Behind the shelf. Collaborations

And Protocols With Private Label Suppliers

In Italy, 83.2% of the collaborations between brands and suppliers in the world of private labels last for over 4 years. Specifically, 36.6% last between 4 and 8 years and 46.6% for over 8 years. Collaborations between companies and distributors are not only increasing, but also perfecting.

One of the factors brands rely on for the development and success of PL is winning collaborations. In some cases, their strength lies in their solidity, which is ensured by reliable and quality suppliers. In other cases, such strength comes from

New targets and the need for cooperation

A research study published in June 2022 by Ipsos e McKinsey commissioned by Gs1 has shown the latest new-normal consumption trends. Not only were consumers grouped by category, named based on their expectations and shopping behavior (from “you don’t need much to be happy” to “nostalgic of genius loci”), but also the characteristics of the collaborations between the industry and distribution were reviewed, among which, the first is precisely cooperation. The document was used as a basis to draft the New Consumption Code.

A land almost unexplored (so far)

Of all the logos on food products and others, two are highly underestimated in Italy: Kosher and Halal. Even though experts and habitual consumers of such products consider these to be the safest certifications, Italy doesn’t even rank among the first 10 destinations for the members of these two target communities. A land almost unexplored, metaphorically speaking, especially in light of the increase in Islamic and Middle-eastern tourism in Italy. Not to mention that, based on forecasts by Fortune Business Insights, Allied Market Research and Il Sole24Ore, the global Kosher market will record +6.5 billion euros by the end of 2026. As for Halal, it’s expected to record +1.18 trillion dollars by the end of 2028.

RELIABILITY AND CERTIFICATION: CURRENCIES OF EXCHANGE FOR VISIBILITY IN THE POS

In Italy, 83.2% of collaborations between private labels and suppliers last for over 4 years. Specifically, 36.6% last between 4 and 8 years, while 46.6% for over 8 years. This is what the position paper ‘Marca del distributore e consumatore nella società che cambia’ (Private labels and consumers in a changing society) by Forum Ambrosetti, in collaboration with Adm and Ipsos, revealed. The paper was presented in Bologna during the 2022 Marca exhibition. «There have been collaborations between companies and distributors for decades, but now, in the era of the new-normal, they’re growing and improving. In the last years, the way projects are “built” not only reflects the needs of retailers, but also the production capacity and know-how of suppliers, who increasingly work as co-packers too», says Carlo Alberto Buttarelli, Managing Director at Adm and Director of Studies and Relationships at Federdistribuzione . Nevertheless, the position paper also shows that, specifically in the food industry, 83% of people are willing to pay more for certified products, and that

91% of those buying PL products want to read the names of producers on the packaging. This shows how Italian consumers seek to know more about products to favor proximity, community work and attention towards the environment in their choices. “If, on the one hand, today’s consumers are on average more informed on products than in the past, on the other hand, only few are able to technically assess PL products according to scientific standards or ethical and legal policies between suppliers and large-scale distribution. They trust the choices made by the brands, which, however, earned their respect over the years and put themselves out there for their private labels”, says Carlo Alberto Buttarelli.

CARREFOUR AND SUPPLIERS:

A Code To Regulate Them All And A Code To Direct Them

Carrefour’s code of ethics is a mandatory step for all suppliers. It sets out the company’s values and what it expects from its suppliers, that is, refraining from unfair commercial practices and bribery. It defines ‘quality’ and ‘traceability’ as principles underpinning the supply chain. In the wake of this ‘polar star’, in the 2022 edition of Salone Carrefour, two new agreements with suppliers from Treviso were signed: one with Trevisanalat, for the supply of mozzarella cheese, and the other with Frescolat, for the supply of crescenza cheese, both under the name of Filiera Qualità, the PL that has celebrated its 20th anniversary. This private label has always paid attention to animal wellbeing and good animal husbandry practices, as well as environmental protection and enhancement of made in Italy products. The brand currently boasts over 300 references and about 8,500 collaborators among farmers and zoo technicians.

Moreover, with its Act for Food project, the company has implemented a simplified (two-page long) supply contract for local producers, which allows the company to have access to Carrefour Italia purchasing center, and therefore the sales network, within a week.

COOP: A MATTER OF PRINCIPLES (AND CODES OF CONDUCT)

Besides the adoption of the Sa8000 standards since 1998, which require suppliers to ensure specific guarantees in terms of work, such as the prohibition to employ minors and the reduction of gender inequalities, under penalty of exclusion from the network, in 2021, Coop Italia was also one of the first 65 companies to sign the EU Code of conduct on responsible food. The adoption of the Code is a further step towards the ‘Farm to Fork’ strategy, launched in May 2020, under which all the individuals in the supply chain voluntarily undertake to actually improve their environmental, social and financial performance. Such commitment became even more compelling in 2021 with the subscription of the ‘Women Empowerment Principles’ (WEPs) supporting gender equality and women’s financial emancipation. As for product-related aspects, Coop aims to extend the rules on phytosanitary product use to all its 35 fruit and vegetable supply chains by the end of 2023. Among others, the rules include a ban on glyphosate and neonicotinoids (according to 2018 EU bans). “In November 2022, Coop launched ‘3 Grani Pregiati Italiani’ pasta under ‘FiorFiore’, which was the result of a collaboration between mills and pasta makers,” says Paolo Bonsignore, Marketing and PL Director . This project was made possible thanks to the collaboration between Molino De Vita, located in Apulia, and two pasta factories in the South of Italy: Gramm, in Bari, for four references, and De Matteis, in Avellino, famous for its Armando brand, for other 11. Ensuring a minimum wage to farmers, that of De Vita is a fair supply chain where we can grow and mix three types of 100% Italian quality organic wheat. In addition to that, the company proves to be flexible and nature-oriented also when it comes to its farm produce. Indeed, there is no obligation to sow the same variety every year, but the best one is chosen for each year.

83.2% private label collaborations between brands and suppliers over 4 years.

Specifically:

36.6% between 4 and 8 years;

46.6% collaborations over 8 years

ESSELUNGA: FARMERS EMBRACING FAIR TRADE

The collaboration with suppliers is ever more crucial to the monitoring of production chains, both in terms of freshness and ethics, and it isn’t limited to food products. As part of Esselunga’s ‘Rose Fairtrade ’ project, launched in collaboration with the Cooperative Flora Toscan, the sale of certified roses has finally been allowed. Flowers are sold 3-4 days after being picked, thus ensuring a short chain and products with higher quality and longer shelf life on average. As for food, some references of ‘Naturama’ line, such as apples, clementines, trimmed green beans, new potatoes, peppers, Sardinian tomatoes and pomegranates, as well as some ‘Organic’ line products, such as bananas, obtained the ‘Etico Certificato’ label, which ensures the adoption of good practices by each single farm through the participation in programmes of renowned associations, such as Global G.A.P., Grasp and Altromercato.

ALDI: ALL FOR ONE... COMMON GOAL

The all-round commitment of suppliers is therefore often a need rather than a possibility, especially when it pursues global, such as climate neutrality. The new year and the next one are expected to be crucial for Aldi Süd, which decided to make private labels a vital asset in its path towards sustainability. Within the scope of its 2030 Vision, the German Group aims to minimize its carbon footprint and it’s therefore working on a policy on greenhouse gas emissions for Italy. This is set to be released by the end of 2024 and will be addressed to suppliers, who are responsible for 75% of PL emissions. The idea is indeed to implement an approach based on scientific evidence throughout the whole supply chain. The German discounter is also working on a compendium including 50 practical tips to adopt an environmentally-friendly lifestyle and behavior. Finally, in November 2022, within the scope of the ‘Oggi per domani’ (Tomorrow is today) strategy, Aldi Süd updated its guidelines for animal protection in breeding farms, that grants their right to have the right amount of space, air and light, not to be tortured, to receive for (in every sense of the word), and not to be subject to further sufferings in the last moments of their lives. These guidelines were reinforced as a result of Efsa’s recommendations on animal welfare, the latest of which focuses on pigs.

Protocols and certifications: a multitude of logos

The 2022 report by Osservatorio Immagino dedicated an in-depth analysis to certifications and claims on shelves: ‘Organic’ (9% of total sales, despite recording -1.3% in 2021), ‘antibiotic free’ (+5.6%), ‘Vegan’ (+1%) and ‘fair-trade’ (+6% but only for Fairtrade), are just a few examples of the labels of the best-selling products. As for the certifications related to the production process, which guarantee the compliance with international work, environmental and biodiversity protection standards, the most important ones are Fssc (on products of 634 companies in Italy), Fsc (on 5.2% of products), Msc (0.6% of total, despite having recorded an upward trend of 6.8% in 2021).

The top 5 european food certifications

The Brc Certification certifies that a given company ensures work environments and controls on both its products and production process, in compliance with the British market. Ifs shares the same goal as Brc, a standard actually shared among the food and agriculture production chains of the French and German large-scale distribution. The Iso 22000 certification harmonizes all national and international standards applying the Haccp method. Fssc combines the requirements of Iso 22000 and Iso/Ts 22002 standards, as well as some required by Gfsi. Last but not least, the Organic certification.Mandatory since 2007 for all organic products produced in the EU, it requires that the food in question contain at least 95 percent organic ingredients and meet stringent conditions for the remaining 5 percent.

LIDL: REPLACING WOOD AND PAPER. THE CRUSADE OF PRIVATE LABELS

Also the reduction in the use of wood, cellulose and paper for packaging is subject to agreements and common views among private labels suppliers. Lidl has been committed for years to replacing virgin fibers with recycled ones and using Fsc certified virgin fibers for those products where no recycled material can be used. By the end of 2025, the company aims to use recycled or Fsc certified materials throughout the whole private label packaging process for food, household essentials and personal care. To date, numerous products in Lidl Italia's continuous assortment are certified, such as Floralys tissues, napkins and toilet paper, Lupilu diapers and Aromata baking paper.

IPER-LA GRANDE i: THE PHARMA PL OF IPER-LA-GRANDE i, INNOVATION IN THEIR MEDICAL CORNERS

In Iper-la grande i of Seriate (Bergamo, Italy) the synergies between external service suppliers and Iper private label OTC pharmacies resulted in a space dedicated to telemedicine, inaugurated in September 2022, open every day from 8:00am to 9:30pm. This innovative project was possible thanks to Buongiornodottore and Whealthy Care Solutions companies. Buongiornodottore provides the personnel of SOS Dottore and SOS Pediatra, two services for house calls. Whereas, Whealthy Care Solutions has been a partner of Iper-la grande i, with Più Medical and G.S.M OTC pharmacies, the company managing Iper’s OTC pharmacies for years.The state-of-the-art service is provided in a dedicated area inside the hypermarket: after only 10 minutes, a doctor will connect and visit the patient through technological devices activated by Iper Pharma staff, Iper’s pharmaceutical brand, supporting the service. There, a qualified healthcare worker records the physiological parameters of the patient (blood pressure, body temperature and oxygen saturation) and starts the measurements (for instance Ecg) at the request of the doctor connected and based on the patient’s clinical needs, all by transmitting information in real time. After the consultation, the doctor provides a report and therapeutic indications, if any. Together with general practitioners and pediatricians, 24 specialists, such as cardiologists, nutritionists and dermatologists, provide consultation via telemedicine and are available within an hour of requesting a consultation or by appointment.

In Conclusion

When it comes to reaching agreements and choosing the most innovative partners, who are willing to obtain the largest number of certifications possible and, why not, identify new consumer perceptions, what comes into play, besides the duration of the collaboration, is a sort of ‘selection of the best players’. The hope is that among these new perceptions is that of having only one planet and only one humanity.l