboration?

First of all, we wanted to help our consumers to eat healthy, but in an easy and affordable way. It was also a groundbreaking test to revolutionize the culture of retail and especially discounters. We wanted to break with the tradition. This philosophy has been our characteristic for a long time, as our service counter and the choice of a vertically- farmed salad line showed. Developing sustainable products is a fundamental asset for us.

You’re the first to develop such a project. Are you thinking of ‘exporting’ it?

Indeed we’re discussing both with our colleagues of Rewe Group and the similar association of Airc in Europe. But first, we want to analyze the reaction and results here in Italy.l 35

PLM - COMPANIES INTO PLAY

New positioning for Verso Natura by CONAD With more than 270 references, the brand represents the evolution in brand positioning, responding to the new emerging trends. ‘Verso Natura Conad’ is a PL product line designed for environmentally-conscious customers who prioritize sustainability, thanks to a product supply that respects nature. Launched in 2016, the line now features more than 300 references stemming from food to home care, which in 2022 recorded a 220 million euro turnover (+7% compared to 2021). For the Earth Day 2023, Conad announced the new positioning of ‘Verso Natura’ to respond to the new emerging trends. Conad’'s new soul is marked by a strong brand recognition, addressing the need for a balance between attention to the individual and attention to nature. In this framework, the new ‘Verso Natura’ brand opens up and becomes more inclusive, fully embracing all the values of nature, in a constant dialogue between man and environment. In fact, the brand offers a wide range of organic products, with low environmental impact and with raw materials from renewable sources, along with recycled, recyclable and compostable packaging. Conad products are the ultimate expression of Conad’s commitment to sustainability, where its actions perfectly translate into the ‘Sosteniamo il Futuro’ (TN: Let’s sustain future); a framework which values the three dimensions of sustainable actions taken by Conad: Environment and Resources - which includes the attention to sustainability and animal well being for the PLs section-; People and Community - all the social initiatives for human development and wellbeing; Enterprises and Territory - to support Italian excellences that are made in Italy.l 36

COMPANIES INTO PLAY

- PLM

Happy anniversary IPLC! The consultancy agency celebrated 20 years of activity. Let's retrace, through the memories of founder Koen de Jong, his growth which is intertwined with that of private labels in the world.

oday it is 20 years since I founded IPLC. More by coincidence than by choice, I started my career in the Private Label industry back in the 1980s. After graduation, the vast majority of my fellow students joined ‘blue chip’ companies. Some of my friends were surprised by my choice -one had not entered university in order to end up in what was perceived as being a somewhat dull and inferior industry such as Private Label. However, I was immediately fascinated by this complex and rapidly growing sector. I worked for 18 years until 2003 for leading Private Label manufacturers in the Netherlands, the United Kingdom, Germany and France. Then I started IPLC. At that time, the average market share of Private Label in Europe was around 5%. Today, including discount retailers, this is above 40%. The ballgame for brands has changed irreversibly. Many of them have been pushed to the defensive or have even disappeared. The Private Label market is extremely competitive and complex. More professional players on both the retail and manufacturing sides have fuelled further market share growth. Over the past 20 years, IPLC has grown into a team of Private Label professionals across 9 countries in Europe. Our collaborative networks allow us to have access to key decision makers in the industry. This allows us to support our clients around the world in the best possible manner. The market continues to develop at a phenomenal pace and own label thrives by a decline in brand loyalty, the rise of discount retailers and value-focused younger generations. The debate on whether manufacturer brands will outlast Private Label may well continue but it is an irrelevant debate for the cost-conscious consumer. Does it really matter who makes your box of cereals, bottle of detergent or pack of batteries, as long as they do the job? These are not status symbols by any measure. The propensity to pay a premium for brands may well be on its way out, especially if the quality difference between alternatives is not discernible.l 37

PLM - INTERVIEW... FROM THE INDUSTRY'S POINT OF VIEW

IT’S NOW GIULIO E CORINNA MUSURUANA, GIULIO AND CORINNA MUSURUANA, CHIEF EXECUTIVE AND INDEPENDENT MARKETING CONSULTANT AT MUGUE, TO TALK WITH PL MAGAZINE.

INTERVIEW... FROM THE INDUSTRY'S POINT OF VIEW - PLM

Mugue: growing young

thoroughbreds in pet care Dynamic micro-enterprise based in Arcore (Lombardy, MB). The company was founded by Guerino Musuruana in 1966, who initially marketed chemical products for house cleaning. Today the company is a super specialist in animal accessories. by Maria Teresa Giannini

oday, 35 million people share their lives with 65 million pets and, in 2025, four-legged and winged animals are going to outnumber people aged under 14. These are just predictions, but, based on current evidence, it’s a likely future. A horizon, although worrying for someone, is certainly an opportunity for those companies that have turned to pet care. Mugue is an example of this, since for 20 years it has widened its business making this sector its new core-business, with remarkable records and a constant focus on research and innovation, from raw materials to products. Giulio and Corinna Musuruana, Chief Executive and Independent Marketing Consultant at Mugue respectively. On average, every Italian lives with almost 2 pets (1.86 for the record) and these numbers are expected to increase. Would you and Mugue’s Founder have ever imagined such a great change, twenty years ago? About twenty years ago, we noticed the attention to pets was growing and people were giving pets more and more importance, cuddling and treating them like humans. However, we didn’t expect such a change into today's paradigm. Plus, in the emergency phase of Covid-19 pandemic, a lot of people - especially singles - adopted animals, maybe to get out of their loneliness and escape with a loyal companion, despite the restrictions. In that moment, however, we recorded a great growth not just in the pet care category, but also in the house care.

PLM - INTERVIEW... FROM THE INDUSTRY'S POINT OF VIEW

Plant: Arcore (Mb)

Employees

Consolidated Turnover in 2022: over million euros

First quarter 2023:

+5% on 2022 ytd

How was 2022 turnover and what’s your best-selling product? We closed the year with over one million euro and we grew compared to 2021, even if slightly. The consumer pays more attention to quality and we produce 100% made-in-Italy products, from raw materials, to process, passing by the design, and we do it for every detail. In addition to our 'lint roller' hair remover, with a strong adhesive sheet, we have an international patent, filed in the USA for producing brushes that can directly act on animal fur through essential oils that are released every time the brush ‘caresses’ the fur to remove loose hair. In January and June 2023, compared to the same period last year, we recorded a +5% growth.

% PL share

Presence:

13 countries, plus Italy

INTERVIEW... FROM THE INDUSTRY'S POINT OF VIEW - PLM

Did you have any price-increase due to the events of the last year and half? Yes, we've experienced a significant price increase, above all on paper. Plastic was also affected by the increase in prices, but of course we haven’t completely applied this price difference to clients. What’s your large- scale distribution share as PLs and how are you channeled? Our PL share is about 60%, the rest is covered by our own brand. We produce for many other supermarkets and hypermarkets and for specialized stores, sometimes also for discounters' products. Since we’re a very flexible company, it’s easy to customize almost everything. Your SPF 50 sunscreen for pets is an innovative product: can you tell us more about it? The product was launched in spring 2023. The idea, as usual, -came from a real need that no one was able to meet yet: protecting short, white and light colored hair, or with white nose dogs and cats, susceptible to cancer an- unfortunately-increasingly common condition. It’s a SPF 50 sunscreen, exclusively designed for dogs and cats' pH, the sole in Italy. Thanks to its 10ml airless tube, it can be applied directly on the skin - such as shaved or scarcely hairy areas, and ears. It’s water-prof - even if we suggest applying it after taking a bath - not toxic, paraben-free, and with a nice smell, because it’s made from natural vanilla extract. It’s produced under our personal brand, but, if needed, we can do it by subcontracting.

What’s the latest news? In July we launched ‘Arnipet’, a gel based on arnica and other phytoderivatives for muscular exertion, particularly used in the equestrian sector. In what countries, apart from Italy, can a consumer find your products on the shelf? In the EU, we’re present in France, Spain, Greece, Portugal and Romania. We’re also present in non-european countries such as Turkey, Israel, Saudi Arabia, Qatar, Emirates, Japan, Singapore and Hong Kong.l

PLM - MARKETS

Inflation pushes pet food and pet care market towards PLs

In a period of significant price increase, PLs have developed a 23% total share, with + 1.2 points compared to 2021. And the high-range supply grows.

MERCATI - PLM

+11,4%

is the increase of the 2022 dog and cat food market, mainly due to inflation.

hanks to 65 million pets - 10.2 million cats and 8.8 dogs -, the Italian pet food and pet care market is growing, although more slowly than the last two years. In fact, according to Circana data published in the 16th Assalco-Zoomark Report, in 2022, dog and cat food - which account for most of the market - were affected by a strong inflation, which caused a turnover increase (+11.4%), but a less remarkable volume increase (only +0.8%). In a period of relevant price increase, PL as reported in the Assalco Report - developed a 23% total share, with +1.2 points compared to 2021, while the volume share remained almost unaltered(40.4%). More specifically, in large-scale distribution (apart from discounters) the PL pet food share increased by 1.5 points, reaching 22.1%. In terms of volume, instead, the performance was more positive: +2 points, recording 36.3% (54.6% including discounters). Richer assortments, wider high-range supply and competitive prices are the major drivers of PL pet food growth.

A PET CARE LINE WITH YOUR BRAND YOUR LOGO

Can you even make man’s best friend loyal to your Private Label? Yes, you can... and easily, with Rinaldo Franco Spa’s targeted range of Pet-Care products.

For more information, please contact Rinaldo Franco SpA: +39.02.4837.6157 www.best-friend.it

MARKETS - PLM

23%

is the total value share of the Italian market of PL pet food generated last year (+1.2 points compared to 2021).

PL PET FOOD AIMS AT EXPANDING ITS ASSORTMENT According to Rosa Tufano and Claudia Ponciroli, from Pet Food Category and Pet Food Buyer at Iper La grande i respectively, the pet food and pet care industry have showed continuous and constant increases in the last few months, more visible in terms of value than volume, due to inflation: “We recorded particularly positive growth trends for our PL which, with almost forty references, covers dog and cat food category. This phenomenon started last year with inflation: due to the relevant price increase, a great number of consumers changed their purchasing habits and turned to our PL. Our PL, indeed, offers high-quality products, but at a more affordable price compared to the main brands of the industry. We aim at expanding the assortment of dog and cat wet food, by offering a wide selection of flavors and formats.”

MARKETS - PLM

Not just DOG and CAT FOOD

In 2022 large-scale distribution share of PL pet food accounted for 22.1% (+1.5 points), while volumes equaled 36.3% (+1.9 points).

Chemi-Vit - historical Italian company of pet food and pet care since 1972 - is specialized in the production of professional and amateural products for ornithology (complete and complementary food, vitamins, snacks and sticks). “Several of our successful products have been replicated by competitors or taken as benchmark by big chains specialized in the pet segment and by large-scale distribution brands to announce competitions for PL products - affirms the CEO Andrea Lattanzi - such as sticks for birds or small mammals, rabbits and pet rodents. Our PL supply ranges from products for ornithology and small mammals (complete and complementary food, snacks and sticks, various mixes) to simple or functional food, vegetable or meat based, without added cereals and hypoallergenic semi-moist snack and dog cookies. We’ve also introduced new raw materials such as insect proteins, which are very nutritious and sustainable, and paper packaging, as we are firmly convinced that our environmental impact should be as low as possible, with an eye to the health and wellbeing of animals, men and nature.”

SHOW YOUR BUSINESS POTENTIAL

16-17 January 2024 20 th EDITION www.marca.bolognafiere.it

TECHNICAL SCIENTIFIC COMMITTEE

MARKETS - PLM

HIGH-RANGE SUPPLY INCREASES PL pet food and pet care market offers a wider and wider supply, especially in high-range segments, such as premium, functional or organic. “We strategically decided to approach this sector - affirms Luciano Fassa, General Manager at Monge & C. - by creating specific projects with many brands, starting from the 90s. At the same time, in the last decade, we’ve developed PLs for some of the main chains in Europe, as well. As for PL products, we turned our attention especially to the wet food segments, where, in the past, we had a productive capacity. Both large scale distribution and pet chains, in the last years, have moved to PLs for recipes with price and quality premium and super premium positioning: references produced with special meat, high meat content, or low in cereal, that is no-grain, or fully gluten-free. While most of the demand for wet food concerns single serve in bags or cans from 70/80/100 g and multipack/multi-bag packaging.”

PET CARE PRODUCTS ON THE RISE Accessories and pet care products are among the PL references that in the last few months, have seen a growing success among consumers. “As a company specialized in pet product distribution - affirms Dan Franco, President at Rinaldo Franco - we boast over 150 references of PLs to the main brands of the specialized channel and Italian large-scale distribution. This market segment represents a strategic opportunity to collaborate with important distribution chains, by offering them high quality products under their own brand. Among the most sought after references in large-scale distribution, there are absorbent mat, cat litter, waste bags, collars, toys, dog waste bags and other pet accessories. These products have to satisfy different key-conditions, starting from their quality that must be extremely high to guarantee pet safety and wellbeing, reliability, and convenience both in terms of price and ease of use, variety and sustainability. It’s always important to offer eco-friendly products or sustainable packaging to respond to the growing environmental concerns of consumers.”l

Fabio Massi, Journalist specialized in Retail and Mass market issues.

PLM - QBERG OBSERVATORY

PLs in Pet Care: flyers and e-commerce websites In these times of great changes, QBerg, leading Italian Research Institute in price intelligence services and cross-channel assortment strategy analysis (flyers, physical points of sales), has analyzed what support trade (large-scale distribution and pet specialists) has given to sales in terms of both promotions and web assortments. 50

QBERG OBSERVATORY - PLM

Specifically, we focused on PLs by comparing the first eight months of 2023 and the same period in 2022.

PL visibility on the rise This clearly emerges in the first graph below, which shows the year-on-year variations of the “Qp3” flyer visibility share and the e-commerce display share. Betting on PLs has been a sort of mantra for trade: in times of emergency, with double-digit increases in prices, PLs allow room for maneuver in terms of product types and profit margins; something that the brand industry does not seem to be able to ensure. As a matter of fact, a different strategy between large-scale distribution and specialists is observed: as far as the latter is concerned, the increase in visibility share is the same for both flyers and the web, whereas large-scale distribution seems to be focusing more on flyers (with a significant increase by over 3 percentage points) than the web, where the PL share has slightly fallen, losing 0.44 percentage points.

In what categories? Let’s analyze in depth what categories have most contributed to the growth. As for large-scale distribution flyers, it is the increase by 3.69 percentage points in food to have a positive impact, considering the importance of the category in the total pet care. Noteworthy is the remarkable visibility growth in pet hygiene (+6.33 percentage points) and cat accessories. As for specialist flyers, an increase was recorded in all categories, except for dog accessories. In this case, the effect of the +4.5 percentage point increase in pet food is also proportional In the online category, on largescale distribution websites, except for other animal accessories and litters', which is the only category where PLs have grown, the slight decrease recorded in the previous analysis and resulting from the other categories, has been confirmed. As for specialists, instead, what has been confirmed is that PLs have increased their visibility compared to the other categories, with significant +3.08 percentage points in food only. 51

PLM - QBERG OBSERVATORY

Flyers: what actions have helped PLs? The term 'action' refers to all those promotion mechanisms (discounts, below-cost prices, competitions, loyalty card discounts, etc.) applied to products on flyers. We have divided them into three large groups: ● Cost-effectiveness: actions based on the concept of cost-effectiveness, with no loyalty program memberships; ● Loyalty: activities reserved to loyalty card owners; ●Branding: contests and actual branding of a single product, a group of products or a whole page, aimed at highlighting the supply. The data shown in the following graph can be summarized in the following concept: little changes in large-scale distribution flyers, actions oriented towards cost-effectiveness for specialist flyers. On the one hand, while on the left part of the graph we can notice quite irrelevant year on year variations, on the other, on the right, we can clearly notice that cost-effectiveness actions have doubled: about 40% of products for which last year ‘no actions’ were taken (therefore included ‘bare-bones’ on flyers), this year are characterized by promotional features that encourage purchases. The remaining mechanisms are instead stored year on year. However, as we can notice, in large-scale distribution loyalty programs are more common, whereas, in the specialist industry, the Branding share prevails over large-scale distribution.

Web: how many discounts? Similarly to what was done for flyers, we asked ourselves how many views of PL prices in both large-scale distribution and specialist online websites were cut. We can rightly point to a strong push: the share of views of discounts on largescale distribution websites has almost tripled and almost doubled in specialist sites. However, a difference can be noted: in 2023, large-scale distribution accounts for only 5.1% of PL views of ‘discounts/ promotional prices’, whereas specialists account for ten times more, specifically 54.4%. 52

QBERG OBSERVATORY - PLM

Discounts? Fine, but to what extent? The flyer actions of ‘price-effectiveness’ (discounts, multi-buy, discounts on a second item, etc.) and ‘loylaty’ type (only the ones allowing for a discount) can result in an average discount for the whole PL assortment. This “average discount” is calculated by taking into account both discounted and non-discounted views of PL references: it is therefore the actual price effectiveness of PLs. Therefore, as far as average discount is concerned, large-scale distribution flyers have recorded a slight decrease, whereas specialist flyers, whose related percentage is already higher, have increased by about 10 percentage points, reaching 18.07%. In terms of web, despite tripling year on year, the average discount in large-scale distribution remains stable at 1.20% of the total pet care PL assortment. On specialist websites, however, after reaching a significant 5.75%, the average price has now increased to 7.19%. We also wanted to consider the “declared average discount”: this measurement is calculated by averaging the views of the discount mechanism. If, on the one hand, the average discount helps us to understand what discount has been applied, the declared average discount gives us information on how significant this discount actually is. In the lower part of the graph, we can therefore notice how the declared average discount ranges between 22% and 24% for flyers and how the web average discount decreases from 25% to 23% in large-scale distribution, and from 20% to 13% in the specialist industry. So, the extent of the discount decreased: based on the previous analysis, we can state that it was decided to communicate more discounts (which means applying these dynamics more often), while reducing their specific extent. This absolute numerical increase allows the total average discount of PLs to increase year on year, despite each discount being less significant, except for large-scale distribution flyers, as seen in the previous part of this graph.l

Fabrizio Pavone Marketing Manager and Business Development of QBerg

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