Go Germany

1

• Go Germany
• How to enter the German retail market
• Riga, 29.11.2007

2

• Guido Wolff
• born 1962
• Until 1987 University studies of economies and
  employed in fathers 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 gt 50 mio.)

3

• 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

4

• Food retail in Germany 2004 by shop type
• no. of stores sales mio
• Superstores gt 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 lt 400 sqm 32.978 11.715
• __________________________________________________
  _____________
• Total 59.288 121.350
• 40 of retail sales are in Discount Stores
• Source AC Nielsen

5

• 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

6

• 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

7

• Metro
• Location of Head Office Düsseldorf
• Turnover Food 31,9 Bn (Food 46,2)
• Number of stores 286 Hyper, 264 Super, 117 CC,
  
• 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

8

• 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

9

• 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

10

• 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

11

• 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

12

• 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

13

• Kaisers 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

14

• 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

15

• 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?

16

• 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

17

• 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

18

• You have only one meeting to leave a first
  impression
• Dont mess it up