3 rd PASTA WORLD CONGRESS Changing Competitive Dynamics In Food Retailing Lamberto Biscarini...
Transcript of 3 rd PASTA WORLD CONGRESS Changing Competitive Dynamics In Food Retailing Lamberto Biscarini...
3rd PASTA WORLD CONGRESS
Changing Competitive Dynamics In Food Retailing
Lamberto Biscarini
Barcelona - October 24, 2005
3rd PASTA WORLD CONGRESS
Changing Competitive Dynamics In Food Retailing
Lamberto Biscarini
Barcelona - October 24, 2005
THE BOSTON CONSULTING GROUP
© BCG 2005 - All rights reserved [25011-99-3rdPastaCongress-Oct05-TB-LBi-ep-Mil] TTHEHE B BOSTONOSTON C CONSULTINGONSULTING G GROUPROUP
TurkeyTurkey
Germany
FranceFrance
Argentina
Peru
Venezuela
Source: UNIPI, Countries statistics offices
RussiaRussia
USUS
BrazilBrazil
ItalyItaly
TODAY PASTA IS AN INTERNATIONAL BUSINESSMain pasta countries according to Unipi
TODAY PASTA IS AN INTERNATIONAL BUSINESSMain pasta countries according to Unipi
GermanyGermany
SpainSpain
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72%
65%
65%
25%
21%
21%
19%
15%
38%
29%
0% 10% 20% 30% 40% 50% 60% 70% 80%
France
Germany
Spain
United States
Italy
Argentina
Turkey
Brazil
Peru
Venezuela
Russia
(1) In the Moscow and St Petersburg area, the only 2 with tangible modern retail presence(2) Top 100 US Metropolitan Statistical areas (60% of population)Source: M+M Planet Retail, BCG analysis
TRADE INTERFACE IS BECOMING CRITICALIN MOST PASTA COUNTRIES
Top 5 retailers cumulated market share, 2004
TRADE INTERFACE IS BECOMING CRITICALIN MOST PASTA COUNTRIES
Top 5 retailers cumulated market share, 2004
Mature
retail markets
Developing
retail markets
30% (Moscow, St. Petersburg)
62%(2)
10%
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1
3
1
1
3
1
2
2
1(1)
2
(1) Including C&C businessSource: M+M Planet Retail, BCG analysis
TOP 3 GLOBAL RETAILERSBUILDING SOLID POSITIONS BY COUNTRY
# Ranking in each market (only if in top 3)
TOP 3 GLOBAL RETAILERSBUILDING SOLID POSITIONS BY COUNTRY
# Ranking in each market (only if in top 3)
France
Germany
Spain
United states
Italy
Argentina
Turkey
Brazil
Peru
Venezuela
Russia
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Discounters' growth, behind a trading-down shift in consumer behaviour
Price-focused horizontal competition among retailers
Repositioning of Private Labels towards lower price levels, shifting from margin generators to price leadership vehicles
• Additional pressure on Branded players
Shrinking of # of suppliers, particularly in mid size surfaces
• Max 1-2 players in each category
4 MAIN TRENDS EMERGING IN MATURE RETAIL MARKETS4 MAIN TRENDS EMERGING
IN MATURE RETAIL MARKETS
1
2
3
4
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9 9,210,2
11,9
17,116,5
18
19,920,3 20,2 20,419,5
0
5
10
15
20
25
2000 2001 2002 2003
Frequency rate
Loyalty index
Value SoM Groceries - Chilled
16.1 16.3
Average ticket €
%18.3 20.7
Source: Consoscan, TNS
DISCOUNTERS GAINING CONSUMER LOYALTY...Example France
1
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"I don't shop Lidl because I can't afford to shop in a supermarket, it's just that if I can save money on shopping I will"Consumer interview, Madrid, July 2005
"I don't shop Lidl because I can't afford to shop in a supermarket, it's just that if I can save money on shopping I will"Consumer interview, Madrid, July 2005
Consumers evaluation
-1 -0,5 0 0,5 1
1 Price
Avg. supermarket
2 Convenience
3 Innovation
4 Affinity
5 Trust
6 Product range
7 Service
8 Advertising
Advantage on price, convenience, and affinity
No major disadvantage on trust, product range, and service
Source: 6 000 consumers interviews across Europe, 2005
... REFLECTING A CHANGEIN CONSUMER PERCEPTION
Example: Spain
... REFLECTING A CHANGEIN CONSUMER PERCEPTION
Example: Spain
1
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HORIZONTAL COMPETITION MAINLY BASED ON PRICE
Real food prices in Western Europe, 1999-2004, index
HORIZONTAL COMPETITION MAINLY BASED ON PRICE
Real food prices in Western Europe, 1999-2004, index
90
92
94
96
98
100
102
104
106
108
110
1999 2000 2001 2002 2003 2004
Real food price (index)
Note: Real food price index is defined as consumer price index for food / consumer price indexSource: Eurostat; Planet Retail; Press; BCG analyses
CAGR02–04
(2.9%)
(0.9%)
(0.4%)
(1.4%)
0.0%
(1.6%)
CAGR99–04
0.6%
0.0%
(0.4%)
0.4%
(0.6%)
(1.2%)
Sweden
France
UK
Italy
Germany
Netherlands
2
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Premium
Mainstream
Value/first prices
# SKUs
240-500
2.100-6.500
350-400
Margin overbranded products
+3%
+3% - (-5%)
(-5%) - (-15%)
Role to retailer
• Image of innovator, exclusivity, solution provider (e.g. diet, allergy)
• Increasingly used as loss leaders in traffic building categories
• Low price image
• Defense from Discounters
Source: Websites; BCG Experience
CHANGING ROLE OF PRIVATE LABELFew examples
CHANGING ROLE OF PRIVATE LABELFew examples
3
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Hyper
Hyper
Super
Super
Discount
Discount
-
RATIONALIZATION OF SUPPLIER PORTFOLIOExample, Spain store checks, major dry pasta brands
RATIONALIZATION OF SUPPLIER PORTFOLIOExample, Spain store checks, major dry pasta brands
Format Gallo Barilla Ardilla El Pavo PL/ 1st pricesBrand
Pasta brands
"Brands have to tell me why I should have them all in my portfolio"Pasta buyer, leading retailer in Spain
"Brands have to tell me why I should have them all in my portfolio"Pasta buyer, leading retailer in Spain
Source: Store checks, Oct '05
4
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EVEN FASTER TRENDS IN DEVELOPING MARKETS1. Retail consolidation - Turkey
EVEN FASTER TRENDS IN DEVELOPING MARKETS1. Retail consolidation - Turkey
2002Market shares
4.2%
3.1%
2.3%
2.2%
2.1%
13.9%
2005Market shares
7.4%
4.8%
3.5%
3.1%
2.6%
21.4%
Acquisition of G
ima
Acquisition of Tansas
Share of top 5+7.5 p.p. in less than 3 years
"We aim to become either leader or # 2 in each Country we decide to invest in"Carrefour Investors report, October 2005
"We aim to become either leader or # 2 in each Country we decide to invest in"Carrefour Investors report, October 2005
Source: M+M Planet Retail, BCG analysis
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80
90
100
110
120
Jan-04
Feb-04
Mar-04
Apr-04
May-04
Jun-04
Jul-04
Aug-04
Sep-04
Oct-04
Nov-04
Dec-04
Jan-05
Feb-05
Mar-05
Apr-05
May-05
Jun-05
Jul-05
Aug-05
Sep-05
CarrefourMetroMigrosBimYimpas
+0.8%
(2.2%)
+1.5%
(3.4%)
(2.4%)
Source: October 2005, BCG analyses
EVEN FASTER TRENDS IN DEVELOPING MARKETS2. Price competition – Turkey (grocery sample products)
EVEN FASTER TRENDS IN DEVELOPING MARKETS2. Price competition – Turkey (grocery sample products)
Delta %
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# Stores
~ 1 200
~ 290
~ 200
Market Share (%)
3.5% (3° player)
2.4%
1.1%
Over 1 800 Discount stores today in TurkeyOver 1 800 Discount stores today in Turkey
Source: Datamonitor, M+M Planet Retail, retailers data, BCG analysis
EVEN FASTER TRENDS IN DEVELOPING MARKETS3. Discounter penetration - Turkey
EVEN FASTER TRENDS IN DEVELOPING MARKETS3. Discounter penetration - Turkey
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EVEN FASTER TRENDS IN DEVELOPING MARKETS4. PL role and supplier portfolio – Quotes from Trade interviews
EVEN FASTER TRENDS IN DEVELOPING MARKETS4. PL role and supplier portfolio – Quotes from Trade interviews
"We will get to more than 20% PL share quite soon, and brands know it... at our last on-line tender [for PL production] we got an incredible battle"
Food Buying Director, Russia
"PL penetration will grow rapidly... we are investing resources and would like to see at least 20% of sales"
Food Buying Director, Brazil
"Portfolio rationalization is not yet a hot topic in Pasta, as it is still growing very fast for us. But it will soon happen "
Pasta Buyer, Russia
Source: Interviews, October 2005
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Clear business strategy
• Strong leading brands ?
• Private label manufacturing?
• No long term space left in between
Local market know-how and product customization capabilities
• Food retail expectations still local
Partnership with retail country leaders
• Coherently with all channels you want to access (Ho.re.ca.?)
Cost leadership
• To face fiercer Trade Margin requests
KEY CHALLENGES FOR PASTA SUPPLIERSKEY CHALLENGES FOR PASTA SUPPLIERS