Dealing With Dutch Food Retail - Pim Haasdijk, Green Seed

Board Bia Head Office, Clanwilliam Court, Lower Mount

Street, Dublin 2

22 April 2009

Pim Haasdijk, Green Seed The Netherlands

Dealing with Dutch Food Retail…..

Commercial insights and which pitfalls to

avoid

Table of contents

• The Dutch Retail Scene…..a brief overview

• Who are the main players?....brief account profiles

• Entering the Dutch market

Ø Setting the Scène

Ø Strategy

Ø (Launch) Preparation

Ø (Trade) Introduction

Ø Launch

• How do we work?

• The Daniels Group case

• Summary: The 9 key drivers for successful exports

Welcome to the world of

Our story began providing help exclusively for British food & drink

companies, as the ‘Food From Britain International Network’.

Since we started business in 1984, we have assisted over a thousand of

clients growing brands and selling products internationally.

Today the ‘Green Seed Group’ services food and drink companies from

around the world. We are a unique network of 12 privately-held sales &

marketing consultancies covering 19 countries across Europe, North

America and Australia.

The Green Seed Story

The Green Seed concept

Seed

Incubate

Grow

Harvest

Through our specialist international

food and drink expertise we create

value for our client’s brands and

products.

We help business to grow,

from the seed to the fruit

offering growth strategies

for each phase of the

product life-cycle

The Dutch retail scene

Developments in Dutch retail

Internationalisation

Innovation→→→→ UK

Increasing concentration

Fascia as brand

Development Own labels

Own label is gaining share in many main product groups

29.1

20.6

16.2

21.7

27.3

27.8

49.1

23.6

5.9

42.2

20.2

1.1

30.3

21.4

16.5

23.6

27.6

28.8

51.7

23.7

6.3

42.2

20.6

0.7

Totaal Gemeten Groepen (1.2%)

Houdbaar (0.8%)

Dranken Houdbaar (0.3%)

Kruidenierswaren (2%)

Zoetwaren & Snacks (0.3%)

Diepvries (1.1%)

Vers (vast gewicht) (2.5%)

Drogmetica (0.1%)

Personal Care (0.4%)

Papier (0%)

Home Care (0.4%)

Tabak (-0.4%)

2007 2008

Private label value share per supergroup

( ) = % growth vs. PY

Food open markets

Source: AC Nielsen 2008

OL share rapidly increasing

• Stronger need for retailers toposition store format

• Development of premium own labels

• Desire of retailers to decrease power of A-brand suppliers

Own label developments

Characteristics of Dutch supermarkets

Average selling space of 750 m2

– Small assortments

(1 facing→ high order frequency)

– Listing means de-listing

– Small outer cases

– Just in time (JIT) logistics

– Short order lead time

- The total supermarket turnover was € 30 bln

- 4,800 supermarkets

- Average turnover of € 7,928 per m2

Retail margins

No listing fees

VAT rate on food products is 6%

19% VAT on non-food and high alcoholic drinks

Formula 2 (Albert Heijn)

(RSP-VAT) – buying price = profit margin

Profit margin / RSP = profit margin in %

Formula 1 (other supermarkets)

(RSP-VAT) – buying price = profit margin

Profit margin / (RSP-VAT) = profit margin in %

Market shares within Retail

Source: AC Nielsen 2008

Market Share within Total Food Retail NL 2008

Albert Heijn

30%

Super Unie

31%

C1000

13%

Super de Boer

7%

Aldi

9%

Lidl

5%

Other

5%

Who are the main players?

100% subsidiary of Ahold

Euro 7,48 billion (+ 7,9%, 2007)

30.0 % market share (2008),

Market Leader / innovator

Growth Success:

Market leader in size and innovation. Strong focus on OL

development à increasing OL segmentation with focus

in Premium

753 stores (2008), 200 franchise

2006: + 23 Konmar stores

2008: + 56 C1000 stores -> market share > 30%

Multi format :

Albert Heijn (686), AH XL (27), AH to go (40)

Positioning

Make everyday grocery affordable and the special available

Up-market full service supermarket

Middle of the market -> improved price image

Pricing is at / slightly above average

Strong focus on fresh products

Wide and deep Assortment (12.000 sku’s)

Customer profile

- High education scale

- 1 + 2-persons HH, focus more on young families with children

- Welfare class A and/or B

Suppliers strategy

- Low & High involvement = Buying & Merchandising

- Euroshopper = international => via AMS

- Exclusive suppliership for OL

Centralized Logistics

- (Nieuwegein, chilled and slow movers; Geldermalsen, slow

movers; Pijnacker, Tilburg, Zaandam, Zwolle, fresh products;

Culemborg, cheese)

- VVM (today for tomorrow)

30.7% market share

- Plus 6.1 %

- Jumbo 5,0%

- Koopcom 4.4 %

Boni-Markten, Boon, Co-op, Deen,

Dekamarkt, Jumbo, Em-Té, Golff,

Hoogvliet, Jan Linders, Nettorama,

Poiesz, Sanders Supermarkten, Sligro,

Spar, Sperwer (Plus), Vomar

Voordeelmarkt

Number of Stores 1910:

- Plus 278 (++)

- Jumbo 117 (+)

- Sligro 200 retail stores (Golff,

Meermarkt + EM-TE) and 50 cash &

carry)

- Koopcom 90 stores

Central buying organisation

2007 : 15 members

July 2008 : new member Koopcom (Drik v/d Broek bedrijven, +4,4 %, 90 stores)

National and Regional multiples

Multiples regionally very strong

Positioning

- Full service supermarkets + discount

- Every member has its own characteristics

Logistics

- Through warehouses for dry-grocery, frozen and chilled foods

- Central depots or per member

Euro 4,09 billion

13.2% market share (2008)

2008 : AHOLD sold all 73% shares => got 56

C1000 stores

2008: CVC capital partners

443 stores (2007) -> 387 (2008)

= 90% Independent entrepreneurs (franchise)

Mission; help the customer save money, time and

troubles during the daily shopping in a pleasant

way

Market follower

Full service supermarket

Wide and undeep assortment -> more upgrading :

quality & fresh & innovation -> increasing focus on OL

Customer profile

- families with children -> also more focus 1 + 2 pers. HH

- social class C and D

Logistics

Decentralised→ 5 depots

(Gieten, Raalte, Breda, Woerden, Eindhoven)

Central chilled distribution center

Euro 2,08 billion

2008: Laurus -> Super de Boer N.V.

2008: Casino increased their share to a total of 63,3%

2006: Laurus sold off

- Konmar stores to Albert Heijn (29) and Jumbo (12)

- Edah (223) stores to Sperwer (Plus) and Sligro

(EMTE and Golff)

6.8% market share

Number of stores 305

> 50% franchise

Policy

“full service to their shoppers”

Wide and deep assortment

Customer profile

- High education scale

- 2-pers. HH and families with childeren

- Welfare class A and/or B

Logistics

Beilen, Den Bosch, Veenendaal en Drachten

•100% subsidiary of Aldi North, Germany

•Positioning as hard discounter

•Very small and undeep assortment withmany fancy labels (± 800 a 850 SKU’s)

•Logistics - 7 depots

• (2006) 9.6% ->(2007) 8,9% market share

• 442 stores

• Customer profile:

- social class C and D

- also “Fun” shoppers

• 4. 0% market share

• 249 stores

• Customer profile: social class C and D

•Largest discounter network of Europe

•Positioning as hard discounter

•Small and undeep assortment

•“Value for money” strategy

•Logistics - 4 depots

Hard Discount

Entering the Dutch market

Dutch vs. UK Retail scene – similarities:

• High trade concentration – high buying power

• Coalition vs. conflict model

• Severe price competition

• Focus on Adding Value / Category Growth e.g. no listing fees

• Focus on (Premium) Own Label

• Sophisticated Logistic infra-structure (Central deliveries, JiT, IT-driven)

• Risk avoiding vs. entrepreneurial attitude


Setting the scène

Dutch vs. UK Retail scene – differences:

• Clear retail leader vs. followers

• More limited resources for Category management

• Lower price points

• Relative small outlets à impact on assortments,

packaging, logistics

• Importance multiples vs. franchise chains (discipline)


Setting the scène

• Very open trading mentality à no mental nor logistic barrier

• Good (English) language skills

• Strong focus on UK developments

• High food retail concentration à 5 players > 90% share

• Increasing focus on OL (chilled, ambient and frozen)

• Diversification in OL (price defensive, standard, Premium &

Organic)

• Clear preference for direct commercial approach

• Exclusive supply vs. non-exclusivity

• Foreign suppliers to adapt to (IT) systems and procedures


Setting the scène

• Internal SWOT-analysis à company’s success

drivers

• Customer selection + understanding profile

• Strategic decision OL vs. brand à resources (human,

financial, time path)

• In-direct vs. direct à OL per definition direct

• Logistic infra structure à adapt to local needs


Strategy

Just knocking on the door is not enough anymore….so

DO YOUR HOMEWORK FIRST à Understanding customer(s) + commercial environment

1. Market share and mentality

2. Fascia concept + positioning à their consumer, multiple vs. franchise

3. Commercial strategy à pricing, assortment, promotional, assortment revision time slots

4. Buying structure + trading conditions

5. Logistics à depot + ordering structures, administration procedures, EDI / GDSN + crate systems

6. Regulations: VAT, Packaging tax costs etc.


Preparation

DO YOUR HOMEWORK à Understanding local

consumer in relation to product concept

1. Brand vs. OL

2. Comprehensive market assessment à

– Development of category

– Competition à pricing, investments, outer case

specs

– Available space à assortment, pack design, outer

case specs

3. Product concept testing à qualitative / quantative


Preparation

DO YOUR HOMEWORK à Simulate commercial

viability

1. Distribution scenarios vs. account investments

2. Rate of sale projections

3. Pricing / margin strategy

4. Sales forecast yr 1, 2 and 3

Profitability analysis per account


Preparation

1. Initial contacting

2. You did your home work à Dutch market + retailer understanding and UK experience…. but NL ≠ UK

3. You understand THEIR concept , problems & needs

4. Company credentials + product concept

5. Present business case based on assumptions:

• Distribution levels

• Assortment composition (no. of SKU’s)

• Investments (support plan)

• Other underlying assumptions e.g. rate of sale, pricing/margin contribution, product ranking vs. competition etc.

• Trading conditions (payment terms, overriders)

6. Present Supply Chain incl. ordering structure (lead times, warehousing and data exchange)


Introduction to Trade

While presenting……

1. Be ambitious but realistic in objectives

2. Discuss openly relation between distribution and investments

3. Focus on your added value

4. Rather than just attacking competition ….

5. Convince preferably based on hard facts

While discussion conditions……

1. Include immediately all conditions / costs….avoid surprises

afterwards

2. Keep the lead rather than reacting à defensively


Introduction

1. Base your critical launch time plan on retailer specific

time slots

2. Product administration (GDSN, manual product spec

sheets incl. palletization

3. System set-up:

• EDI + supply chain à build up direct contacts with

logistic managers

• GDSN

• VAT regulation / packaging tax


Launch

How do we work?

Ø Trade & Consumer Insight

Ø Opportunity Assessment

Ø Trends & Developments

Ø Scanner Data (Nielsen)

Ø Market Entry Strategy

Ø Product Proposition Evaluation

Ø Sales & Profitability Projections

Ø Partner Search & Introduction

Ø Sales Strategy & Planning

Ø Broker Selection and Management

Ø Channel & Category Planning

Ø Key Account Management

Ø Brand Planning

Ø Trade & Consumer Promotion

Ø Event Management

Ø Public Relations

“We Advise, We Execute & We Deliver”

How to go about in exports?

How does the Green Seed Group assist?

• An international network giving access to key export markets in Europe, North America and Australia

• A consistent approach for our clients across the different markets

• Sales and marketing is what we do; is what we are good at

• Your commercial international projects:

– we will manage it for you, with you

– you have a direct relationship with your clients

– You score


A case study from the UK

Launch of freshly

squeezed juices

in leading Dutch

department store HEMA

followed by….chilled

premium cheesecakes

to leading Dutch

retailer ALBERT HEIJN

Daniels Group

Who is Daniels Group ?

• Makes chilled, fresh, natural foods without compromising on taste

• Manufactures in brand & private label for major UK & European retailer &

foodservice

• currently operates over 7 owned manufacturing sites

in the UK

• Is committed to growing our Business in Europe both through UK Export & in

potential manufacturing acquisition & set-up on the continent

• Annual turnover > £ 219 million

Daniels Group is committed to developing 5 core categories

Development

expertise

Brand & OL

consumer

understanding

1. Chilled Ready Meals

2. Soup

3. Fresh prepared fruit

4. Fresh Drinks

5. Traditional chilled puddings / desserts

£1,343 £1.453

£1.830

£3.307

£3.825

£7.500

£0

£1.000

£2.000

£3.000

£4.000

£5.000

£6.000

£7.000

£8.000

2005 2006 2007 2008 2009 2010

Working with Green Seed offices Daniels has more than doubled

the size of our Export business in two years (previously static)

Sales Revenue £000’s

ACT. ACT.

ACT

PLAN

PLAN

ACT

Development plan

with GS Offices

Daniels Group

Client briefing

Department store chain Hema changed 2007 strategy within Food

and Beverage, emphasizing more on healthy and fresh concepts.

Hema was interested in finding a chilled juice supplier who was able

to supply according to these new objectives and targets.

Green Seed's response

Utilizing its broad manufacturer’s network, GreenSeed The

Netherlands introduced Hema to Daniels PLC’s drink division.

GreenSeed The Netherlands was asked by Daniels to coordinate

the development and launch of a new juices and smoothies range,

in line with Dutch consumer preferences and Hema’s new strategy.

GreenSeed The Netherlands dealt with the pre-launch preparation,

organising factory visits, labelling, logistics

and marketing for the launch.

The results

A range of currently 10 SKU’s were launched successfully

at Hema in both Retail and Foodservice (in-house restaurants). New

drink line extensions are being prepared to be launched soon.

Albert Heijn tray bakes – launched Sept 08

Same Dutch retailer was looking for something

new & different in mainstream desserts fixture

DUTCH FRUITS & ING.

NEW CATEGORY

OCCASSION

EVENT

FAMILIARITY

HOT THE UNKNOWN OR

HISTORIC

COLDFAMILIAR

MAIN FOCUS

HOT or COLDFAMILIAR & APPROACHABLE

AS EXP. HOT

STROOPWAFFLE

BITTERKOEKJES

GRIESMEELPUDDING VLA

DUTCH FAVOURITES

EASTER ’09SUCCESS / LEARNINGS

CLASSIC DUTCH DESSERTS

CONSUMER

SERVES 2, 4, 6 +

TABLE PRESENTABLE

THAT FINISHING TOUCH / FEEL INVOLVED

UK & OTHER EUROPEAN DESSERTS INFLU.

AB1

HIGH BASKET SPEND

DRAW TO AH, PREMIUM, INNOVATION

Key considerations in developing a range of

desserts for the Dutch market

Albert Heijn Cheesecake – launched Easter into the entire

+700 store estate

Key rules for successful exports

1. Understand your potential customer and the competitive

environment

2. Invest in time and resources

3. Get local advice

4. Go step by step, market by market

5. Invest in sales people, not just linguists

6. International project needs full support from company top

management

7. Develop and implement support programmes: get your product off

the shelf

8. Have patience!

9. Do your homework properly

= Be Committed

Thank you!


Documents

Dealing With Dutch Food Retail - Pim Haasdijk, Green Seed