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Go Germany How to enter the German retail market Riga, 29.11.2007. Guido Wolff born 1962 Until 1987 University studies of economies and employed in father‘s trade business (food brokerage) 1987 – 1991 Bahlsens Keksfabrik (D, I, A) product manager

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Go Germany

How to enter the German retail market

Riga, 29.11.2007


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Guido Wolff

  • born 1962

  • Until 1987 University studies of economies and employed in father‘s trade business (food brokerage)

  • 1987 – 1991 Bahlsens Keksfabrik (D, I, A) product manager

  • 1991 – 1994 Holsten-Brauerei AG marketing & sales manager

  • 1994 – 1998 FRoSTA AG managing director export

  • 1998 – 2002 Roncadin GmbH managing director marketing & sales

  • Since 2003 own business, sales of frozen and chilled products to european retailers ( sales revenue > € 50 mio.)


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Top 9 Food retailers in Germany 01.01.2006

no. of stores sales mio €

Edeka 10.600 35.750

Rewe 7.430 31.209

Metro (Metro, real, Extra, Kaufhof) 578 14.740

Schwarz Group (Lidl, Kaufland) 3.170 24.000

Aldi 4.200 23.000

Tengelmann Group (Plus, Tengelmann) 3.700 9.450

Markant Group (excl. Tengelmann) 11.800 41.000

Norma 1.210 2.850

Globus Holding 35 3.570

Source: LZ Trade Dimensions


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  • Food retail in Germany 2004 by shop type

  • no. of stores sales mio €

  • Superstores > 5.000 sqm 704 16.180

  • Hypermarkets 1.500 – 5.000 sqm 2.313 17.430

  • Medium Stores 800 – 1.500 sqm 4.606 16.875

  • Discounter except Aldi 10.524 27.110

  • Aldi 4.038 20.750

  • Supermarkets 400 – 800 sqm 4.125 11.290

  • Other Shops < 400 sqm 32.978 11.715

  • _______________________________________________________________

  • Total 59.288 121.350

  • 40 % of retail sales are in Discount Stores

    Source: AC Nielsen


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Edeka

Location of Head Office: Hamburg

Turnover: € 35,7 Bn (Food 85,7%)

Number of stores: 185 Hyper; 10720 Supermarkets

1745 Discounters (Netto)

Buying Habits

  • Buying office in Hamburg for commodities and discount-like products

  • Regional Offices with a very high autonomy to purchase

  • Netto North and South will purchase individually

  • Central invoice clearing  contract necessary

  • Prices equal all over the group

  • Listing fees, overriders and bonusses likely


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Rewe

Location of Head Office: Cologne

Turnover: € 31,2 Bn (Food 71,6%)

Number of stores: 85 Hyper, 4800 Supermarkets,

2030 Discounters (Penny)

Buying Habits:

  • Very strong head office with central buying

  • Buying committee to decide about listing

  • Very traditional and unlikely to change suppliers

  • Extremely high listing fees and overriders (not for Penny)

  • Commodity goods are tendered once a year


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Metro

Location of Head Office: Düsseldorf

Turnover Food: € 31,9 Bn (Food 46,2%)

Number of stores: 286 Hyper, 264 Super, 117 C&C,

114 Department stores

Buying Habits:

  • Central buying in Düsseldorf

  • Direct negotiations possible to single chains

  • Central invoice clearing

  • Listing fees, bonusses, Overriders likely and very high


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Lidl

Location of Head Office: Neckarsulm

Turnover: € 13,8 Bn (Food 82%)

Number of stores: 2650 Discount stores in Germany

Buying Habits:

  • Central Buying for Europe in the Headquarter

  • Extremely rude and demanding to suppliers

  • All new products to be presented in Headquarter

  • Direct Contact to local branches very difficult

  • No Listing fees, no bousses, no Overriders


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Kaufland

Location of Head Office: Heilbronn

Turnover: € 10,2 Bn (Food 80%)

Number of stores: 520 Hypermarkets

Buying Habits:

  • Central buying in the Head Office

  • Always looking for strong promotions

  • Branded products will face high overriders and Bonusses

  • Very supplier loyal


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Aldi Nord

Location of Head Office: Essen

Turnover: € 11,0 Bn (Food 82%)

Number of stores: 2500 discount stores

Buying Habits:

  • New products have to be first presented in the head office

  • Afterwards in the 37 regional offices for a possible regional test

  • Existing products are tendered once a year

  • „national“ products min turnover € 10 mio (RSP)

  • No listing fees, no overriders, no bonusses


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Aldi Süd

Location of Head Office: Mülheim/Ruhr

Turnover: € 12,0 Bn (Food 80%)

Number of stores: 1700 discount stores

Buying Habits

  • New products have to be first presented in the head office

  • Products are tested in 3-5 test regions

  • Existing products are tendered once a year

  • „national“ products min turnover € 10 mio (RSP)

  • No listing fees, no overriders, no bonusses


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Plus

Location of Head Office: Mülheim/Ruhr

Turnover: € 6.9 Bn (Food 86,7%)

Number of stores: 2900 Discounters in Germany

70% of the shares will be sold to EDEKA in 2008

Buying Habits

  • Central buying in Mülheim for total Europe

  • Mainly own label products

  • Demanding very low prices

  • All products are tendered once a year

  • Also looking for strong promotions


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Kaiser‘s Tengelmann AG

Location of Head Office: Viersen

Turnover: € 2,5 Bn (Food 93%)

Number of stores: 800 convenience stores

Buying Habits:

  • Very brand focussed

  • High listing fees and marketing allowances

  • Participation of internal trade shows may be required for new products

  • Comodity goods are tendered once a year

  • In 2008 a buying cooperation with Edeka shall start


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Norma

Location of Head Office: Fürth

Turnover: € 2,85 Bn (Food 85%)

Number of stores: 1210 Discounters mainly in South and East germany

Buying Habits:

  • Very price sensitive

  • Quite open for new products and ideas as they always want to differentiate from their competitors

  • All new products will be sampled by the owner

  • All comodities are sampled once a year


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Checklist for your entry to the German Market

The Enterprise

  • ISO 9001 ff

  • IFS Accreditation

  • Internal Laboratory familiar with German Food Legislation

  • DSD („green Dot“) Contract

  • Language skills of Back office and Logistic Department

    The Product

  • Does your product fit to the German Taste?

  • Are there already similar products on the market?

  • What is your price positioning?

  • Who are your competitors on the German Market?


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What is typical for a German Buyer

  • Strong Focus on Price. Germany is a discount driven market

  • Always under time pressure. No long meetings, not much small talk

  • Expects from suppliers a deep understanding of the German market in General and his company in particular

  • Does not want to mess around and bargain. The first offer should be striking.

  • Will (almost) not visit suppliers

  • Aldi and the major Brands are seen as the benchmark for new products

  • Prefers to talk in German for the daily business


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Before your first Customer Meeting

  • Do a very deep analysis of the German Market

  • Understand where a niche for your product is

  • Prepare a concrete offer for the buyer with a clear proposal about:

    • Targeted retail price

    • Cost price estimate and margin proposal

    • Logistic, quality and account issues

    • What is your source of business

    • Who will look after the day-to-day-business



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