Hamburg, Dusseldorf At Edeka there are no more chocolate bars from Mars on the shelves, at Aldi there are no creams from Nivea. Customers feel with every purchase that retailers and manufacturers are at odds in the price battle. Branded companies want to put more pressure on retailers with delivery stops.
For example, Germany’s largest food retailer Edeka is currently no longer being supplied by 17 consumer goods manufacturers. Pampers producer Procter & Gamble, soft drink supplier Pepsi or Persil manufacturer Henkel have imposed a delivery stop for parts or the entire range.
While customers are annoyed by this, there are also winners in this escalation of the price dispute. And these are not just own brands like “Ja” from Rewe or “Gut & Billig” from Edeka. Competing companies that continue to supply also have an advantage. In addition, new manufacturers are crowding the shelves.
“There are numerous brands that benefit from the delivery stops,” says Edeka boss Markus Mosa. The effect is particularly clear in the case of animal feed. The US group Mars, which has not supplied Edeka for almost nine months, not only produces chocolate bars, but also pet food from the Pedigree, Cesars, Frolic, Sheba and Whiskas brands. This product is also missing from Edeka.
The competition is happy: Edeka is now making more sales with the Purina brand from the Swiss food giant Nestlé or products from the Bremen manufacturer Vitakraft. Apparently, many pet owners have changed: Nestlé has now replaced Mars as the market leader in pet food, according to figures from market researcher Nielsen.
However, delivery stops do not automatically mean that customers do without their usual manufacturers. “That depends on how resilient a brand is,” says Christopher Spall, managing director of the brand identity consultancy “Spall macht Marke”.
Mars is unlikely to suffer from delivery stops, but Pepsi will
Strong product brands such as Mars chocolate bars or Coca-Cola soft drinks, which are market leaders, could certainly afford delivery stops. “The impact for top brands is less dramatic than one might think,” says Spall.
Just because Mars bars are missing from a retailer in Germany, such a strong brand is not threatened, according to the expert. Although the dispute with Edeka is about 450 Mars products with a sales value of 300 million euros, Mars achieves sales of over 41 billion euros worldwide.
According to brand expert Spall, the consequences of a delivery stop are much greater for less prominent brands that have not established a monopoly position in the minds of customers. Pepsi, for example, is feeling the effects. The soft drink manufacturer, which is also in a price clinch with Edeka, is the eternal number two in the industry. Market leader Coca-Cola is five times larger. The delivery stop apparently hurts Pepsi further. Since there has been no more supply of Pepsi, sales of Coca-Cola drinks have increased at Edeka retailers.
This also applies to the Lay’s brand snacks, which also belong to Pepsico. Because they are missing from the Edeka shelves, Lorenz snacks from Bahlsen or crisps from the Funny-Frisch and Chio brands from the Düsseldorf manufacturer Intersnack benefit.
Triumph of no-name goods
Those who also benefit from the delivery stops are Edeka’s own brands. According to Edeka boss Mosa, sales of no-name products have increased by 24 percent, while sales of branded items have stagnated. Even at the competitor Rewe, sales with own brands in parts of the range have increased by more than 50 percent, says Rewe purchasing manager Hans-Jürgen Moog.
Current figures from market researcher GfK show a dramatic shift in market share. Branded goods accounted for 54 percent of sales in the first quarter. In 2021 as a whole, it was still 59.4 percent. Since then, brand manufacturers have lost eight billion euros in sales in the 149 billion euro market. “The triumph of private labels has continued,” says GfK expert Robert Kecskes. Inexpensive entry-level brands such as “Ja” or “Gut & Billig” in particular saw the strongest growth.
Will this development mean that customers will permanently wean themselves from brands? Henkel boss Carsten Knobel is calm: “In times of macroeconomic crisis, consumers have always moved in the direction of private labels.” When the economic situation returned to normal, that was corrected again.
Brand expert Spall takes a similar view: “In volatile times, brands are more important than ever as anchors of trust. Not only do they make it easier for consumers to make purchasing decisions, they also serve a central need in times of change: security.” At the same time, retailers have “a huge opportunity to profile their own brands and thus build loyalty.
Supermarkets rely on brands
Edeka boss Mosa wants to continue to be the grocer in Germany “who carries the most branded goods”. But he threatens the manufacturers: “If the other retailers carry fewer brands, we could of course reduce our share.”
If Edeka manages without a well-known brand like Mars in the long term, that would at least have a signal effect, warns Christoph Driver, consumer goods expert at the OC&C consultancy. “That would shift the balance of power in favor of the four major retailers in Germany.”
>> Read also: Disputes with Pepsi and Mars leave their mark on Edeka
However, Edeka and Rewe cannot do without brands. According to industry experts, they generate 75 percent of their sales with them. And: Customers who buy Coca-Cola products, for example, would spend more than 30 euros on average for other items, while the average purchase is just under 17 euros, according to market researcher Nielsen.
New brands on the shelves
It is not without reason that supermarkets are looking for alternative brands. Edeka is now shopping together with the Swiss supermarket chain Migros in Asia and is introducing its own brands such as Chocolat Frey chocolate or the Skai chewing gum brand in some stores. This is intended to fill in the gaps left by Wrigley’s and Airwaves from Mars, for example.
And even the diaper brand Huggies, which the US group Kimberly-Clark took off the market in Europe a good ten years ago, could experience a comeback in this country because it is unclear when the price dispute with Pampers producer Procter & Gamble will end. “Mid-year we could add huggies to the range,” announces Edeka boss Mosa.
More: Less variety in the supermarket – manufacturers are cutting their range