PL Magazine May 2022

Private Label Magazine Nutriscore and Nutrinform: the derby of brands still to be played Colruyt, PLs with complete cycle Zucchi: the PL oil that relies on traceability and art of blending 3/2022

M R FO

I R T U N

E NUTRISCOR

SUMMARY - PLM

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Editorial 16 Interview with distribution Are private brands spelling the Colruyt, PLs with complete end of small premium brands? cycle

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Analysis Retail Institute: private labels and challenges for the future

8 Cover Nutriscore and Nutrinform: the derby of brands still to be played

20 First-hand experience 2018-2021: Ukraine and hope for the future 34 Interview with the company Zucchi: the PL oil that relies on traceability and art of blending

PLMagazine Quarterly supplement of Distribuzione Moderna magazine, a media outlet registered with the Court of Milan Registration No. 52 of 30 January 2007 Editor-in-chief Armando Brescia Editorial director Maria Teresa Manuelli

Translation Jcs - Language Services info@jcslanguage.it

38 Markets Private label oil and seasonings improve in quality

Scientific Committee Stefano Ghetti, Managing Partner Expertise on Field/partner IPLC Italy Gianmaria Marzoli, Retail Solutions Vice President IRI Italia Alberto Miraglia, General Manager Retail Institute Italy Paolo Palomba, Managing Partner Expertise on Field/partner IPLC Italy Emanuele Plata, Co-Founder, Past President, Board Advisor PLEF Contributing Authors Federica Bartoli, Stefania Colasuono, Maria Teresa Giannini, Fabio Massi, Malachy O'Connor, Ivan Palchevskyi, Luca Salomone

Creative Director Silvia Ballarin Editor Edizioni DM Srl - Via A. Costa 2 20131 Milano P. Iva 08954140961 Contact Phone 02/20480344 redazionedm@edizionidm.it Advertising Sales office: commerciale@edizionidm.it Tel: 02/20480344

There is no guarantee that we will publish the original versions or any part of submissions (texts, articles, news, images, data, charts, research, etc.) sent by authors outside the Editorial Board. Submissions may, however, be published in a revised form for editorial reasons. It should also be noted that sending a submission constitutes an automatic authorisation by Edizioni DM Srl to publish it free of charge in all its publications.

EDITORIAL - PLM

Are PRIVATE BRANDS spelling the end of small PREMIUM BRANDS? Interesting trends emerge from NielsenIQ's latest analysis of the first four months of 2022. First, the positive trends in the FMCG sector recorded during the two-year full pandemic have been shaken by rising inflation and slowing economic growth due to the current geopolitical scenario. Above all, the combination of these elements is creating an entirely new landscape for the large-scale retail sector in Italy, which will have a profound impact on Italians' buying behaviors and habits and outline new consumption scenarios. Private label trends also highlight these trends. As we had seen in the analysis entrusted to Plef in the January issue of PLM, private brands - born as an emulation of industrial brands - have today totally changed their skin, segmenting themselves and becoming promoters of innovation. But lately we are witnessing one more evolution. Already visible over the past few years and also evidenced by NiensenIQ's unequivocal data: the premium segment of PL is growing more than any other (+9.6% on a total PL average of 2.9%). These numbers are a testament to how private label is increasingly seeking both to satisfy customers and to capture emerging trends. Where customers are looking to PL for the quality and gratification they can no longer discern in industrial brands.

Even to the detriment of both other private supply segments and lesser-known industrial brands, which are in danger of disappearing. So the real question will be how PL will reconcile their convenience nature with an increasingly premium demand. In second place in terms of performance, however, we find first price with +6.7%. Even in private label, therefore, we see the same phenomenon that involves FMCG in general: the progressive polarization of purchases. A phenomenon that occurs not only in Italy, but all over the world.

Two growths at the extremes of the price scale that come at the expense of the belly of the market, where PLs were born. So the chase has begun on the one hand to the top of the range, perhaps absorbing the plurality of small premium brands, and on the other to the discount store, which is then the fastest growing channel after e-commerce.

The challenge will be in being able to find the balance between these two extremes.

Maria Teresa Manuelli Editorial director

PLM - ANALYSIS

RETAIL INSTITUTE:

private label

and challenges for the F U T U R E

In the last 20 years, PL has gone from being a ‘me-too’ product to being a true Brand and has officially taken on a significant and strategic role in paving the way for the band’s ‘capital of trust’. What are the next steps?

P

rivate Label is increasingly relevant in the shopping cart, especially in a period of growing financial difficulties for Italian households as of now. PL also confirms its ability to identify the true needs of consumers in terms of price and quality, providing a more and more comprehensive supply, and satisfying specific consumption targets and occasions. In the last 20 years, PL has gone from being a ‘me-too’ product to being a true Brand and has officially taken on a significant and strategic role in paving the way for the band’s ‘capital of trust’. It has become an invaluable point of reference for the customer in store, thanks to its strategic supervision of all the different supply segments - from Entry Price to Premium - and its concrete solutions to very delicate subjects for consumers, i.e.safety, sustainability, geographical location, health and wellbeing.

But what are the challenges and opportunities for the future development of Private Label?

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ANALYSIS - PLM

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u The growth of Discounters.

Discounters are the main sellers of Private Label and, although the brand industry’s labels are gaining an increasingly important role in their assortment, the model is still dominated by private labels. The market share of the discount channel has now exceeded 20% in value (and even more in volume and will continue to grow). Discounters’ PL products are an important benchmark of quality and price for ‘traditional’ retailers, as much as leading industrial brands (especially in some categories). In light of this, we’re experiencing a constant reduction of the price gap between Private labels of discount channels and of supermarkets, and this is confirmed by the research "Mind the Gap – Retailers across Europe continue to close the price gap with Discounters", carried out by IPLC in Europe.

A number of retailers, in addition to reducing this price difference, are working on the structure and segmentation of the supply and in this context the fierce competition between channels will contribute to the overall growth of Private Label sales.

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PLM - ANALYSIS

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u E-commerce: risks and opportunities.

The development of online sales and, in general, of the omnichannel approach may allow PL to strengthen its role as a lever of loyalty for the brand. Today, many European retailers have already recorded a higher market share of PL in e-commerce than in physical stores. Among all the possible omnichannel activities, we recommend Tesco’s ‘5 easy family dinners for £25’: an offer of 5 dinners for 4 people at £25 including the description of the recipes and the possibility of adding to the order - directly in the last page - a list of the necessary ingredients, all exclusively Tesco PL products, of course. A good omnichannel strategy involving Private Label can certainly help contrast Amazon's growing push for more and more physical stores and branded product launch in key categories, leveraging its data ecosystem and using automated replenishment to build customer loyalty.

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ANALYSIS - PLM

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u Community and local economy.

Consumers ask companies for more transparency. They want to know who produces the PL and how. They want to feel as if they were helping their community by consuming local products. Retailers have to show how they’ve contributed to enrich the community and the local economy in a significant way.

So, customers become ‘ambassadors’ of those products and brands, which not only bring personal and functional benefits, but also collective ones. Origin, geographical location and transparency are increasingly important drivers of preference in the process of purchasing branded products and therefore of loyalty to the brand. The French retailer E.Leclerc, in 2022, launched the ‘Soutenons nos Agriculteurs’ (Marque Repère) Private Label, which developed a range of products that support French agriculture, based on 3 key attributes: (a) 100% made in France; (b) 3-year partnership minimum; (c) fair pay. Furthermore, retailers can use technologies - such as the Blockchain - to increase product traceability and consolidate the customer trust.

u Good diet.

A good and healthy diet should be affordable to everyone and should take into account the increasing ‘food diversity’. The Mediterranean diet is still the culturally predominant reference point, but there are also different value-related systems and consumption preferences- for example intolerances, free-from, rich in, bio, vegan and plant-based, gourmet, protein. Private Labels represent this ‘diversity’ through their range of products, and can also help clients adopt a correct food approach through adequate nutritional information, reduction of potentially ‘dangerous’ ingredients (i.e. salt, fats, additives, sugars, and more), and healthy and balanced recipes. A full commitment to good nutrition can contribute to the consumers’ wellbeing in a more concrete and incisive way than simply adding the Nutriscore value on products. l

Alberto Miraglia General Manager Retail Institute Italy 7

PLM - COVER

Nutriscore and Nutrinform: the derby of brands

still to be

played Europe will have to complete the impact analysis on the systems adopted by countries, but any decision could significantly affect local products and the private labels that have made them strong.

A

fter October 31, 2017, when the French Ministry of Health recognized the Nutriscore logo by a decree, in the same month in 2020 the Italian Ministry of Agriculture voluntarily introduced the Nutrinform Battery. In four and a half years, frontof-pack nutrition labeling or ‘Fop Labels’ in the European Union has turned into what seems just another tug-of-war between Paris and Rome. However, looking deeper, an intertwining of science, political will and economics in the supply chain emerges.

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COVER - PLM

u Teamwork

Both Nutriscore and Nutrinform are the result of preparatory studies by teams of experts. The French label has a clearly identifiable ‘father’ in Serge Hercberg, epidemiologist and nutritionist at the Sorbonne and member of the French High Council for Public Health since 2007, who worked with his team on ‘NutriNet Santé’. The Italian label, on the other hand, is the result of the work of Iss and Crea, with the support of trade associations and of 4 ministries (Agricultural Policies, Health, Foreign Affairs and Economic Development).

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PLM - COVER

PARIS OR ROME (OR STOCKHOLM): THE DEBATE IN EUROPEAN POLITICS

According to Brussels’ version, making food packaging more intelligible and using it in all member countries aims to combat obesity, overweight, as well as, to prevent cancer, in the wake of the UN SDGs (2015) and FAO’s indications (2019 and 2021). A path undertaken with the Regulation 2011/1169 and continued with the ‘Farm to fork’ strategy. "This debate on labels has something in common with the debate that raged back in the early 2000s, when the amount of cocoa and chocolate had to be established erga omnes - recalls Paolo De Castro, member of the Committees on Agriculture (Comm. ‘Agri’, ed.), Budget, Foreign Trade at the European Parliament -. Let's face it: for now there is no European law initiative on this subject, we’re at an earlier stage.

There are only national or macro-regional proposals, such as Nutriscore and Nutrinform, or even the lesser-known Scandinavian Keyhole, which are in the running for becoming universal. Europe will have to complete the impact analysis on the systems adopted by countries. However, it is not out of the question that, in the end, it may acknowledge that there is no need for a new single and compulsory system, which would actually lead to greater confusion." Despite the European Commission’s talk of ‘simplification’, in fact, no Fop label model aims to replace the nutritional table, but rather to complement it. "The European Union is vast and includes different climates, specialties and food cultures. Stigmatizing the impact of specific substances on the consumer, such as fats and sugars, would be counterproductive, if not arduous. - affirms De Castro- There’s no criticism of Made in Italy itself, as some want us to believe. It’s more a matter of divergence between schools of thought: there are those- such as the experts of the Eat-Lancet Commission- who believe that the consumer is not able to choose and their purchases should be guided, for both environmental and health reasons. We are light-years away from this idea.” The ministerial decree on Nutrinform, however, contains an opting out clause for packages smaller than 25 cm2 and for PDO, PGI and TSG products. This has led to considerable criticism. "An exclusion at the European level of protected foods alone, isn't a good idea, and would prejudice the market. In my opinion, honey, cheese, cured meats, oil and fresh-squeezed juices, all deserve to be exempt from the traffic light label, which, if anything, could be applied only to foods that undergo more than 3 processing steps. This would be the case of, for example, snacks, chocolate bars, and it would trigger a ‘healthy’ competition among hyper-processed products.

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COVER - PLM

As it is now, the label may be misinterpreted, and it is no coincidence that in Italy 17 in 20 consumer associations are against it. In addition, if it were extended to the EU, large food companies would carry out color-driven ‘reputational operations’, by using promotional levers - as it’s happening in Belgium, France, Holland and Germany. This would further complicate things for brands, whose added value lies in the supply chain and in their direct contact with local producers." One possibility for large companies to improve the ‘rating’ of the traffic light label could be to change some ingredients, their dosage or change some steps, which is something forbidden to foods that have recipe and processing established by specific Disciplinary Regulations. This is the case of Parmigiano Reggiano, Prosciutto San Daniele or Pasta di Gragnano, but also of the French Roquefort or the Spanish Jamón Serrano. According to Oxfam, already in 2013 the 500 most famous food brands in the world were concentrated in 55 groups headed by only 10 major brands. Of these, 6 are on the Eu Transparency register. The question arises whether a single label represents a lower cost and concern compared to 27 all different.

u A road paved with best intentions

Speaking of food education, it should be remembered that there is already the so-called ‘School Fruit and Milk Program’: presented on August 1, 2017, it brought together two previous projects, ‘Fruit and Vegetables for Schools’ and ‘Milk for Schools’. Under EU Regulation 2017/39, all states are required to implement the program by investing a 10-15% share of their annual budget, that is 220 million euros (270 before Brexit). Italy is due as much as 26 million, 11.8% of the total.

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PLM - COVER

u Traffic light system vs battery system, the differences

Nutriscore and Nutrinform are conceptually profoundly different. Nutriscore gives an overall and decontextualized judgment to each food and does so by assigning it a color from green to red and a corresponding letter from A to E, based on calculations made on a fixed amount of 100 grams. Nutrinform simply displays the calories and nutrients contained in the product on the basis of the RDA (recommended daily allowance) and in relation to the daily food intake.

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COVER - PLM

PRODUCERS, PROTECTION CONSORTIA AND BRANDS FOR AND AGAINST

In Italy, trade associations, such as Assica (which has published a detailed report about the debate on labels), producers and protection consortia, from North to South are on the warpath. "Cold cuts belong to the Mediterranean Diet and for good reason. With their B12 vitamins," Doriana Sena, Quality and HR Director of Parmacotto Group, recalled at Marca 2022. "Of course, they must be consumed in the right quantities and any judgment disregarding this aspect, such as in the case of Nutriscore, would demonize the entire category.” From Andria, appealing to the EU Regulation 1151/2012, in November 2021, the Consortium for the protection of burrata Igp, Consorzio di tutela della burrata Igp, labeled the traffic light as "a measure that devalues the image of the product.""The Consortium - clarifies the Director Francesco Mennea - took all the necessary actions to counter such practices, including the refusal to change the Igp label (by proposing the traffic light label) following a buyer's request". Among distributors, ‘hawks’ and ‘doves’ stand out.

Coop Italia and Gruppo D.it are resolute "with the French label, Italian products are penalized as they are not contextualized to a realistic RDA. In addition, we have more than 1,900 branded references, each of which has a color code. Introducing other colors would mean reprinting all the graphics - specified Roberto Romboli, PL Director, at Marca 2022. The costs range from 200-500 euros to 4-5,000 euros per reference, depending on whether a label is produced to be superimposed or a can is redesigned by redoing the entire tinplate." Softer is the position of Carrefour, where they say they are in favor of the exclusion of cheese, cold cuts and oil from Fop labels. "It could be a solution, given the need common to France, Italy and Spain.

- explained at Marca 2022 Gilles Ballot, Marketing, Merchandise and E-commerce Director of the Billancourt-based brand - Packs between France and Italy differ, especially when it comes to products from America, and this is a further source of complication. Of course, the customer wants clarity and so do we, whether it's called Nutriscore or not. In the meantime, we can guarantee that we will always respect the Law." In late 2021, however, Carrefour's Italian division, along with other brands and food companies, was subject to one of the five investigations on the use of Nutriscore in Italy carried out by AGCM,The Italian Competition Authority.

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PLM - COVER

STUDIES AND SCIENTIFIC OPINIONS

"Nutriform and Nutriscore have been exalted as 'the remedy' but their purpose is to clarify some aspects of proper nutrition." - explains Vitaliano Fiorillo, Director of AgriLab at Sda Bocconi in Milan. Most scholars agree that Nutriscore’s interpretation is too superficial. On the other hand, the graphics of the Nutriform Battery, validated by the scientific community, are not very intuitive for the average consumer, whose knowledge on the topic isn’t enough to fully understand it. Hopefully, there will be a solution with no colors and letters together with a serious dietary education from childhood." After all, if we look at numbers and projections, the situation isn’t the best.

"In 2021 in the EU 60% of the population will be obese or overweight. - claims Michele Carruba, Professor at the University of Milan and founder of the Csro - Compared to the rest of Europe, on average, Italy outranks the other countries when it comes to adults. However, the same can’t be said for the sum of obesity and overweight in childhood, which is 43% in the 6-9 years. Notwithstanding these data, nutrition is undoubtedly a complex matter, there are not only products with the ‘traffic light’, and collateral factors, such as physical activity, are of great importance." The professor is the first signatory of an article, published on October 19, 2021 on the scientific website ‘Springer’. Contrasting Nutriscore and Nutrinform, he affirms "The British Mtl (Multiple TrafficLight Label) was already unconvincing for two reasons: it divided foods into ‘good’ and ‘bad’, which is unreal, and it had no significant impact on obesity, despite being taken into consideration by far more people. The French Nutriscore’s harsh judgment, then, may not help some categories of consumers, such as young people in their developmental age, athletes or cardiovascular patients. In fact, for these people seeing yellow, red or green on a package makes little difference. Another issue concerning this label is its algorithm. Speaking of ‘efficiency’, its creators have tried to convince the entire European scientific community ."As reported in the same article on ‘Springer’, the score the color and the letter displayed on each label are obtained from is always unbalanced, since ‘harmful elements’ such as salt, saturated fat and sugar are worth 40 points, while ‘healthy elements’ such as fiber, vitamins and proteins are worth 15.

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COVER - PLM

.

A MAT TER OF MORAL SUASION

"A person takes on average 2-3 seconds to decide what to put in the shopping cart. This explains why European institutions aim to provide equally immediate indications - says Paolo Palomba, partner of IPLC Italy - Italy's proposal came out late, losing its three years of advantage, which could have been useful to conduct a moral suasion on the rest of Europe, while the French were applying their system.

In addition, Italian companies oppose any indicators penalizing them in the eyes of the public. Therefore, transparency and courage on the part of companies, as well as a simpler logo should come into play. We Italians are still very convoluted in our communication, especially compared to Central Europe, where messages are perhaps too simplistic."

In fact, 27% of Eu citizens live in that area, something that makes it pretty relevant in the community when it comes to decision-making. There, obesity and overweight are closely linked to the abuse of canned products, a problem much more evident then in taly, Greece, Cyprus, Portugal and Croatia. Considered as the ‘cradles’ of the Mediterranean Diet, these five Eu countries are also strong on fresh and semi-processed product consumption, the result of historical production, something imbued with artisan reminiscence.l

Maria Teresa Giannini, Professional Journalist specialized in Large-scale Distribution.

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PLM - INTERVIEW …. FROM THE DISTRIBUTION’S POINT OF VIEW

THERE'S STEFAN GOETHAERT, COLRUYT GROUP FINE FOOD AND PL MANAGING DIRECTOR, TO TALK WITH PL MAGAZINE.

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INTERVIEW …. FROM THE DISTRIBUTION’S POINT OF VIEW - PLM

Colruyt, PLs with

complete cycle The giant Belgian company goes beyond the logic of supply. Despite its industrial partners, at the heart of PL supply is production, Colruyt group Fine good.

Founded in 1950, the group is a market leader in Belgium. On 31 March 2021, the total distribution network , including sales points in France and Luxembourg, accounted for 720 independent and 591 affiliated supermarkets. Its consolidated turnover reached 9.9 billion euros. Pls are very relevant. In fact, according to the Plma’s Yearbook, in 2021 Pls gained a 43.4% share on Large scale distribution sales. We discussed it with Stefan Goethaert, Colruyt group Fine food and PL Managing Director.

What’s the role of your products?

Their role is crucial. Even though the share value is confidential, I can say that, for each category, we really want to offer three levels of supply: national brands, brands for families and Everyday. Sold at the best possible price, national brands are usually associated with continuous innovation, although PLs are now highly innovative. Our brands for families combine high quality and affordability; this would be the case of the umbrella brand Boni and of our caffè Graindor. Then, there’s Everyday, our first price category. It includes good quality food commodities, which are the most cost-efficient in their category.

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PLM - INTERVIEW …. FROM THE DISTRIBUTION’S POINT OF VIEW

Turnover (million euros)

Belgian market share on the turnover

9.931

92,4%

Gla area of direct sales points (mq)

861.000

COLRUYT GROUP'S Date of birth

Total sales points (direct or associated)

1.311

Investments (million euros)

1950

469

Employees

32.945

Has the PL taken off? If so, how?

Again, data, in terms of number of references, are confidential. However, our assortment is really wide. Our pillars are Boni selection, indeed - with our sub-brands Boni Bio, Boni Eco, Boni No Gluten, Boni Veggie and Boni Kids -, Everyday and Graindor, whose coffee toasting is made in our laboratories in Belgium. We’re also present with Kangouroo’s school items.

Definitely a wide basket. Do you think this may be misleading?

Absolutely not, because our customers are great at choosing according to their needs.

So, the cart is always varied and includes, as usual in large-scale distribution, both big industrial brands and high-range PL products, as well as a set of money-saving goods. After all, at least for Colruyt, a best-price promise provides the Idm (branded industry, ed.) with an important place in terms of demand and sales.

What are the PL leading divisions?

Colruyt is not only a distributor, but also a producer. So, it’s no surprise that butchery and cold cuts are so relevant, considering, fine food meat, our business unit of meat processing. However, I’d say frozen products are runners-up.

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Source: company data

Fiscal year 20/21, closed on 31 March 2021

INTERVIEW …. FROM THE DISTRIBUTION’S POINT OF VIEW - PLM

Why would a distributor be also a producer?

Because it is one of our ways of interpreting sustainability. By producing firsthand, we have full control over costs, quality, and over the whole value chain. Moreover, we can easily adapt to the changing needs of our consumers. Speaking of important needs, I mean health and wellbeing, social and environmental responsibility, and animal protection. Today, these are the trends, but these trends are never steady, although they all tend to intensify and refine.

Through our Colruyt Group Fine Food division, we can guarantee flexibility, thanks to seven business units: Fine food bread, Fine food wine, Fine food cheese, Fine food meat, Fine food spreads, Fine food coffee and Fine food smart crops.

We’ve talked about sustainability. What can PLs do?

Sustainability has always been extremely important, in absolute terms and in particular today, as people are increasingly aware of the environmental emergency. For our Boni brand, Csr is a true mission. These products aim at encouraging the most sustainable choices and the most responsible consumption. So, in 2021, we also added Eco-score (a label that shows the environmental impact of a product ed.). And, plus, there’s Boni eco, a non-food range of products, for cleaning and home care, which meets the directions of the European Ecolabel.

Local origins are important too. And so, we’ve developed, for Boni Bio, a soy-based vegetable hamburger, with soy grown in Belgium. More generally, our group implemented its own strategy of visual simplification, ‘Pas à pas’. In a nutshell, through a specific on pack iconographic repertoire, customers are invited to consume responsibly respecting health, animal wellbeing and the environment.

Any plans for the future?

I’ll give you only one example. We’re going to create the first ‘farm of the sea’, in the North Sea, for mollusk farming of Belgian origins. ‘Farm to sea’ will be under the Boni brand by 2022 fall, first temporarily, in limited quantities and then, permanently, in 2023.

Let’s wrap it all up with the duration of your contracts with your partners...

It depends on the products, but, mostly, our contracts are annual, even though our goal would be to establish long-lasting relationships with our suppliers.l

Luca Salomone Professional Journalist specialized in Consumer Goods, Distribution, Shopping Centres and Finance.

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PLM - FIRST-HAND EXPERIENCE

2018-2021:

UKRAINE and HOPE for the future in Europe Playing a social role in the middle of a sudden and devastating war. What does it mean for a retail food company?

I

n the wake of the pandemic, over the past two years, retailers and FMCG manufacturers around the world had to quickly learn how to best continue to play their role as distributors of basic goods. However, due to an invasion, not everyone had to maintain their essential role for their citizens...

IPLC - The Retailer Brand Specialists, has been working with retailers, manufacturers and other supply chain companies on the development of Private Label products under the Retailer’s Brand for almost twenty years now. This was thanks to its International Partners with significant experience in retail and largescale manufacturing, in Ireland, UK, Netherlands, Germany, Italy, France, Belgium, Spain and Portugal. Now a global phenomenon, in 2021 Private Label recorded even a double digit-growth in a couple of continents. As a consequence, IPLC is also increasingly global and has recently collaborated with several retailers, including in emerging countries, such as the United Arab Emirates, Kosovo, Azerbaijan and Ukraine.

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FIRST-HAND EXPERIENCE

- PLM

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HAI MAI VIAGGIATO CON IL PALATO?

Con Piaceri Italiani puoi farlo ogni giorno, senza muoverti da tavola.

Una grande selezione. Una grande attenzione ad ogni passaggio della filiera. Un grande rispetto delle tradizioni culinarie più autentiche. Un grande impegno per offrirti sempre il meglio. Dalla pasta alla mozzarella di bufala DOP, dalla marmellata al caffè, dalla salsa di pomodoro ai biscotti fatti come una volta, oggi puoi ritrovare il piacere di scoprire tutte le prelibatezze del Bel Paese stando seduto a tavola.

LA TRADIZIONE HA SEMPRE RAGIONE.

FIRST-HAND EXPERIENCE

- PLM

As for Ukraine, our colleague Malachy O'Connor has worked more directly with this country's leading retailers in recent years. O’Connor had the opportunity to learn from our Ukrainian colleagues what it is like to continue to do your essential work in a sudden and devastating scenario.

The result was a testimony that we believe is worth sharing with the entire business community, including in Italy.

«I have my own experiences of conflict, though nothing on the scale of what we’re now seeing in Ukraine. I’ve heard plenty of warning sirens and actual explosions in Northern Ireland. The rattle of gunfire is startling but the bombs are especially unforgettable, the way both the air and earth shake, a violent separation of normality and obscenity. It makes an indelible imprint on your psyche. But the troubles are history now, war in Europe was history.

In 2018 I made my first trip to Kyiv in Ukraine to speak at the Trademaster Private Label conference. I was struck by the warmth of the people, their pride in their nation and their determination to learn from outsiders. Gradually, I built up my Ukrainian network, speaking at Kyiv Logistics School educational events and investing in learning some Russian language, with twice-weekly lessons from my tutor Katya in Kyiv. Then in 2021 my IPLC colleagues and I commenced a

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PLM - THE PRIVATE LABEL SCENARIO

FIRST-HAND EXPERIENCE

- PLM

private label strategy project with СІЛЬПО (pronounced Silpo), Ukraine’s biggest chain of large supermarkets and part of the Fozzy Group. The Silpo team had seen tough times.

In 2014, Russian sponsored separatists seized the Donbass region and Russian regulars invaded the Crimean peninsula. Silpo lost 12 stores and the Ukrainian Hrivnia currency fell to a third of its previous value. This put massive pressure on company finances but their resilience shone through and they survived.

I

visited Kyiv again in September 2021 and met the entire Silpo management team to do a 360o engagement. Kyiv had changed in the intervening three years. It was still as proud, youthful and vibrant as ever. But serious investment had been made in infrastructure. The road to Boryspil Airport was smooth and new stores and retail centres were springing up alongside the old apartments. Going for a morning run with my IPLC colleague Remy, up Taras Schevchenko Boulevard and down through the park, past the University Metro Station, we breathed in a city filled with hope. We visited lots of stores and the huge Silpo depot in Brovary that services the Kyiv market. Here, a very proud young project manager demonstrated the newly commissioned robotic picking trial. The stores were amazing. Literally the best supermarkets I have ever experienced. Of the 330 Silpo stores, about 100 are stand-alone concept stores. We visited the Asian themed store in the Ultramarine Centre and the ‘Under the Sea’ store at River Mall in Kyiv. We also visited older stores like the Silpo on Lisoviy Avenue in the eastern suburbs but the common theme was the sense of hospitality and service. Silpo don’t have customers or shoppers. They have ‘guests’ and they want to make every guest feel special. .

THE UNTHINKABLE Despite the tension and predictions of war in early 2022 it was very much business as usual for Silpo. There were ambitious store opening plans, new quick-commerce projects. The logistics transformation was well under way and the company had commissioned its own craft brewery. Week commencing 21st February started like any other week and the Silpo social media team were busy making their usual facebook posts: 20% off Marco Cervetti Wines, a funny video encouraging plastic packaging reduction and the health benefits of Kosher Herbal Teas.

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FIRST-HAND EXPERIENCE

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But on 24th February the Russian Federation launched a full-scale invasion of Ukraine. My tutor Katya and many of the Silpo team were awoken at 4am by the sound of missile strikes on military infrastructure and commercial airports. I learned of the war when we landed in Turkey on our way back from our Azerbaijan project. All flights into Ukraine were cancelled. Boryspil airport was under attack.

Just a few weeks earlier, when making my travel plans, I’d had the option to fly back through Kyiv but Biden’s warnings of an impending invasion were ringing in my ears and I had opted for a return through Istanbul.

B

y the end of 24th February there was vicious fighting in multiple locations as Russian Forces made a dash for Kyiv, Kharkiv, Mariupol, Melitopol, the key cities and airports. In the midst of this war, a shocked world looked on, but Ukrainians still needed to eat. And so the resilience that had been forged in 2014 kicked in again. Silpo and the other grocery retailers quickly assessed the situation and made their plans to keep the nation fed.

ALL HANDS ON-DECK Silpo is part of the Fozzy Group where there are 68,000 employees. The Silpo chain of supermarkets sits alongside the Fozzy Group’s other retail businesses. There are 280 ‘Fora’ proximity convenience stores, 90 ‘Thrash’ discounter stores, 9 Fozzy Cash & Carry Hypermarkets, 88 pharmacy stores and Ukraine’s most extensive postal, courier and distribution network. There are company-owned food packing and production facilities too.

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PLM - FIRST-HAND EXPERIENCE

The two absolute priorities in the early days of the war were to keep Ukraine fed whilst keeping staff as safe as possible. Non-essential projects were cancelled and all available staff were redeployed as store assistants, warehouse pickers and production operatives. New distribution routes were needed due to the practicalities of avoiding active combat zones or bomb-cratered roads. Delivery planning was complicated further by the mass exodus of civilians from many cities. Getting into Kyiv’s western suburbs from Brovary was hard but getting back out to re-load was another story altogether. The business adapted, but it wasn’t enough. Silpo had lost many skilled workers as they were called up to the territorial units defending the cities. The call went out for volunteers and the people responded valiantly. There was no shortage of food at this point but they were still desperately short of HGV drivers to get it to where it was needed. Silpo staff did their best, sleeping in city underground stations and suburban basements and, despite their exhaustion and the threat of war, they brought an A-game to their guests every day.

A

round this time a voice of comfort and reassurance was emerging. The Silpo facebook page had switched from herbal teas and 20% off promotions to messages of comradeship, humanity, integrity and support. There were daily updates on opening hours, store closures, the impact of combat and curfews. The Silpo facebook page became a reassuring voice, a virtual hug and a source of inspiration for its ‘guests’.

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FIRST-HAND EXPERIENCE

- PLM

24łh February

Dear friends, together we have lived 16 hours of war - thank you wonderful guests for being with us today. Tonight and tomorrow we will continue to make sure you have the necessary and delicious products on your tables. Baguettes are ripening in the bakeries - we've reduced the assortment so that we can bake even more. We've started packing cereals that will arrive in stores tomorrow so you can replenish your supplies. We will pass on your thanks to our teams in the field who, despite everything, went to work in the stores, production units, distribution centres and delivery routes. We have a long night ahead. We can only hope that it is peaceful. But we are ready to meet new challenges side-by-side with all Ukrainians.

24łh February

Guests, today was not easy. But you helped us incredibly when you responded to volunteer at Silpo.

Thank you so much for this! We know that not all stores had enough stock. Hopefully we can find more trucks to deliver overnight tomorrow. There is plenty of stock in the warehouses but the traffic jams are horrible. Did you notice that Silpo was open and closed during the day? We’re responding to the situation - and sometimes in minutes our supermarket is converted to an air raid shelter. But we respond quickly to all the challenges and changes - and still continue to bake, cook, pack. We all have a new routine. And we share ours with you openly. Tell us about your new routine? How are you overcoming the daily challenges?

6łh March

International companies that continue to work in the Russian Federation. Wake up! Re-read carefully the values of your company and find where it is written about cowardice, spinelessness and greed. Right now people are dying in Ukraine: innocent children, men and women of all ages and professions – the same people that were previously your target markets and customer segments. We see incredible examples of Apple, Ikea, Google, Microsoft, Nike, IBM. Ask yourself: is your company on this list? Will the next generations forgive your small-mindedness and indecision? We have reached out to fellow retailers in other countries for their support 29

PLM - FIRST-HAND EXPERIENCE

and you will feel it, you will feel public opinion and you will feel your own conscience. Because you personally know exactly how to do the right thing. To honestly look into your children's eyes, who, unlike ours, do not hide in basements and bombardments, do not live without lights in hospitals, do not lose their parents every minute while you delay. You may be forced to adopt this decision anyway.

Maybe in a week, maybe in two, but the stain on your brand's reputation will stay for decades. Do it now - refuse any kind of cooperation with Russia, which commits the genocide of Ukrainians. If your leadership or shareholders have no conscience, state your personal position. Prove that you have a conscience.

11łh March

The rhythm of the war. With the beats switching from silence to storm, under explosions and under new sounds we go to this rhythm. We mix tons of bread dough every day and bake fresh every morning. We pack cereals, cut cheese and even bake buns and donuts every day. And the cakes. While real birthdays and anniversary celebrations are delayed until "post-victory"... we think these special days should still be a little bit special, in spite of the war. As another resistance to the invaders. For we are not ready to give up our lives and be subdued by fear. We work, we act, we love. Because Ukraine is fighting for its freedom with every cell, every breath. And we gratefully embrace everyone with whom we are together in the rhythm of this struggle.

23łh March

Today it has been a month as we all fight for our peaceful life, for our independence.

• A month of good fighting against evil and showing the world what real superheroes are.

• A month when you took care of our defenders, transferring loyalty points to the Come Back Alive charity fund.

• A month as volunteers working like wizards and every day helping to make victory closer.

• A month as our supervisors leave their fear at home and head to their workplace so you can buy everything you need.

• A month as our brave drivers search and invent new routes to deliver products to you intact and unharmed.

• A month as we try to fill the shelves with everything you need..

This month, all Ukraine has learned what war is and learned how unbreakable we are. We have learned how it hurts us to review the news, but every news report gives us a push to new achievements. This month, like all the previous years of Silpo’s existence, we thank you for being with us! Because you are our support, our reason to push away the tears and overcome for you. Let's cry later on. Good luck. The happiness of victory.

Thank you, our independent guests! In our independent Ukraine.

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«

FIRST-HAND EXPERIENCE

- PLM

So, into the second month of war, the dynamics are changing and Silpo are adapting further too. Over 1,300 missiles have been fired into Ukraine by Russian forces since the invasion started. Each one of these prompts an air raid warning siren where Silpo staff must react by closing the stores and moving quickly to the nearest shelter. The Kharkiv depot is closed since it cannot be re-supplied. The depot I visited in Brovary was destroyed in a Russian missile attack on March 12th. One person was killed, another injured and a huge amount of essential food supplies were destroyed. The depot operation was moved to another location which cannot be revealed for fear that Russia will target it for a second time.

Photo Credit: Alex Zakletsky

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PLM - FIRST-HAND EXPERIENCE

S

ome stores have been looted by Russian troops, 68 stores were closed as of early April with 23 destroyed, yet 80% of the network remains open and trading. Silpo have created a new depot in Poland to receive donations of humanitarian aid. This is then shipped into Ukraine and distributed to the towns struggling under the weight of internally displaced people. European countries, especially Poland, have welcomed almost four million Ukrainian refugees but war-torn Ukraine is dealing with over six million internally displaced people. Some towns and regions are taking the brunt of this humanitarian disaster so Silpo have created a special zone in 145 of its stores where food donations from Europe are given away to guests for free. So far, over 1,000 pallets of donated goods have been routed through the Silpo humanitarian depot in Poland.

Even in occupied Kherson, one Silpo store has stayed open and is baking bread daily. But it's reserves of flour and other ingredients are dwindling quickly. There are no stores open in Mariupol where some residents have been able to escape but the Russian encirclement has prevented any supplies going in. Apart from the merciless bombardment, death from starvation and thirst is a real and immediate problem for the +100,000 residents still trapped there.

But overall, morale remains high. My contact Ivan in the Silpo press-room tells me that most Ukrainians remain absolutely convinced of their eventual victory. And when I tell him that many people outside Ukraine agree with his assessment, he smiles for the first time in our hour-long conversation. But nothing is certain and unless there is a breakthrough in the ongoing peace talks, there could be a long and hard road ahead for Ukraine, for Silpo, its 68,000 employees and their millions of ‘guests’.

1 32

When I ask Ivan what is needed he is clear and unequivocal about the priorities: “We urgently need more humanitarian aid. There is a massive need for shelf-stable foods, personal hygiene and medical supplies. If you are a grocery retailer or supplier, we need your ongoing help and you can route it through our Poland-based aid depot – you can find details at https://helpukraine.center/. We will make sure that it goes where it is needed. Alternatively, you can work with organisations like Dopomoga Razom who have created a coordination platform to move donated goods through Europe and into Ukraine https://razom-ua.com/en-gb/”

FIRST-HAND EXPERIENCE

2 3

- PLM

“We badly need trucks, trailers and fuel. We have food in our depots but we are critically short of the trucks needed to move it around the country. We need 10 x 5 Ton Trucks, 30 x 10 Ton and 40 x 20Ton Trucks.

And every time that Russia targets a fuel depot they make it harder for us to transport food. Donations from European supermarkets, suppliers, automotive and logistics companies could make a massive difference in this area. We have even asked Elon Musk to help by giving us his Tesla Semi electric trucks” “We need food suppliers that can deliver direct to our stores. Our buyers can be contacted through the special platform https://produkraine.org/en/. The platform is also open for foreign manufacturers and suppliers who can place an offer of their products or respond to existing requests and agree on a contract. Offers can be placed on any consumer goods but the priorities are eggs, dairy, meat, fish, beverages, baby & childcare, and household goods”.

I

finished the call by asking Ivan what he felt we could do to help the four million plus Ukrainian refugees feel more at home after arriving in our countries.

“You will never make them feel at home because Ukraine is their home. We are grateful for your help but they have had a tough and traumatic journey.

Reach out to them, show them that you care and maybe invite them around for dinner. They cannot be our guests at this difficult time, maybe they can be your yours. Hopefully this terrible war will end soon and they can return to help us rebuild. But in the meantime please take care of our guests“

Malachy O'Connor Partner at IPLC (International Private Label Consult) Thanks to: Ivan Palchevskyi, Head of Press Office, Fozzy Group.

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PLM - FROM THE POINT OF VIEW OF THE INDUSTRY

IT’S NOW DIEGO GHISONI, AT OLEIFICIO ZUCCHI TRADE DIRECTOR, TO TAKE STOCK OF THE SITUATION WITH PL MAGAZINE.

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FROM THE POINT OF VIEW OF THE INDUSTRY - PLM

Zucchi: the PL oil that relies

on traceability and art of blending Founded in 1810, based in Cremona, Zucchi is among the most important oil producers at the international level. It produces and distributes oils from its own-brand olives and seeds, for PL and the food industry. With 135 employees, it boasts a turnover of 265 million euros.

by Maria Teresa Giannini

Originally an artisanal business project dedicated to seed-oil extraction for food consumption by Zucchi’s family, over the years, the company has become a key industrial and trade business in oil production. In fact, they supply the main national and international large-scale distribution chains. We talked about it with Diego Ghisoni, trade director at Oleificio Zucchi.

What’s the importance of PL production and how significant was it on the 2021 total production?

PL accounts for almost 50% of our turnover of the consumer division of Oleificio Zucchi. As in other sectors, PLs are growing in the oil industry, and tend to dominate high quality added-value premium segments, aiming at innovative elements, such as supply chain traceability.

What are the strength points of your production?

For more than 70 years, we have supported distributors with an all-round service. Also due to important investments on plants, our 11 production lines have a productive capacity of 1.5 million liters of packaged oil per day. We have a refinery for seed oils with 500 refined tons per day and about 6 thousands tons of stocking capacity for extra virgin olive oil in ‘Cantina dell’Olio’, constantly kept at 16° degrees.

35

PLM - FROM THE POINT OF VIEW OF THE INDUSTRY

Oleificio Zucchi

Foundation year

1810

Employees

150

Turnover:

250

million euro (estimated in 2021)

PL accounts for almost 50% of the turnover of the consumer division

Product safety and quality, of both own brands and PLs, are guaranteed by the accurate selection of raw materials and analysis made during the multiple steps of the process. In fact, every year, almost 37 thousand lab analyses are carried out, both during the process and on finished products. In addition to that, further assessment is given by the oil testing, taking place in a qualified Panel Room, officially approved for this use.

What does producing oil really mean in Italy today? Despite being the first Country for biodiversity of cultivar olive-growing (that is 538) in fact, Italy has to face the fierce competition of Spain and Tunisia.

Our country has a demand of about one million tons of olive oil, if we consider the domestic consumption - about 500-550 thousands tons - plus exports.

Local production (estimated at 350-400 thousand tons in a good year, such as in the 2019-20 vintage) satisfies these needs only partially, thus making the use of foreign oils inevitable. Italian companies know how to select the best quality in global production, by harmonizing perfumes and tastes of different

36

INTERVISTA...

DALLA PARTE DELLA PLM FROM THE POINT OF VIEW OFDISTRIBUZIONE THE INDUSTRY -- PLM

cultivars, to obtain a superior product different from the initial ‘ingredients’. This is the art of blending: a fine ability that Italy has perfected for over 100 years, and something that Oleificio Zucchi first chose to enhance, thanks to its R&D laband its Blendmaster in-house team.

What’s the ‘Traceability Project’? Are you planning on other projects next year, especially on the supply chain?

Transparency has always been one of our hallmarks. We provide PLs with a product range tracked from field to fork. This provides for extra virgin olive oil, both of 100% Italian supply chain and 100% Italian seed oil. The origin of raw materials can be tracked through the QR code and the lot number on their packaging.

Have you put into place sustainable initiatives in the last five years?

Sustainability is one of the key values of our company, even before it became a worldwide trend. Sustainability is to be intended as something well-rounded, definitely not limited to the environment alone, but also as a social, economic and nutritional commitment. In 2017 the company created the first sustainability certificate for extra virgin olive oil. As for the packaging, being the producers of Pet bottles is a great advantage that means we can, for example, use recycled Pet in bottle composition generally intended for seed oils, or make lighter containers with less plastic. Another innovation of Zucchi’s extra virgin olive oil, but also of PL products, is the grass paper label. Thanks to the high percentage of grass in its mixture, we use less cellulose and reduce the impact on trees.

As regards the glass packaging, only bottles with bottles with a guaranteed minimum percentage of 70% recycled dark glass are employed, to reduce the use of natural raw materials (including quarry sand extraction) and to increase energy savings at all stages of glass production.l

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PLM - MARKETS

Private label oil

and seasonings improve

in quality

Over the years, large-scale distribution brands have been increasing their supply of own-brand seasonings, focusing on ranges appealing both in terms of price and quality, while offering local excellencies.

O

ver the past few months, the easing of lockdown restrictions and subsequent reopening of the catering industry have contributed to reducing the shopping-rush in large-scale distribution stores, as recorded in 2020. This trend has also affected the consumption of oil and vinegar. In fact, from January to November 2021, according to Ismea, according to Nielsen/Bd Mkt data, sales of olive oil in modern retail outlets decreased in volume (-12.2%) and value (-8.3%) compared to the

38

MARKETS

- PLM

+3%

In 2021, the Todis-branded oil and condiments industry recorded a positive trend across the range, in line with the overall company figure.

39

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MARKETS

- PLM

corresponding period in 2020. Vinegar, according to IRI’s data processing, showed an overall decrease in the first nine months of last year (-5%). However, sales of balsamic vinegar increased (+4.3%). Over the years, large-scale distribution brands have been increasing their supply of own-brand seasonings, focusing on ranges attractive both in terms of price and quality, while offering local excellencies.

THE EFFECTS OF THE PANDEMIC CONTINUE TO INFLUENCE CONSUMPTION "Last year - says Francesco Portaluri, Shopper Analyst and Liquid Category Manager of Iper La grande I - sales of PL seasonings in our stores recorded a negative trend in volume (-6%) and in value (-10%) compared to 2020. We also noticed a trend among customers toward first prices, which showed an increase in volume (+3%) and in value (+16%)."

Large-scale distribution brands widen their PL seasoning assortment, aiming at affordability and quality, and offering different excellencies of the territory.

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PLM - MARKETS

According to Francesco Iuculano, Sales Manager of Todis, 2021 figures, compared to those of the previous year, are still hard to read due to the pandemic: "However, for 2021 the PL oil and seasonings industry has recorded a 3% increase across the range of items, in line with the overall company data. The data for 2022 shows an increase in turnover and a substantial hold on volumes, at least in these first months."

GROWING APPRECIATION FOR PRODUCTS WITH STRONG REGIONAL CONNOTATIONS The pandemic has heightened consumer interest in healthier and more natural food products, specifically of Italian origin. "The year 2021 was unique as the pandemic and lockdown eased - says Luigi Riva, Product Manager of Carrefour Italy - and customers, still responsive to offers and price, have tried to explore new consumption experiences by seeking out more unique products with strong regional

Sales of Iper brand condiments have seen a negative trend since 2020.

-6%

in volume

42

-10% in value

MARKETS

- PLM

AN INCREASINGLY WIDE RANGE AND SEGMENTED SUPPLY CHAIN

Through PL product lines, large-scale distribution brands segment their supply by reaching a wide range of consumers. "Our assortment of PLs in this category comprise a range of references and brands with the aim of covering all price ranges and units of need - explains Francesco Portaluri of Iper La grande I. We strive to offer our customers the best products at the right cost. For example, our brand iNaturale is an expression of our attention to the well-being of people and the environment, while the brand Viaggiator Goloso offers the excellence of the Italian territory. With the exclusive brand I Preferiti this range is enriched with quality and high value products."

Today's consumers are more informed than in the past, but they are not always able to make fully informed purchases when faced with a shelf of dozens of bottles of oil. "In recent years, extra virgin olive oil in particular has been the focus of attention both from producers and the entire distribution chain - explains Francesco Iuculano of Todis - with the latter expanding the range on the shelf by offering not only a wider selection, but also different qualities and prized monocultivars (oils made exclusively from olives) to make people understand the importance of good oil and its mindful use.

With this in mind, we have expanded our proposal of ‘Il Saggio Olivo’, Todis' historic extra virgin olive oil, with its inclusion in our premium brand ‘Arte delle Specialità’, certified as Umbria ‘PDO’, Tuscany ‘PDO’, and Sabina ‘PDO’.

connotations, for example. Regarding oil, in addition to the more mainstream products of European origin, we offer a wide range of Italian and organic products, accurately tracked by the experts of our chain and our partners/suppliers." Therefore, proposals of high-quality PL products that express the typicality of a territory are growing.

"Our vast branded assortment, with more than 20 products, responds to customers’ varying demands - Luigi Riva continues also enhancing regional excellence thanks to the breadth of Carrefour’s ‘Terre d'Italia’ line. As for ‘Terre d’Italia’ ‘s PGI-certified extra virgin olive oil from Apulia, this product came from a collaboration between Carrefour and the local area with the support of the supplier. It was awarded the prestigious Gold Tasting Cup by the jury of the Milan International Olive Oil Award (Miooa)."l

Fabio Massi, Journalist specialized in Retail and Mass market issues.

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