There is no doubt about the merger between Ahold and Delhaize will also have consequences for fruit and veg suppliers. "Ahold-Delhaize expects to save € 500 million by purchasing 80% more cheaply. So it's not about efficiency, but even more power," open field grower and LTO director Jan Roefs concluded this morning after the announcement on Twitter.
Filip Fontaine of BelOrta cautiously looks at the Ahold-Delhaize merger, saying he still has a lot of questions and few answers. "It's possible that Ahold and Delhaize don't even have those answers themselves." He still hasn't come to the conclusion whether the news is good or bad for the auction. "You hear a lot of negativity, but I put that into perspective. Of course: the more buyers we have, the better it is for us. Our bargaining position won't be any better, in any case." Delhaize is a regular buyer at BelOrta, and AH purchases modest volumes. "The positive thing is that we're big enough to be at the table with such a retailer. We are a professional partner in the fruit and veg sector, and we believe in our strength. This retailer is also professional, so I expect us to keep finding each other."
"For suppliers, Ahold-Delhaize will be an even tougher negotiator," professor Cor Molenaar confirms in a response. he says the merger is a logical consequence of the changes in the retail landscape. "Market leaders are seeing lower shares, Tesco is seeing the same thing in the United Kingdom. We're facing budgetary moves at the consumer. Because of the rise of stores like Aldi and Lidl, the established players have to see how they can lead a more efficient operation that costs less, so that they can compete with the discounters in this market."
Marketing professor Gino van Ossel also says that there are mainly disadvantages to the merger for suppliers. "Ahold and Delhaize are looking for synergy, and will save costs. Cost savings will probably go in the direction of purchasing: they want to buy on better conditions. And that will also happen for fruit and veg, of course. It will inevitably become more difficult for fruit and veg suppliers to negotiate now. The game played in situations like this is a very classic one: you compare the conditions on which you're both buying, which price AH pays and which price Delhaize pays. Then the question is: where do I get it the cheapest, and can I also move that from one market to the other? Of course that's not always possible. There are, for instance, also suppliers that can't deal with larger volumes. There are also opportunities for traders: if you're supplying to AH in the Netherlands, you may also get the chance to supply in Belgium. That's not immediately a given, because Delhaize and Albert Heijn will continue to exist as independent store formulas. As long as that independence is still there, exchanging things like that doesn't happen automatically."
Price conscious, but not the cheapest
"Delhaize will continue with what it's doing already: lowering prices and roll out new stores. There won't be big decreases in price, because Delhaize won't change its profile. Just like Albert Heijn in the Netherlands, it wants to be price conscious, without being the cheapest. Both will also look if and how they can bring the product ranges in line with each other. At the moment Albert Heijn and Delhaize each have their own budget brand," Van Ossel adds in Belgian newspaper De Morgen.
Cor Molenaar expects the differences to be limited for the consumer. "Delhaize remains a Belgian supermarket with a Belgian look and feel and Belgian products, and the same goes for AH in the Netherlands. At best, they will learn from each other and expand the product range with certain products that hadn't been on offer in the past, but those differences will be marginal. The efficiency will mainly be increased behind the scenes, by bundling the headquarters, logistic flows and purchasing power. In addition, they can better combine the activities abroad, like in the United States, to achieve much more efficiency here. I expect this to be the main focus."
Bol.com e-commerce giant in Benelux
For consumers, the Delhaize and Ahold merger will have positive consequences, says Jorg Snoeck, editor in chief of trade journal RetailDetail. "The Delhaize prices will go down. That's logical, because they suddenly become twice as big. They can purchase together and thus lower prices. Although I don't think they will enter into a price battle with discounters. Ahold Delhaize will mount the pressure on the Belgian competition in two areas. In the first place in buying food products. The smaller suppliers in the Benelux will have a difficult time. The purchased volume will increase sharply, making a price offensive possible. And then there's non-food. If Bol.com is integrated into the 800 Delhaize stores, they'll also attack the Belgian competition in that area. Bol.com will then truly become the e-commerce giant in the Benelux."
Cor Molenaar also expects both retailers to make each other stronger in terms of e-commerce. "Bol.com is market leader in the Netherlands and Belgium, and their position is a lot stronger by combining those activities. E-commerce for food is still in the early stages now. In addition, in terms of fruit and veg the retailer still has an important social function, and the freshness plays a part. But in 2020, the number of single households will increase to 45%. These people are under significant time pressure, and for this group in particular a physical supermarket will become less and less relevant."
Regarding competition, Cor Molenaar does not expect any problems. "The consumer has enough alternatives. You can be market leader, but it's not the case that AH is dominating the market. I don't expect a reaction from other retailers to this." The lesson the fruit and veg sector can learn from the merger, according to the professor, is to work together a lot more. "That could be within the fruit and veg sector, but also beyond the sector. I am a firm believer in platforms. A few years ago, at a bakery congress, I proposed to share a lot more ideas. Now 250 bakers from all over the Netherlands are exchanging information through Facebook. That should happen a lot more on all levels."