DBV Situation Report 2019/20:

Market power of the food trade is truly great

Food retailing in Germany is the largest sales channel for German food manufacturers. It achieved sales -including non-foodstuffs- of €252.7 billion in 2019. This is 2.0% more than in the previous year, according to the current situation report from the DBV. The food sector included in this number rose by 2.1%, to €210.0 billion.

Company concentration is high, with the five largest companies - Edeka, Rewe, Schwarz-Gruppe, Aldi and Metro - accounting for almost 76% of the market. They stand opposite more than 6,100 predominantly small and medium-sized food producers. These unevenly distributed negotiating positions are giving rise to fierce quality and price competition among the food manufacturers and thus to intense competition for the retail companies' list positions.

Concentration of the retail sector continues to increase
By far the largest German retail chain is the Edeka Group with a 24.5% share of sales (2019). This is followed by the Rewe Group with 17.7%, the Schwarz Group (Lidl) with 16.5% and the Aldi Group with 11.7%.

In 2019, German consumers were supplied with fresh food and beverages on a daily basis by 37,400 food retail outlets. Ten years earlier (2009), the corresponding figure was 40,400 stores, the DBV added.

This means that within 10 years, the number of grocery stores has declined by approximately 7%. For 2020, grocers expect a bottom-line sales growth of 2 to 3%. Enormous, Corona-induced sales increases in food retailing are offset by sharp losses in the bulk consumer sector.

Competition between discounters and full-range retailers
In an international comparison, the market share of discounters in Germany remains very high at 44.9%. While full-range retailers such as Edeka and Rewe are increasingly focusing on flexible offers (special offers), service, private labels and aggressive marketing strategies, discounters such as Aldi and Lidl are offering lower prices and putting more branded and fresh products on the shelves. To distinguish themselves in the market, they are increasingly introducing product programs that focus on sustainability aspects.

Convenience with the most product innovations
The food range in Germany comprises more than 170,000 products. Some 40,000 new products are added to the range every year, giving rise to new market segments in the process. Only some 13,000 of these will survive beyond two years; the rest give way to new trends.

Ready-to-eat products, also known as convenience products, are the most important drivers of innovation. According to a trend study by BVE and Innova Market Insights, 83.5% of new products worldwide in 2018 claim this quality feature. The attributes "healthy" (53.6%) and "sustainable consumption" (44.9%) follow in second and third place among the innovation drivers. Today, new products generally combine more than just one of these attributes.

Product innovations also focus on health and sustainability
Ready-made products can relieve the consumer of kitchen work such as cutting, seasoning or heating, or in some cases can be consumed immediately. Finished products differ according to the type of preservation (e.g. freezing, canning or packaging) or also according to the production stage (e.g. ready-to-cook, ready-to-cook or ready-to-eat).

For more information: www.bauernverband.de 

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