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Netherlands Food and Drink Report Q1 2010
Business Monitor International, Jan 2010, Pages: 66
Netherlands Food and Drink Report provides industry professionals and strategists, corporate analysts, food and drink associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on the Netherlands' food and drink industry.
In the Netherlands, the major news of the last quarter must be the takeover of Casino-owned retailer Super de Boer by number four on the market Jumbo which came despite a decline in sales across the country's retail sector in line with the economic downturn. The move could mark the beginning of a period of consolidation in the sector that is currently dominated by Ahold, with around 34% of the market. Formerly named Laurus, Super de Boer has reduced hugely in size from a peak in 2001 when it posted sales above EUR6.5bn (US$9.6bn). At that time the company was the second largest retailer in the Netherlands and also owned 700 stores in Spain and a significant network in Belgium. However, the company expanded too quickly and by 2002 was posting annual losses above EUR128mn (US$190.4mn). This forced it to sell off international operations and led to a bailout by French retailing giant Casino. This downsizing continued between 2006 and 2008 with the company selling off its Konmar supermarket chain and its Edah discount stores.
Now left with only its flagship Super de Boer supermarkets, it posted sales of EUR2.1bn (US$3.1bn) in 2008. Yet after several years of losing money, including a loss of EUR45mn (US$66.4mn) in 2006, the restructured company has returned to profitability, which clearly stoked the interest of Jumbo. The latter has now leapfrogged Schuitema and Sligro to become the country's second largest retailer. This additional scale will aid Jumbo as it looks to challenge the market dominance of Ahold, and also puts it in pole position to emerge as a clear number two if, as we expect, the sector continues to consolidate. Super de Boer CEO Jan Brouwer noted, “The position of the combined businesses of Super de Boer and Jumbo in the consolidating Dutch food retail sector, where banner positioning, size and purchasing power are essential to maintain a leading role, will be substantially stronger.”
In the food sector, companies are looking to refocus on core operations. For example, at the end of October, Netherlands-based natural and organic food and drink specialist Royal Wessanen announced plans to offload two frozen food units, Karl Kemper and Righi, as part of its strategy to concentrate on its European speciality and organic food businesses Wessanen is focused on natural and speciality categories, a position which leaves it exposed during the downturn when consumers tend towards value. Declining consumer sentiment and a generalised eurozone slowdown are expected to take an increasingly heavy toll during 2009, with real GDP forecast for the Netherlands estimated to contract by 4.9%. Certainly, another round of quarterly results from the country’s major food players also show that many operators continue to struggle. Anglo-Dutch conglomerate Unilever reported nine month results showing a 33% drop in profit to EUR2.75bn (US$4.55bn). Net sales also fell by 1% to EUR30.16bn (US$49.9bn). Bakery supplier CSM reported a 2.2% drop in third quarter revenues to EUR634.5mn (US$943.8mn) due to lower volumes and average prices, whilst Nutreco reported a 8.9% drop in third quarter revenues to EUR1.2bn (US$1.7bn), Dairy group FrieslandCampina also reported a 15% fall in first half revenues to EUR4.1bn (US$6bn), attributed to the economic downturn and falling demand.
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