Going to Germany once again last month – this time to attend the second edition of its annual fresh fruit and vegetable congress organised by our colleagues at Fruchthandel Magazin – I very quickly got the feeling that something was happening in Europe’s largest consumer market.
That was not simply a reaction to the evident wealth you see even on the backstreets of a prosperous city like Düsseldorf – so unlike the roads of Spain’s rural north-west, which I had walked on a short holiday only a few days before – but also in the attitudes of the 250 and more senior executives who came together on a hot and sticky summer’s day to discuss some of the major issues that they face in their business.
Germany’s long-running and single-minded obsession with low prices seems to be on the turn: evidence presented by the market analyst GfK suggests that discounters are seeing their market share gradually eroded as other formats grow strongly; there is industry talk of adding value, of better branding and of more product differentiation; and there is a confidence and swagger about the place which results from Germany’s economic well-being at a time when the rest of the eurozone is struggling.
We all know that discounters have shaped the German fresh fruit and vegetable business for years. Their demand for the lowest possible prices from their suppliers, which allowed them in turn to pass on savings to their shoppers in what has always been Europe’s most highly competitive food retail market, has determined the way in which the rest of the German supply chain works.
In recent years high-profile media campaigns against pesticides in food sensitised German shoppers to the produce they were buying. Last year’s E coli crisis brought fresh fruit and vegetables even more to the centre stage, depressing demand for local and imported produce alike, and causing the business in Germany to look at itself even more closely.
So the word is that the leading discounters are talking to their suppliers in a new way. The days when discussion focused entirely on the few cents’ price saving you were required to guarantee if you wanted to win their business seem to be on the way out. Don’t get me wrong, you still need to be as sharply competitive as you always have been, but it now seems you can talk about other things too. It’s no longer only about price.
“They’re now happy to discuss with me how I can supply them over the long term with the same variety at the same high levels of quality from sources all over the world,” a Dutch fresh produce supplier remarked to me last month, adding: “That is a huge change.” It’s clear that seismic changes like these will have their own impact through the supply chain. Germany becomes a much more interesting market for suppliers who used to be frightened off by the short-termism of its retail buyers. And, as the conversation with retail takes on a quite different tone, their own shift in attitude will have an effect more immediately on the approach taken by German fresh produce businesses further up the supply chain.
Germany’s economic success at a time when the rest of Europe is mired in the worst economic recession in a generation focuses attention on the opportunities there for all the right reasons. It is even more fortunate for the rest of the trade that this attention on Europe’s largest consumer market comes at a time when it seems to be changing its own sourcing priorities away from an obsession with low prices to a more measured interpretation of the importance of value for money.
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