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OPPORTUNITIES FOR UK
DAIRY PRODUCTS
-BELGIUM-
MILK DEVELOPMENT COUNCIL
Prepared for the Milk Development Council by Food from Britain Belgium
March 2003
Food from Britain

4th Floor, Manning House
22 Carlisle Street
London SW1P 1JA
Tel: 020 7233 5111
Fax: 020 7233 9515
Website: www.foodfrombritain.com
Opportunities for UK Dairy Producers Food from Britain

- Belgium - 1 March 2003
Table of Contents
1 THE OVERALL MARKET .................................................................. 76

1.1 COUNTRY F ACT SHEET .................................................................... 76
1.2 COUNTRY DATA ............................................................................ 77
1.3 DEMOGRAPHIC PROFILE................................................................... 78
1.3.1 Total Population and Growth ................................................. 78
1.3.2 Population by sex and age group ........................................... 78
1.3.3 Household Composition........................................................ 79
1.4 ECONOMIC PROFILE ....................................................................... 80
1.4.1 Economic Overview ............................................................. 80
1.4.2 Latest Economic Indicators................................................... 80
1.5 CONSUMER TRENDS....................................................................... 81
1.5.1 Food Consumption .............................................................. 81
1.5.2 General Consumer Trends .................................................... 81
1.5.3 Consumer Trends Specific to Dairy Products............................ 82
1.5.4 Consumer Profiles ............................................................... 82
2 OVERVIEW OF THE RETAIL MARKET............................................... 83

2.1 RETAIL STRUCTURE ....................................................................... 83
2.1.1 Background to the Retail Environment .................................... 83
2.1.2 Number of Stores and Shares by Store Format......................... 84
2.1.3 Shares per Retailer Fascia .................................................... 86
2.1.4 Main Trends in Retail ........................................................... 87
2.2 PRIVATE LABEL ............................................................................ 88
2.3 LOGISTICS, MARGINS & PAYMENT TERMS .............................................. 90
2.4 RETAILER SWOT.......................................................................... 91
3 RETAILER PROFILES ..................................................................... 92

3.1 CARREFOUR BELGIUM ..................................................................... 92
3.2 DELHAIZE LE LION GROUP ............................................................... 94
3.3 COLRUYT ................................................................................... 96
4 RETAIL STORE CHECKS ................................................................. 97

4.1 CHEESE OVERVIEW........................................................................ 97
4.2 DAIRY OVERVIEW (EXCL. CHEESE) .....................................................100
4.3 T OTAL DAIRY OVERVIEW ................................................................102
4.4 KEY BRANDS..............................................................................102
4.5 PRICES ....................................................................................103
4.6 PACKAGING ...............................................................................104

DAIRY PRODUCTS
- G E R M A N Y-
Prepared for the Milk Development Council by Food from Britain Germany
March 2003
Food from Britain

22 Carlisle Street
London SW1P 1JA
Tel: 020 7233 5111
Fax: 020 7233 9515

Table of Contents
Note: all Charts are in the Appendix

1.2 COUNTRY DATA ............................................................................ 15
1.5 CONSUMER & CONSUMPTION TRENDS ................................................... 20
2.2 RETAIL T RENDS & DEVELOPMENTS ...................................................... 28
2.3 PRIVATE LABEL ............................................................................ 30
2.5 RETAILER SWOT.......................................................................... 36
3 RETAILER PROFILES ..................................................................... 37
3.1 KEY RETAILERS IN THE GERMAN MARKET................................................ 37
3.2 PROMOTIONAL ACTIVITIES................................................................ 40
4 RETAIL STORE CHECKS ................................................................. 41
5 THE MARKET................................................................................. 43
5.1 MILK PRODUCTION........................................................................ 43
5.2 DAIRY PRODUCT MARKET ................................................................. 46
5.2.1. Market Overview................................................................. 46
5.3 KEY PLAYERS .............................................................................. 50
5.4 RETAIL MARKET SEGMENTS .............................................................. 58
5.4.1 Cheese ............................................................................. 58
5.5 Y OGHURT................................................................................... 63
5.5.1 Dairy Desserts.................................................................... 66
5.5.2 Yoghurt / Milk Drinks ........................................................... 68
5.5.3 UHT Milk ........................................................................... 71
5.6 PACKAGING /LABELLING & LEGISLATION/ ............................................... 73
5.7 SWOT ANALYSIS ......................................................................... 76
6 FOOD PROCESSING MARKET.......................................................... 77
6.1 SIZE OF THE MARKET ..................................................................... 77

6.1.1 Key Suppliers ..................................................................... 77
(5) HOCHWALD NAHRUNGSMITTEL-WERKE GMB H .............................................. 78
T HE MERGER IN 2001 WITH DAIRIES EIFELPERLE MILCH, MILCHWERKE AM BURGWALD AND
MOLKEREI BORKEN MADE HOCHWALD THE FIFTH BIGGEST DAIRY IN GERMANY. BY TAKING
OVER THESE DAIRIES, HOCHWALD EXPANDED THEIR PREVIOUS PRODUCT PORTFOLIO OF
DRINKING MILK , UHT MILK AND EVAPORATED MILK BY ADDING YOGHURT AND SLICED CHEESE.
T HE TOTAL GROUP TURNOVER AMOUNTED TO 625 M WITH SALES OF 982 M KG OF MILK ... 78
(7) BAYERISCHE MILCHINDUSTRIE EG (BMI) ................................................... 78
IN DECEMBER 2002, BAYERISCHE MILCHINDUSTRIE (BAVARIAN DAIRY INDUSTRY) TOOK
OVER F RANKEN-MILCH LANGENFELD -UFFENHEIM GMB H. LANGENFELD PROCESSES APPROX.
100M KG OF MILK , 80% OF WHICH ARE EXPORTED, AND TURNED OVER 37M IN 2001.
LANGENFELD IS BMI'S 12TH PRODUCTION SITE AND RAISES THEIR ANNUAL CHEESE
PRODUCTION TO APPROX . 28,000 TONNES....................................................... 78
6.1.2 UK Dairy Exports in Food Processing ...................................... 79
7 CONCLUSIONS & RECOMMENDATIONS........................................... 80
7.1 CONCLUSIONS ON MARKET POTENTIAL.................................................. 80
7.1.1 Cheese ............................................................................. 80
7.1.2 Yoghurts / Dairy Desserts..................................................... 80
7.1.3 Dairy / Milk Drinks .............................................................. 80
7.1.4 UHT Milk ........................................................................... 81
7.2 T HE ROUTE TO THE MARKET.............................................................. 81
7.3 LEVELS OF INVESTMENT................................................................... 82
7.3.1 Product Category Grouping Approach ..................................... 82
8.2 COUNTRY DATA ............................................................................ 85
8.3.2 Population by sex and age group ........................................... 86
8.5 CONSUMER TRENDS....................................................................... 89
FOOD AND DRINK RETAIL PURCHASES HOLD A SHARE OF 14.9% (ON
TOTAL EXPENDITURE). ........................................................................ 90
HORECA (HOTEL, RESTAURANT AND CAF) HOLD A SHARE OF 4.9%,

WHICH IS INCREASING BOTH IN ABSOLUTE FIGURES AND IN SHARE. .. 90

9.1.3 Shares per Retailer Fascia .................................................... 94
9.2 PRIVATE LABEL ............................................................................ 96
9.4 RETAILER SWOT.......................................................................... 99

10 RETAILER PROFILES ................................................................ 100
10.1 CARREFOUR BELGIUM ....................................................................100
10.2 DELHAIZE LE LION GROUP ..............................................................102
10.3 COLRUYT ..................................................................................104
11 RETAIL STORE CHECKS ............................................................ 105
11.1 CHEESE OVERVIEW.......................................................................105
11.2 DAIRY OVERVIEW (EXCL. CHEESE) .....................................................108
11.3 T OTAL DAIRY OVERVIEW ................................................................110
11.4 KEY BRANDS..............................................................................110
11.5 PRICES ....................................................................................111
11.6 PACKAGING ...............................................................................112
12 THE MARKET............................................................................ 113
12.1 MILK PRODUCTION.......................................................................113
12.1.1 Key Suppliers of Milk ..........................................................116
12.2 DAIRY PRODUCT MARKET ................................................................118
12.2.1 Market Overview................................................................118
12.2.2 Key Players.......................................................................118
12.2.3 Retail Market Segments ......................................................120
12.2.4 Trends per Product Category................................................122
12.2.5 Legislation/Labelling ...........................................................123
12.2.6 SWOT analysis of Market for Dairy Products............................124
12.3 T HE ORGANIC MARKET ..................................................................125
13 FOOD PROCESSING MARKET .................................................... 126
13.1 SIZE OF THE MARKET ....................................................................126
13.2 KEY SUPPLIERS ...........................................................................127
13.2.1 UK Dairy Product Exports in Food Processing ..........................130
14 CONCLUSIONS & RECOMMENDATIONS ..................................... 131
14.1 CONCLUSIONS ON MARKET POTENTIAL.................................................131
14.1.1 Cheese ............................................................................131
14.1.2 Yoghurts ..........................................................................131
14.1.3 Dairy Desserts...................................................................131
14.1.4 Dairy/Milk Drinks ...............................................................131
14.1.5 UHT Milk ..........................................................................131
14.2 T HE ROUTE TO MARKET..................................................................132
14.2.1 Retail...............................................................................132
14.2.2 Catering ...........................................................................132
14.2.3 Food Processing.................................................................132
14.3 LEVELS OF INVESTMENT NECESSARY ...................................................133
14.3.1 Product Category Grouping Potential .....................................133
15 APPENDICES ........................................................................... 134
15.1 APPENDIX 1 DAIRY PRODUCT SALES .................................................134
15.2 APPENDIX 2 MARKET SHARES ........................................................135
15.3 APPENDIX 3 - CASE STUDIES ...........................................................146
15.3.1 Case study - Fresh Milk at Delhaize .......................................146
15.3.2 Case study - Biamo cheese..................................................147
15.3.3 Case study - Stassano: dairy drinks in PET bottles...................148
16 THE OVERALL MARKET ............................................................. 152
16.1 COUNTRY F ACT SHEET ...................................................................152
16.2 COUNTRY DATA ...........................................................................153
16.3 DEMOGRAPHIC PROFILE..................................................................154
16.3.1 Total Population and Growth ................................................154

16.3.2 Household Composition.......................................................155
16.4 ECONOMIC PROFILE ......................................................................156
16.4.1 Economic Overview ............................................................156
16.4.2 Latest Economic Indicators..................................................156
16.5 CONSUMER & CONSUMPTION TRENDS ..................................................158
16.5.1 Food Consumption .............................................................158
16.5.2 General Consumer Trends ...................................................158
16.5.3 Consumer Trends Specific to Dairy Products...........................159
1.4.4 Consumer Profiles ..............................................................162
17 OVERVIEW OF THE RETAIL MARKET ......................................... 164
17.1 RETAIL STRUCTURE ......................................................................164
2.1.1 Background to the Retail Environment ...................................164
2.1.2 Number of Stores and Shares by Store Format........................165
2.2 RETAIL T RENDS & DEVELOPMENTS .....................................................166
2.2.1 Main Trends in Retail ..........................................................166
2.3 PRIVATE LABEL ...........................................................................168
17.2 LOGISTICS, MARGINS & PAYMENT TERMS .............................................171
17.3 RETAILER SWOT.........................................................................174
18.1 KEY RETAILERS IN THE GERMAN MARKET...............................................175
18.2 PROMOTIONAL ACTIVITIES...............................................................178
20 THE MARKET............................................................................ 181

20.1 MILK PRODUCTION.......................................................................181
5.2.2. Market Overview................................................................184
20.3 KEY PLAYERS .............................................................................188
20.4 RETAIL MARKET SEGMENTS .............................................................196
20.4.1 Cheese ............................................................................196
20.5 Y OGHURT..................................................................................201
20.5.1 Dairy Desserts...................................................................204
20.5.2 Yoghurt / Milk Drinks ..........................................................206
20.5.3 UHT Milk ..........................................................................209
20.6 PACKAGING /LABELLING & LEGISLATION/ ..............................................211
20.7 SWOT ANALYSIS ........................................................................214
21.1.1 Key Suppliers ....................................................................215
(5) HOCHWALD NAHRUNGSMITTEL-WERKE GMB H .............................................216
T HE TOTAL GROUP TURNOVER AMOUNTED TO 625 M WITH SALES OF 982 M KG OF MILK ..216
(7) BAYERISCHE MILCHINDUSTRIE EG (BMI) ..................................................216
PRODUCTION TO APPROX . 28,000 TONNES......................................................216
21.1.2 UK Dairy Exports in Food Processing .....................................217

22.1.1 Cheese ............................................................................218
22.1.2 Yoghurts / Dairy Desserts....................................................218
22.1.3 Dairy / Milk Drinks .............................................................218
22.1.4 UHT Milk ..........................................................................218
22.2 T HE ROUTE TO THE MARKET.............................................................219
22.3 LEVELS OF INVESTMENT..................................................................220
22.3.1 Product Category Grouping Approach ....................................220
23.2 COUNTRY DATA ...........................................................................225
2.3 PRIVATE LABEL ...........................................................................240
24.3 RETAILER SWOT.........................................................................246
27 THE MARKET............................................................................ 253

27.1 MILK PRODUCTION.......................................................................253
5.2.3. Market Overview................................................................256
27.3 KEY PLAYERS .............................................................................260
27.4.1 Cheese ............................................................................268
27.5 Y OGHURT..................................................................................273
27.5.1 Dairy Desserts...................................................................276
27.5.3 UHT Milk ..........................................................................281
27.7 SWOT ANALYSIS ........................................................................286
28.1.1 Key Suppliers ....................................................................287

29.1.1 Cheese ............................................................................290
29.1.4 UHT Milk ..........................................................................290
30.2 COUNTRY DATA ...........................................................................297
2.3 PRIVATE LABEL ...........................................................................312
31.3 RETAILER SWOT.........................................................................318
34 THE MARKET............................................................................ 325

34.1 MILK PRODUCTION.......................................................................325

5.2.4. Market Overview................................................................328
34.3 KEY PLAYERS .............................................................................332
34.4.1 Cheese ............................................................................340
34.5 Y OGHURT..................................................................................345
34.5.1 Dairy Desserts...................................................................348
34.5.3 UHT Milk ..........................................................................353
34.7 SWOT ANALYSIS ........................................................................358
35.1.1 Key Suppliers ....................................................................359
36.1.1 Cheese ............................................................................362
36.1.4 UHT Milk ..........................................................................362
37.2 COUNTRY DATA ...........................................................................369

2.3 PRIVATE LABEL ...........................................................................384
38.3 RETAILER SWOT.........................................................................390
41 THE MARKET............................................................................ 397

41.1 MILK PRODUCTION.......................................................................397
5.2.5. Market Overview................................................................400
41.3 KEY PLAYERS .............................................................................404
41.4.1 Cheese ............................................................................412
41.5 Y OGHURT..................................................................................417
41.5.1 Dairy Desserts...................................................................420
41.5.3 UHT Milk ..........................................................................425
41.7 SWOT ANALYSIS ........................................................................430
42.1.1 Key Suppliers ....................................................................431
43.1.1 Cheese ............................................................................434
43.1.4 UHT Milk ..........................................................................434
44.2 COUNTRY DATA ...........................................................................441

2.3 PRIVATE LABEL ...........................................................................456
45.3 RETAILER SWOT.........................................................................462
48 THE MARKET............................................................................ 469

48.1 MILK PRODUCTION.......................................................................469
5.2.6. Market Overview................................................................472
48.3 KEY PLAYERS .............................................................................476
48.4.1 Cheese ............................................................................484
48.5 Y OGHURT..................................................................................489
48.5.1 Dairy Desserts...................................................................492
48.5.3 UHT Milk ..........................................................................497
48.7 SWOT ANALYSIS ........................................................................502
49.1.1 Key Suppliers ....................................................................503
IN DECEMBER 2002, BAYERISCHE MILCHIND USTRIE (BAVARIAN DAIRY INDUSTRY) TOOK

50.1.1 Cheese ............................................................................506
50.1.4 UHT Milk ..........................................................................506

1 The Overall Market
1.1 Country Fact Sheet

Germany
Land area 357,028 km2
Population (2001) 82.44 m / increase of 0.2% vs. 2000
Inhabitants per km 231 per km2
Capital Berlin (3.4 m inhabitants)
Language German
Currency Euro (since 01/01/2002)
Exchange Rate (2002 annual average) 1 = 1.5840, 1 = US$1.0534
VAT on food products 7% VAT
GDP (2001) 2,071 bn
GDP growth rate (2001) + 0.6%
Unemployment (2001) 4.225 m. (2002) = 10.1%
International status The worlds third largest economy
Total food and drink turnover (2001) 153.8 bn
No. of grocery stores (2001) 56,200
UK food and drink exports (2001) 534 m.

1.2 Country Data
Map of Germany
SCHLESWIG- MECKLENBURG
WESTERN-POMERANIA
HOLSTEIN
BRANDENBURG
HAMBURG
BREMEN
LOWER B ERLIN
SAXONY
SAXONY-
Hanover ANHALT
NORTH RHINE- SAXONY

WESTPHALIA
Erfurt Dresden
Dsseldorf THURINGIA
Cologne
Bonn
HESSE
RHINELAND- Frankfurt
PALATINATE
Mainz
Nuremberg
SAARLAND
BAVARIA
Stuttgart
BADEN -
WRTTEMBERG
Munich

1.3 Demographic Profile
1.3.1 Total Population and Growth
The development of the German population between 1997 and 2001 can be
described as stagnating. Since the mid-60s, the development of the population
has been mainly influenced by immigration and migration movements of
foreigners.
Germany: Population Growth, 1997-2001

1997 1998 1999 2000 2001
Population (million) 82.017 82.037 82.163 82.259 82.440
Yr-on-yr growth (%) +0.1% +0.02% +0.2% +0.1% +0.2%
Source: Statistisches Bundesamt
Over one fifth of the German population lives in North Rhine-Westphalia, the most
densely populated federal state. Berlin, Breme n and Hamburg are city states
(Stadtstaaten). Nearly a third of the population lives in South Germany.
Germany: Population by Region, 2001

Federal State Population in % Inhabitants per km2
Baden-Wrttemberg 12.9% 297
Bavaria 15.0% 175
Berlin 4.1% 3.800
Brandenburg 3.1% 88
Bremen 0.8% 1.632
Hamburg 2.1% 2.286
Hesse 7.4% 288
Mecklenburg -Vorpommern 2.1% 76
Lower Saxony 9.7% 167
North Rhine-Westphalia 21.9% 530
Rhineland-Palatinate 4.9% 204
Saarland 1.3% 415
Saxony 5.3% 238
Saxony-Anhalt 3.1% 126
Schleswig -Holstein 3.4% 178
Thuringia 2.9% 149
Total Germany 100% 231
Turks are the largest foreign group in Germany, representing 2.4% of total
inhabitants and numbering 2 million. No other group of foreigners is as important.
The second and third major groups are inhabitants from Yugoslavia and Italy.
Germany: Population by Ethnic Group, 2001

Ethnic Group Foreign Population in %
Turks 26.6%
Yugoslavs 8.6%
Italians 8.4%
Greeks 5.0%
Poles 4.2%
Croats 3.1%
Africans (mainly Moroccan) 4.3%
Americans 3.0%
Asians (Iranian, Iraqi, Afghans, Lebanese etc.) 11.5%
Other Europeans (French, Austrians, etc.) 25.3%
Total 100%

Due to the World War 2 there is a surplus of women older than 70 years. In
general, the German population is getting older. It can be estimated that 32%
will be over 60 years old by 2020. Better medical care and the decreasing trend
of having children (longer educational process, professional life of women) can be
seen as the main reasons for this.
Germany: Population per Age Group, 2000

(% of population) Male Female
under 15 16.2% 14.8%
15-24 11.8% 10.8%
25-49 39.5% 35.9%
50-69 24.2% 23.8%
70+ 8.3% 14.8%
Total 100% 100%
1.3.2 Household Composition
Germany: Households Development, 2000

2000
Number of households (000) 38,124
Average number of persons per household 2.18
In 1900, 44% of households consisted of 5 or more people. In 2000, only 4.4% of

households consisted of 5 or more people. The change from an agricultural to an
industrial country can be seen as the main reason for this decrease in the average
number of persons per household.
Over two thirds of households are 1-2 people households and the trend towards
single and 2 people households will continue, particularly in cities.
Germany: Distribution of Household Size, 2000
4 people 5 or more people

12% 4%
1 person
3 people 36%
15%
2 people
33%

1.4 Economic Profile
1.4.1 Economic Overview
After economic output only just reached the level of the preceding quarter (+/-
0%) at the end of 2002, business activity in Germany, as in the entire euro zone,
continues to be sluggish at the start of the year and is still characterised by
increased uncertainty as a result of the conflict with Iraq and other global risks.
The business climate barely improved and expectations and consumer confidence
remain subdued. Moreover, unfavourable data are observed in the area of new
orders, mainly orders from abroad, output, sales and the labour market. Overall,
economic activity signals thus do not yet suggest that economic activity is about
to pick up.
The domestic economy is further characterised by continued investment

weakness as a result of companies lower earnings expectations and the
persistence of weak consumer spending propensity.
Germany continues to adhere to the goal of attaining a balanced public budget by

2006. Departures from the initial stability path in the period of 2002-2004 are
inevitable because of slackening of economic activity.
1.4.2 Latest Economic Indicators
Germany: Economic Indicators, 1997-2002

1997 1998 1999 2000 2001 2002(e)
GDP (in bn) 1,840 1,876 1,915 1,970 1,981 1,984
GDP Growth (in %) +1.4 +2.0 +2.0 +2.9 +0.6 +0.2
GDP per capita () 22,400 22,800 23,300 23,900 24,100 24,100
Inflation (%) 1.5 0.6 0.6 1.9 2.5 1.3
Consumer 1,046 1,075 1,143 1,157 1,191 1,232
Expenditure (in bn)
Consumer +2.5 +2.8 +2.0 +1.9 +3.5 +0.9
Expenditure Growth
(%)
Unemployment Rate 11.7 10.7 10.4 9.3 9.5 10.0
(%)
Balance of Trade (in 62.2 65.8 63.8 93.9 95.5 126.1
bn)
Source: Bundesministerium fr Wirtschaft und Arbeit
GDP Trend
GDP stagnated in the fourth quarter of 2002. Overall GDP growth in 2002 was
only 0.2%. Foreign trade contributed the largest share to growth in 2002 (+1.5%
points). Government consumption accounted for a share of +0.3% points. The
contributions from private consumption (-0.3% points) and gross fixed
investment (-1.3% points) were negative. This can be explained by a decline in
gross fixed assets (-6.4%), of which investment in plant and equipment (-8.4%)
and private consumption (-0.5%), whilst government spending increased
(+1.5%). The result was a 1.3% fall in total domestic expenditure. A rise in
exports of 2.9% contrasted with a decline in imports of 1.3%.

Forecast for 2003/2004
The 2003 annual projection by the federal government assumes a growth rate of
1%. The latest spectrum of forecasts of economic research institutes varies from
0.6% to 1.1% without considering possible consequences of military action in the
Middle East. Economic activity is assumed to pick up further in 2004 with
forecasts ranging fro m 1% to 2.5%. The number of unemployed will fall in the
course of 2003 due to cyclical reasons and on account of labour reforms, but it
will keep on average at about 4.2 million, the unemployment rate will rise to 10%
within the year.
Inflation
The consumer price index for all households in Germany rose by 1.3% in 2002
versus the annual average of the previous year. This was the lowest inflation rate
since 1999.
The decreasing price development for food and non-alcoholic drinks is continuing.
The pric e increase of tobacco products had an effect on a rise in prices. Above-
average year-on-year rates of price increase were still observed for a number of
services. Prices also rose considerably for financial services, repair services and
hotel and restaurant services.
Prices are likely to increase slightly by 1.5% in 2003.
Consumer Expenditure
In 1998, the average monthly net income of private households in Germany

amounted to 2,664. The largest share is generally spent on private
consumption, i.e. food, housing, clothes, travel etc. More than 77% of the net
income i.e. 2,061 was spent on consumption expenditure and only 603
(22.6%) on savings, insurance etc. Nearly one third of total consumer
expenditure was covered by expenses for rental fees, energy costs and
maintenance and repair of accommodation.
Communications and information transmission is the second largest area of

consumer expenditure, accounting for 16% of total consumption expenditure.
Food, drinks and tobacco products follow with 14% of total value.
Due to the increase of the average monthly net income over recent years,
expenditure on health, travel, communication, entertainment and holidays in
particular has also increased.

1.5 Consumer & Consumption Trends
1.5.1 Food Consumption
In 2000, total consumption of private households amounted to 1,114 billion, of

which 117 billion (10.5%) was spent on food.
Chart 1 shows that expenditure of private households on food has been

decreasing over recent years compared with expenditure on consumption in
general. In 1991, for instance, 12.8% of total consumption value was spent on
food. By 2000, the figure had sunk to 10.5%.
The reasons for this are the stagnation of the consumption of food in total (e.g.
due to a decreasing birth rate), the above mentioned shift of private expenditure
from food to leisure activities as well as low prices in retail. The reasons for
decreasing retail prices are the rising agricultural productivity and price-
competition among retailers.
According to statistics, in 1998 each private household spent on average 289

per month on food and luxury foodstuffs (i.e. alcoholic and non-alcoholic
beverages and cigarettes). On average, 14% of the monthly food expenditure
was spent on cereal products, 16% on vegetables and fruit, 22% on meat, fish
and eggs and 12% on dairy products.
In 2001, private households spent a total of 126.6 billion on food. Chart 2 shows
the split of expenditure by food sector.
Generally, the trend towards healthier eating has developed over recent years:
more vegetables, fruit and vegetable fats are consumed instead of animal fats,
and more fish.
Chart 3 shows the split between expenditure on yellow and white line products in
an average private household:
1.5.2 General Consumer Trends
12 relevant food trends can currently be identified:
1. Population (currently 82m) will continue to decrease. Since 1972, the death
rate has been exceeding the birth rate. In 1950, for instance, the birth rate
was 5.4% higher than the death rate; in 1995, the death rate exceeded the
birth rate by 1.5%. This change in population structure will be reflected by a
decline in the value of the grocery market.
2. The number of younger people will continue to decrease, consequently the

number of older people will increase. In 1985, 23.1% of the population were
aged 60+. By 2000, this rate had increased to 26.6%. As this age group will
continue to grow, "senior food" will become an increasingly important factor.
3. The number of one/two person households will increase. In 2000, 16.7%

of the German population lived alone (1950: 19.4%). The average household
size in Germany is 2.2 persons (2000). This development will require smaller
pack sizes and will also result in less home-cooking.

4. The reduction in family size means a decline in the social aspects of
eating, such as the number of occasions a family sits down together for a
meal. Lifestyle changes are leading to increased out-of-home consumption.
5. Income distribution will polarise, e.g. double earners without children vs.
single parents bringing up children. In marketing terms, new, affluent target
markets could be: young double-earners, professional, working females, well-
off established couples (4050 years), well-off, young older people; at the
same time there will be a continuing increase in discounters.
6. Education standards in younger generation households have exploded in

comparison to their parents generation. Younger housewives are more aware
in their food purchasing behaviour and are more sophisticated. Consequently,
the health aspect, ingredients, freshness and quality of the products are
increasingly important.
7. The number of highly qualified professional women is increasing,

therefore reducing the amount of time available for cooking. The contrast
between weekday and weekend has become stronger. Frozen and
convenience food will increase. Already 18% of the total population (and 17%
of the females) find convenience products very important.
8. The share of freely disposable income has increased. This makes

consumers more susceptible to impulse purchases and occasional special
treats without worrying about prices. For instance, only 11% of the
population claim that prices for food are too expensive, but 18% claim that
declarations of ingredients are not adequate.
9. The rich are getting richer, the poor are getting poorer. Forecasts say that
unemployment will continue at a level of around 10%. Retailers are reacting
by expanding their value-lines as well as premium range in order to meet the
needs of both poles of the population.
10. The consumption climate is changing and needs watching carefully. With a
weak economy and a turbulent environment, people are starting to
withdraw into their private sphere. This could result in the growth of
small treats in the food area.
11. The growth in foreign food/products is likely to continue. Ethnic food is

growing in terms of restaurants, but less so in actual retail. 31% of the
German population have increased their consumption of ethnic foods
considerably (GfK research, 2001), most of which in out of home
consumption. As consumers travel increasingly, especially to long-haul
destinations, they are likely to experience exotic foods which they want to
taste back home as well.
12. A growing health orientation. 28% of the total population belong to a diet
type which is very fond of healthy food and a balanced diet. 18% of the
population demand less additives in food (1998: 15%) and 7% ask for less
chemical treatment of food products (1998: 3%). Additionally, people
nowadays are more sophisticated, better informed and thus take more care
over what they eat. Quality, freshness and the health aspect are increasingly
important for consumers, while the development of functional food has
already picked up.

1.5.3 Consumer Trends Specific to Dairy Products
There are currently 6 relevant trends which characterise the eating habits of
German consumers within the market for dairy products:
The trend towards indulgence and taste experience
There is one particular trend within dairy products: consumers are willing to try
new dairy products such as yoghurts or desserts, but if the taste is not
convincing, they will no longer buy the product. An appealing taste is the basic
criterion for the buying decision of any product.
Product examples within white line products for this trend are: creamy and
high-fat product variants such as cream yoghurts, desserts and chilled milk
snacks.
The trend towards healthy life and wellbeing
The consumers demand to live and eat healthily is strongly focused upon due
to the current uncertainty about the possible health consequences of different
types of food.
Consumers have again become increasingly interested in low fat products. Only
in Germany did the segment of low-fat or reduced fat yoghurts show growth
rates of 90% in the period between 1999 and 2001.
Consumers want to control their intake of ingredients such as fat, but at the
same time they want to enjoy dairy products and enjoy the full taste. Light
products will no longer be an alternative.
Due to the improvement in production technologies it is now possible to

produce low fat products which taste good and also have a creamy texture.
There is a boom in functional food in Germany although the absolute level of its
market share in total is still very low at 1.5%. However, the market continues
to grow rapidly. For consumers, these products have added values, e.g. they
contain certain ingredients such as vitamins or pro-biotic yoghurt cultures.
Yoghurt at 19% has the highest market share of total functional food products.
Consumers buy dairy products because they are supposed to be healthy and
taste good. This fact, combined with the idea of functional food, explains the
successful product launches of pro-biotic yoghurts, quarks, cheeses and drinks.
The idea of wellbeing is also the reason for the success of whey drinks (Molke)
in Germany. Products made with whey contain many proteins, minerals and
vitamins but they have a very low fat content.
In white line products this trend is mirrored, for instance, by the increasing
demand for extremely fruity dairy products, such as "Jobst" or "Froop", dairy
desserts that contain more fruit share than yoghurt.

The lack of time and the trend towards more convenience
This trend is a result of demographic developments, e.g. an increasing number

of single households, professional women, together with a more hectic way of
life have led to a reduction in the time available for preparing and cooking food.
This trend is also supported by the fact that younger consumers in particular
are strongly orientated towards leisure and enjoyment which has a significant
influence on their methods of preparing food and on their eating habits.
The trend towards convenience food can be clearly identified within the
segment of fresh milk products: yoghurts made with fruit and UHT milk, chilled
milk snacks, snacks, drinking yoghurts and spoon free yoghurts.
Snacks, out-of-home consumption and take away food in general are eaten
more and more as substitutes throughout the day instead of regular traditional
meals eaten at home with the family. Therefore, products which can be
characterised as convenient, tasty (enjoyable) and healthy have good growth
potential. Many white line products fulfill these characteristics, e.g. yoghurt
snacks and chilled snacks. In yellow line, this trend is reflected by the
increasing consumption of ready to eat cheese snacks, pre-packed cheese and
cheese ready meals, such as cheese fondue and baked cheese.
The trend towards paying specific attention to lifestyle
This trend has resulted in an increase of opportunities for products aimed at

specific age groups or life circumstances, such as products specifically for
children, older people or singles.
Following that trend, a significant growth in the market of childrens yoghurts

and quarks can be witnessed in German retail.
The trend towards paying attention to safety and environmental

responsibility
This trend reflects an increasing sensitisation of many consumers towards

moral and social aspects. The growing demand of consumers for natural
products and products with specific certificates are an indication for this.
Responsibility for the environment is resulting in the increased purchase of

organic products without additives, with environmentally friendly packaging and
logistics with short transport routes.
Important product categories within white line are organic milk and other milk
products based on organic milk.
The trend towards more cost-effectiveness
An increasing price sensitisation of consumers combined with high quality

expectations is becoming apparent in Germany. The consumer type of the so
called smart shopper, someone who wants to buy high quality products at low
prices is the prototype for this attitude.

There is also a strong polarisation of consumer demand which can be divided
into premium price and low price segments. This is a result of the improvement
in income situations within large sections of the German population. Therefore,
there is still enough growth potential for premium white line products.
Chart 4 in the appendix shows a positioning of selected dairy products to

specific consumer trends which have been described in this chapter
(convenience, health / wellbeing, enjoyment / taste, environment, natural).
1.4.4 Consumer Profiles
Consumer purchasing behaviour, food consumption and food expenditure have

changed noticeably in recent years. The volume supply of groceries has been
secured for quite a long time, which is why not only price but also freshness,
quality and taste of products are extremely important for consumers. Additional
factors, such as nutritional value and the production "background" of food, are
increasingly important for consumers as well.
Consumption behaviour is on the one hand affected by income and on the other
by lifestyle (e.g. household size, possibilities of stocking food and leisure
activities). The preparation and consumption of food is decreasing due to lack of
time and long working days. Instead, out-of-home meals are replacing traditional
home - made meals and convenience food is growing.
In spite of the extensive variety of food on offer, multiple lifestyles and basic
individual eating preferences, four different nutritional types can be identified.
1. Convenience
This segment likes frozen food and ready meals. It is important that meals are
easy and quick to prepare. Brands are not as important as the price and taste of
food. Freshness, healthy food and a broad variety are not important to this type.
They like both traditional cuisine and ethnic food and often buy from home
delivery services, e.g. pizza services etc. Very often this type is either a student
or a blue-collar-worker. 60% of this type are below 40 years of age and very
often young singles.
2. Traditional home cooking
Origin and the freshness of food are very important. Dislikes ethnic food,
prepared or RTE meals and home delivery services. Not health conscious.
Approximately 30% of the population belong to this segment. More than 60% are
above 50 years of age. Usually living in two-person-households and mostly
retired.
3. Ethnic Food
Prefers ethnic food and likes to try new things. Loves variety. Often goes out for a
meal, mo stly expensive restaurants. Very brand-conscious when food shopping.
Rejects RTE meals and products. Rarely eats traditional cuisine. Healthy eating,
wellbeing and freshness are vital. Approximately 22% of the population, mostly
between 30-50 years and academics.

4. Health-conscious
Top priority is low-fat and healthy eating. Likes both ethnic food and traditional
cuisine. Whole food and functional food are consumed regularly. Eat both RTE
meals and fresh products. Members of this segment are often gourmets. Enjoy
food shopping. Sophisticated but price-conscious. Approximately 28% of
population, all age groups and educational backgrounds.
Chart 5 gives an overview of the various nutritional types.
The frequency of food shopping naturally depends very much on the lifestyle, e.g.
full-time employees often only go shopping on Saturdays, whereas housewives
and pensioners can go shopping daily. There is not only a broad variety of
products on offer, but also an extensive choice of distribution channels where
food can be bought. Chart 6 gives an overview of how often the various
distribution channels are used.
The various target groups choose different shopping outlets. Research (GfK,
2002) found that the higher the income, the more different outlets are shopped
at. 78% of the population shop at least once a week in a small specialist shop
such as a butchery or a bakery. Larger superstores or supermarkets are visited
once a week at the most for bulk buying. More than a third of the German
population visits small supermarkets at least once a week. 90% of the population
shop occasionally in a discounter to purchase special offers.
Approximately 40% of singles use petrol station shops. Young families use
specialist drink stores and petrol station shops more frequently than the average
consumer.

2 Overview of the Retail Market
2.1 Retail Structure
2.1.1 Background to the Retail Environment
Food retail turnover rose by 1.3% to 101.1 bn (excl. Aldi) in 2001. Including
Aldi, food retail increased by 3.1% to 123.1 bn. Chart 7 gives a detailed
overview of the development both in the number of retail outlets in Germany and
in turnover over recent years.
The number of retail outlets continues to decrease, mainly applying to traditional

outlets (less than 800 sqm). The number of discounters and hypermarkets
continues to increase. In total, the number of retail outlets decreased by 4.1% to
56,200 retail outlets (excl. Aldi), plus 3,695 Aldi outlets nationally (Nielsen).
As Chart 8 and 9 indicate, traditional retail outlets increased in 2001 both in

outlet numbers and turnover. Hypermarkets and discounters continued to grow.
The most important planning law for retail, the "Baunutzungsverordnung

(BauNVO)", is also affecting the success of retail outlets. The BauNVO determines
that large retail outlets with a surface area of max. 1,200 sqm are only allowed to
be built in cities (Innenstadtkernen) or specially defined areas. It is illegal to build
these in any other area. This regulation is currently being reviewed in order to
expand the maximum surface area for large surface retail outlets to 2,000 sqm,
which corresponds to a selling space of approximately 1,500 sqm.
Discounters in particular benefit from the current regulation of restricting retail

outlets of 1,200 sqm. Retailers with a surface area of 700 sqm are allowed to be
established in industrial estates and "mixed areas" (mixed areas are residential
areas with industry which does not disturb residents, e.g. petrol stations, office
buildings, churches etc.). As the surface area of most discounters, especially Aldi,
equals their selling space, the current legislation provides an advantage for and
supports the development of discounters.
The main differences between German und UK retailers are:
1. Population per store: With approximately 60,000 food retail outlets in

Germany, this means an average of 1,366 shoppers per store. In the UK
with 39,400 retail outlets there are 1,490 people per shop.
2. In Germany, the importance of food shopping for German consumers is

constantly decreasing. Expenditure on leisure activities (e.g. holidays,
communication) is more important and has a bigger share in the private
consumption budget. Consequently, Germans prefer to buy cheap food
products rather than premium quality. The continuous growth of the
discounter chain Aldi within the retailer industry reflects this development.
In the UK, quality retailers such as Sainsbury's and Tesco are more
successful than discounters.
3. In Germany, private label food products only account for a market share
of approximately 22% (incl. Aldi) / 19.2% (excl. Aldi) with an increasing
trend. This compares with UK figures of 38%.

4. Whereas only 10-20% of German retailers use electronic ordering
systems, 80-100% of UK retailers are using information technology for
ordering products.
5. In Germany, only 50% of distribution among retailers is centralised. In the

UK, the centralisation of distribution amounts to 97%.
6. 39% of German retailers use scanners for payment / statistics. In the UK,
this figure totals 76%. Germanys biggest discounter chain has only recently
introduced scanner systems to its shops.
7. Stock carried by food retailers in Germany accounts for 36 days. In the UK

the turnover of products is much higher as stock is only carried for 17 days.
The most important trends currently affecting the German retail environment are
the trend towards shopping in discounters and the increase of private label
products in retail. Both factors will be discussed in detail in chapters 2.2.1 and
2.3. Another trend influencing the development of retailers and their product
range is the polarisation of growing market share of private label and increasing
strength of manufacturers brands. Weak secondary brands will become even
weaker and finally disappear from the market. This issue will also be discussed
extensively in chapter 2.2.1.
The latest development heavily affecting the German food retail market is the
discussion on introducing a deposit for containers for dairy products. The
introduction of the deposit regulation would affect dairies through increasing costs
for cleaning machinery etc., which in turn would lead to a reduction in jobs. As a
consequence, dairies and dairy companies would have to merge in order to
survive, sales and prices of standard dairy products would decrease. Thus,
discounters and private label products would gain additional market share.
2.1.2 Number of Stores and Shares by Store Format

Table 7 Germany: Retail Structure, 2000-2002
Store Format Value in Value in No. of outlets No. of outlets
bn 2000 bn 2002 2000 2002
Traditional Food 27.4 25.1 43,835 38,495
retail (<800sqm)
Hypermarkets (= 51.6 53.1 7,505 7,650
800sqm)
Discounters 20.8 22.9 9,760 10,055
Total 99.8 101.1 61,100 56,200
In 2000, traditional food retail (<800sqm) had a market share of 27.5% of

turnover of total food retail; this decreased to 24.8% in 2002. In terms of the
number of outlets, traditional food retail held a market share of 71.7%, which
decreased to 68.5% in 2002. Hypermarkets grew from a 51.7% market share of
turnover (2000) to 52.5% (2002). In terms of the number of outlets,
hypermarkets raised their market share only slightly from 12.3% to 13.6%.
Discounters are the winners in retail development over recent years with an
increase from a 20.8% (2000) market share to a 22.7% share (2002). Their
market share in number of outlets rose from 16% (2000) to 17.9% (2002). As
discussed in chapter 2.1, discounters and hypermarkets are increasing while
traditional retail (<800sqm) has been decreasing in recent years.

Ranking by turnover and number of outlets
In 2001, total food turnover in retail amounted to 131.7 bn. Chart 10 gives an
overview of the most important food retailers in Germany.
The largest food retailer in Germany is the EDEKA / AVA group with a food
turnover of 20.8 bn and a market share of 15.8%, followed by the Rewe group
with 19.76 bn (15%), Aldi (17.7 bn / 13.4%), the Metro group (14.2bn /
10.8%) and the Lidl & Schwarz group (8.4bn / 8.4%).
In 2001, the number of food retail outlets amounted to 58,600. Chart 11 shows
the number of retail outlets of the Top 5 German retailers. Rewe leads the list
with 4,365 food retail outlets, followed by Edeka with 4,063 outlets, Aldi (North
and South) with 3,620 outlets, Lidl & Schwarz with 2,200 outlets and Metro with
771 food retail outlets.
2.2 Retail Trends & Developments
2.2.1 Main Trends in Retail
The previously mentioned changes in lifestyles and food trends consequently have
an impact on retailers. But also the economic development, e.g. the introduction
of the Euro, and the current recession are influencing people's buying behaviour.
Discounters vs. Supermarkets
Both the introduction of the Euro and the ongoing recession in Germany have led
to a noticeable price increase on the one hand and more price-sensitive
consumers on the other. These factors, again, have led to the increasing success
of discounters. Taking into consideration that white line products are low-interest
products, it is not surprising that consumers tend to buy these sorts of products
where they are cheapest. Additionally, discounters started with the introduction
of the Euro serious price wars and clearly communicated price leadership to
consumers. Chart 12 shows the development of shares of white line distribution
channels: in the first half year of 2002, turnover and sales increased by 3.1% to
2.06 billion / 1.1 million tonnes. 49% of total sales of white line products are
sold in hard or soft discounters, which is 11% more than the first half of 2001.
Aldi North and Aldi South, the largest discounters in Germany, have consistently
decreased prices throughout their product portfolio. Other discounters such as
Plus (Tengelmann), Lidl (Lidl & Schwarz) and Penny (Rewe) had to follow in order
to be able to compete.
The increasing importance of discounters concerns all product lines. The share of
discounters grew from June 2000 to June 2002 from 43.7% to 49% in white line
sales. Sales of yellow line products are dominated by discounters with 41.5%.
Discounters have, thus, considerably gained in customer trust since the
introduction of the Euro and they are also becoming increasingly important as
they are beginning to replace supermarkets as a result of being able to offer a
similar range of products. Products such as frozen food, fresh products, especially
fresh dairy products, many premium products and trend products such as
breakfast drinks are being offered by discounters.

In order to prevent discounters from becoming too strong and powerful, non-
discounter retailers also plan to support manufacturers not supplying discounters.
The term retailers have created for such suppliers of manufacturers' brands is
"Frderlieferanten" (supported suppliers). Three of the biggest retailer chains,
Rewe, Metro and Tengelmann, have already started to support those
manufacturers who "boycott" discounters by additional free secondary display,
free special promotions with the manufacturers' brands etc. Retailers expect that
this will force manufacturers to choose between supplying discounters or
manufacturers and that most of them will invariably decide to supply full-range
retailers. Supplying retailers means a higher margin for manufacturers, supplying
discounters means more volume.
Private Label vs. branded products
Not only discounters affect the market of dairy brands but also private label
products have an impact on dairy brands. Supermarkets' private label products
nowadays fulfil the task of a discounter brand in non-discounter retailers. For
instance, Edeka's own label brand "Gut & Gnstig" (good & good value), Real's
"Toll im Preis" (good value) and Rewe's "Ja!" (Yes!) promise to offer the same
value for money as discounters' products do.
Sales of private label products increased in the first half of 2002 by 15%. The
share of private label white line products accounts for nearly 25% of total white
line sales (excl. Aldi). Sales of private label cheese products rose by 5% to 42%
of total cheese sales.
In order to survive the polarisation between private label and strong

manufacturer brands, brands and their benefits have to be strongly
communicated to the consumer. To achieve this, new product developments are
vital, especially in the white line range.
Manufacturers have already started to restructure their brand strategies and now
increasingly concentrate on umbrella brands, e.g. Allguland Ksereien (cheese
factory) and Nordmilch AG (brand "Milram"). Nordmilch AG, for instance, has
considerably reduced its brand portfolio and has introduced its strongest brand as
an umbrella brand for all its products both in the yellow and white line segments.
Deli counter vs. self-service / prepacked
Deli counters are losing sales shares not only to discounters but also to self-
service counters and pre-packed products. Within the cheese segment, sales of
self-service packs (incl. pre-packed) rose to 70% of total cheese sales. The
reasons for this development are the high costs of a deli counter service (e.g.
personnel costs) and the expanding self-service product range of manufacturers.
Niche products such as speciality cheeses and premium brands can no longer only
be found in deli counters but also in self-service counters. Another main reason
for the increasing number of self-service products is, according to research (AC
Nielsen), unqualified and unmotivated staff. Also, retailers are keen on keeping
costs to a minimum which is why they are no longer prepared to spend money on
high- maintenance services such as deli counters. The concept of offering pre-
packed products meets the retailers' needs to both cut down costs and keep the
credibility of offering fresh produce. Additionally, the introduction of the pre-
packed concept also meets the increasing demand for convenience products.

Increasing importance of convenience food products
Consumers lifestyle developments, such as changing consumption behaviour with

a reduction of traditional eating habits, an increasing trend towards out-of-home
consumption and changing household sizes (trend towards one- or two-person
households) are making retailers review their current shop structure. In order to
meet the consumers needs, retailers are increasingly expanding their
convenience food product range and developing separate convenience food
compartments. To take this further, retailers are also planning to restructure
shops by organising their product range according to consumption habits. This, in
turn, means a reduction in the frozen product range and an expanded offer of
chilled convenience products. Consequently, a larger part of the shop than before
will be dedicated to fresh products.
Although the increasing trend towards convenience products is commonly noted,

only two retailers are currently prepared to dedicate more shelf space to this
particular consumption habit: Rewe and Edeka.
2.3 Private Label
Private label share (overall and in dairy products)
Chart 13 compares the private label share of non-food products and food
products in various fascia.
In the first half of 2002, the market share of white line products grew by 15%,
compared to the same period in 2001. Share grew in all white line segments,
especially in the plain quark segment (volume: 54.1% / value: 48.8%), plain
yoghurt (volume: 39% / value: 28.3%) and herbal quark (volume: 36% / value:
25.2%). The average share of private label within a white line category amounts
to 24.8% (volume) / 18% (value). Private label share within the dairy dessert
category accounts for 29.6% (volume) / 19% (value), for fruit yoghurt it is
slightly below average (volume: 19.7% / 13.5%). Manufacturer brands are more
important in the fruit quark segment, in which private labels hold only a share of
17.7% (volume) / 13.2% (value), in the milk mix drinks segment they have a
share of 17.4% (volume) / 13.7% (value) and in the buttermilk category 16.1%
(volume) / 11.5% (value). Chart 14 shows how private label has developed in
various dairy segments.
In the first half of 2002, Aldi increased its market share in white line products by
21% to 281m kg. All other discounters increased their market share by 8.2% to
261m kg. The combined market share of all other retaile rs decreased by 5.9% to
565m kg.
Research from Axel Springer and Bauer has proved how popular private label
brands are amongst consumers. For instance, 30% of consumers buy yoghurt
from Aldi, but only 28% from Bauer, 27% from Ehrmann and just 25% of
consumers buy yoghurt from Danone. Chart 15 features the share of private label

Private label vs. branded in retailers (dairy products)
Figures above show that white line products, especially plain quark, plain yoghurt
and herbal quark, are particularly low-interest products for consumers, which is
why the share of private label products is constantly growing. Private label quality
is perceived to be as good as manufacturers brands.
According to GfK, market leaders of the FMCG product category increased share
between 1998 and 2001 from 26.1% to 26.4%. Although this is a relatively small
percentage, the second strongest brand in the market decreased its market share
from 12.8% to 12.7%. The same applies to the 3rd strongest brand (from 7.8%
market share down to 7.5%). The 3 strongest brands within a segment managed
to keep their market share stable. Private label and Aldi shares grew in the same
period from 16.3% to 20%.
Further research (VerbraucherAnalyse 2002, Axel Springer /Bauer) has shown

that even consumers shopping in discounters are extremely brand-conscious, just
like supermarket customers. For instance, 45% of Aldi shoppers pay more
attention to brands than to price. More than 50% of Aldi shoppers perceive
branded products to be of better quality than no-name products (with Aldi to be
defined as a well-established brand). This proves that there is still much potential
for branded products.
Consequently, manufacturer brands have to communicate their benefits very

clearly in order to avoid being mixed up with or replaced by private label brands.
As only big manufacturer brands will be able to invest further in communication
with the consumer, the polarisation between price and product (i.e. image and
benefit perceived), i.e. private label versus manufacturers brands, will increase.
Consequently, weak manufacturers brands will lose out to private label, strong
brands will become even stronger.
Key retailer private labels (dairy products)
Germany: Key Private Label Brands of Key Retailers

Retailer (Fascia) Private label brand Positioning
Rewe (toom, HL, minimal) Fllhorn Organic private label brand
(Premium segment)
Erlenhof B-Brand
Ja! Discount brand
Metro (real) Toll im Preis (TiP) Discount brand
Aldi South Milfina, Desira, Biotic, Aldi dairy brands
Biogarde, Zoma, BI AC,
Butterfly
AVA Edeka (Edeka, Mibell B-Brand, only dairy
Marktkauf) products
Gut & Gnstig Discount brand
Lidl & Schwarz (Lidl) Milbona Lidl dairy brand
Rewe (toom, HL, minimal) sell three different categories of private label
products: Fllhorn is a premium price brand for organic products. Erlenhof is their
second brand and includes the basic range of groceries, not only dairy products
but also vegetables, fruit, salads, eggs, tinned food, jams, rice and pasta. "ja!" is
Rewes third private label brand, which is their discount brand. The product range
includes not only dairy products (yoghurt, cream, milk, cheese) but also non-food
articles, frozen food, tinned food and all other basic groceries.

Metro (real) sells its private label products under the "TiP" brand (Toll im
Preis= good value), which is positioned as a discount brand. The brand includes
all basic groceries such as milk, yoghurt, cheese, sugar etc).
Aldi South offers various exclusive brands for dairy products: probiotic private
label products are offered under brands such as Biotic, BI AC. The Desira brand
offers yoghurt and desserts (rice pudding, fruit yoghurt, quark dessert). Aldi also
offers buttermilk desserts (Butterfly), Biogarde (low-fat yoghurt, plain yoghurt),
Milfina (herbal quark, sour cream, yoghurt, plain quark), Tuffi (semolina
desserts), Zoma (milk desserts) and Biotic (probiotic fruit yoghurt). Aldi Sd
offers private label milk (Milfina) and milk mix drinks (Desira) as well as
evaporated milk (Milfina, Desira).
Edeka offers two different private label products: Gut & Gnstig (good value)
stands for their discount brand, which covers all basic groceries, e.g. basic dairy
products as well as other basic groceries and non-food products. Edeka also has
second brands, i.e. private label brands for each individual segment, e.g. Bio-
Wertkost for organic fruit and vegetables, Rio Grande for breakfast products and
fruit products, SnackBar for savoury snack products, Gutfleisch for meat and
Mibell for dairy products. They offer an extensive range of dairy products under
their Mibell brand, including milk (fresh and UHT), milk drinks, evaporated milk,
cream, probiotic drinks, desserts, yoghurts and quark as well as a vast range of
cheeses.
Factors behind growth/success of private label
Various factors are responsible for the increasing success of private label
products. In 2001, one year before the Euro was introduced, retail prices for dairy
products increased dramatically (to their highest level since 1989) as
manufacturing prices for dairy products reached their peak and retailers took the
chance to increase prices before the Euro conversion. Chart 16 shows that the
average price for long-life milk, for instance, rose by one third within a year.
Due to the ongoing recession in Germany, high unemployment rates and the
above mentioned price increases, consumers are seeking out possibilities for
spending less money, especially for low-involvement products. This is a need
which discounters, especially hard discounters such as Aldi, are meeting. Private
label products in supermarkets also offer similar products as manufacturers
brands, but for lower prices and of similar quality. Not only the quality of private
label products has considerably improved compared to manufacturers brands
but also the product range has become rather extensive.
Research (Olbrich, 2001) revealed that, due to the increasing internationalisation

of retailers, private label brands are supplied to various countries. Thus, private
label products will become increasingly internationally established and become
even stronger brands. Currently, only weak manufacturers brands are losing out
to private label, but for the future, private label - by being international - is also
perceived to become a threat to strong manufacturers brands.
Furthermore, the demand for cheaper replacements for manufacturers brands

will increase as the target market for private label products is constantly
increasing. For 42% of consumers aged 50+, price is more important than a
strong brand. As the number of older people will increase due to a decreasing
birth rate, this target group will grow and become more powerful.

2.4 Logistics, Margins & Payment Terms
Payment
Payment in chilled value-added products in Germany is on average 2128 days

after receipt of invoice.
The main accounts generally pay as follows:
Metro within 30 days

REWE within 30 days
Wal*Mart within 30 days
Globus within 21 days
(or within 12 days via Selex Tania)
Tengelmann within 21 days
Aldi within 30 days
EDEKA within 30-45 days
Lidl & Schwarz within 30-45 days
Karstadt within 30-45 days
Plus (Tengelmann discounter) is currently trying to extend payment terms to 60

days but is not having any success with suppliers. Some dairies (e.g.
Schwlbchen) have payment terms of up to 45 days.
The VAT rate in Germany on non-food products and luxury foodstuffs is 16%, on
basic food products a reduced rate of 7% applies. The VAT rate on dairy food
products amounts to 7%. Currently, there is a discussion to increase VAT rates by
2 percentage points. However, no decision has been made as yet.
Retailers are generally not paid any listing fees and / or promotional support
for dairy products listed. However, in order to prevent discounters from getting
increasingly strong and powerful, non-discounter retailers also plan to support
manufacturers not supplying discounters. The term retailers have created for
such suppliers of manufacturers' brands is "Frderlieferanten" (=supported
suppliers). Three of the biggest retailer chains, Rewe, Metro and Tengelmann,
have already started to support those manufacturers which boycott discounters
by offering additional free secondary display, free special promotions with the
manufacturers' brands etc.
Margins
Margins vary from retailer to retailer and also from supplier to supplier.
In chilled food into the dairy cabinet, the minimum margin would be paid by
Ferrero with its heavily advertised Kinder-Milchschnitte cream sandwich bar. The
standard here is 30% and no further overriders except a year-end bonus of up to
3% according to turnover achieved in the previous 12 months.

Margins of retailers vary by type of outlet. Generally, margins are divided into
four categories. On average these would be:
Discounter 20-22 % (incl. VAT)

Cash + Carry / Hypermarkets approx. 25% (incl. VAT)
Supermarket 27% / 28% (incl. VAT)
Department Store Food Halls approx. 30% (incl. VAT)
Prices of dairy products can also include a percentage of around 8.5% for
warehouse e.g. delivery to a central depot. A designated broker, e.g. FZ Sd,
generally receives a margin of 16-18%.
Margins on dairy products can be divided into

Unpacked products / deli-counter up to 70% (incl. VAT)
Packed goods (yellow and white line) 40-42% (incl. VAT).
Logistics
German retailers have been slow to move into own logistics systems, tending
instead to rely on suppliers or third party brokers.
In recent years, as margins have become tighter and interest in private label has
grown, there has been a trend towards improving logistics. This started in
ambient and is now moving into chilled and frozen.
Historically, distribution of chilled and frozen food has been handled by brokers
such as FZ group (FZ West, FZ Sd) and individual regional specialists like Wilms.
Wal*Mart (with 95 ex-Wertkauf and InterSpar stores) was the first food retailer
with plans to adopt the British method of using an external company (Tibbett &
Britten) to completely handle the logistics system for ambient, chilled and frozen.
This is only working optimally in ambient.
It should be noted that chilled logistics comprise a mixture of systems, e.g.

meat and poultry are supplied at 0-4 C. Retailers are only able to guarantee 7o C
in store.
Most retailers have tended to use regional dairies as suppliers and brokers for
their dairy range. Milk/yoghurt/butter etc. is supplied to retailers at 4-7 C. For
example, Schwlbchen Dairy in Bad Schwalbach near Wiesbaden supplies its own
range of drinking milk, yoghurts etc. as well as other brands into all Rewe fascia
in the Rhine-Main area. Suppliers use the dairy as a delivery point.

Germany : Retailer Logistics
Group/Fascia Logistics
Aldi North Delivery of goods to the 2,400 stores exclusively via
their own 35 central depots at least twice per week with
own fleet of trucks. Stores with particularly strong sales
receive deliveries up to twice daily.
Aldi South Delivery of goods to the 1,400 stores exclusively via
Lidl & Schwarz / Lidl Discount Delivery of goods to the 2,300 stores via the 21 branch
depots.
Lidl & Schwarz / Kaufland / Delivery of goods via manufacturers as well as the
Kaufmarkt hypermarkets central depot. Central depots increasing in importance
to all 297 stores.
Metro / real Delivery of goods via manufacturers as well as the
central depot for the fresh, chilled, frozen and dry
product lines to the 246 stores.
Metro / extra Delivery of goods via manufacturers as well as the
Metro / Kaufhof Delivery of goods in the fresh product lines directly via
manufacturer to the 25 department stores with food
halls. Only dry product range via the central depot.
Rewe / toom Delivery of goods to the 59 hypermarkets via
manufacturers as well as 30 central depots for the fresh,
chilled, frozen and dry product lines.
Rewe / minimal Approx. 80% of goods deliveries to the 903 stores via
the 30 REWE central depots.
Rewe / HL Up to 98% of deliveries to the 780 stores via 30
responsible central depots. Only 2% supplied by
wholesalers or manufacturers.
Edeka / neukauf / aktiv markt Fresh, chilled and frozen products supplied exclusively
via the central depot to the 134 stores.
Edeka / aktiv markt Fresh, chilled and frozen products supplied exclusively
via the central depot to the 1,036 stores.
Karstadt Goods delivered by third-party suppliers, e.g. Merl,
EDEKA-depots and Karstadts own depots to the 80
department stores with food halls.

2.5 Retailer SWOT
Due to the fact that the sector of dairy products is the most important food
category in German retail and a very profitable business too, retailers tend to
treat dairy products sensibly.
The chilled section is one of the most frequented areas in retail: the variety and
the quality of both yellow and white dairy product lines are an important
indication for the general attractiveness of an outlet.
Germany-: Retailer SWOT

Group/Fascia Strengths/Opportunities Weaknesses/Threats
1. METRO Group International links Inefficient central
(Makro) distribution
Dominant force in C+C Focus on big brands
Market leader in High cost of entry
hypermarkets (real,-)
2. REWE Group Size Distribution system not
Various fascia quite complete (in
Interested in convenience particular for chilled
food products)
Good hypermarkets Listing procedure
(toom)
Strong central buying
Full range supermarkets
3. EDEKA / AVA Size National and regional
Group Various fascia buyers
Interested in quality and Too many depots (but
private label owned)
Full range supermarkets Many small, rural outlets
Regions at different
levels of development
Listing procedure
4. ALDI Perfect logistics Only exclusive brands
Volume potential Focus on price
Central negotiation No innovations
Very reliable partner Limited range
Strong in both dairy discounters
product categories
5. Karsta dt / Quelle Use brokers for chilled Only department store
products food halls
Focus on quality and Consumer frequency
speciality products lower than in other
Importance of deli- fascia
counter cheese Dairy products (in
More service-orientated particular packed
in yellow line products versions) mainly bought
from classic retailers
(superstores) or
discounters
6. Schwarz Group 2 strong fascia Very elementary and
Large superstores limited product range
(Kaufland) Focus on big brands and
Efficient discounters main stream product
(LIDL) categories
Good distribution Strengths mainly in
systems Southern and Eastern
Germany

3 Retailer Profiles
3.1 Key Retailers in the German market
Edeka / AVA
Edeka Zentrale GmbH & Co.KG
New-York-Ring 6
D - 22297 Hamburg
Edeka, founded in 1907, is a co-operative and power is divided amongst the

regions. The regions themselves are now more concentrated into North, West
and South. In 2003, they will be completely restructured. The head office will
remain responsible for servicing the regions.
Edeka's head office is located in Hamburg. They purchase nationally for 24
branded manufacturers with the rest split between Hamburg and regions.
Symbol/multiple combination.
Total food turnover of Edeka in 2001 amounted to 20.8 bn.
Turnover splits into 83.1% food, 16.9% non-food.
Edeka's total turnover amounts to 19.6 bn (2001) through a total of 3,800
stores under a variety of different fascias. Edeka owns the Bielefeld-based
AVA-group.
AVA turnover amounts to 5.53 bn through 115 Markt kauf hypermarkets plus
various supermarkets. It is based in Bielefeld. Marktkauf has a good central
distribution and is making progress in chilled products / basic ready meals etc.
Store structure has changed dramatically since 1985, when 53% of outlets
were under 400 sqm. This is now down to 13.7%. During the same period,
turnover share of stores over 400 sqm increased from 46% to 86.3%.
Edeka has own brands in 35 product categories, e.g. Mibell for dairy products,
Fischfein for canned fish, Bancettor for frozen pizza etc, with 55 labels for 780
private label products.
Logistics are linked to the regional depots of the 3 regions. Edeka has over 40
distribution centres.
Now own 10% of Globus and reduced shareholding in Edeka Denmark from
50% to 16.6% in 6/02.
Other interests are in Poland, Czech Republic, France, The Netherlands and
Austria.
Food retail split:
Type of Store Fascia No. of Outlets Turnover in bn

Hypermarkets Marktkauf, E-Center,
Herkules, EZB,Cercek,
Alueda Center, dixi 387 6.73
Superstores E-neukauf, V-Markt,
Delta, Aktiv Discount 135 0.77
Supermarkets E-neukauf, Reichelt,
Comet, SB-Halle, E-aktiv,
Edeka Markt, Kupsch 1,322 4.62
Discounters NP, Diska, Treff, Kondi 630 1.07
Full-range grocery retailer

Rewe
Rewe Zentral AG
Domstrae 20
D 50668 Kln
Total food turnover in 2001 amounted to 19.76 bn.

Turnover splits into 68.6% food and 31.4% non-food.
Head office and buying is located in Cologne.
The group is divided into regions with own logistics. The regions are Eching
(Munich), Hungen, North, East, Rosbach, South-West and West.
The Rewe group owns Billa, the No. 1 Austrian retailer with 95 Merkur stores
and 912 Billa supermarkets. REWE is also present in Bulgaria, France, Italy,
Croatia, Poland, Romania, Czech Republic, Slovakia, Ukraine and Hungary.
Rewe sold its 28% share of Budgens in August 2000 to Musgrave.
Other business sectors include Food Service (wholesalers), Travel (DER, LTU)
and Media (Promarkt, PRO 7).
Food retail splits:
Type of Store No. of Outlets Turnover in bn

Hypermarkets 59 1.62
Large Superstores 124 1.23
Small Superstores 903 4.19
Supermarkets 780 2.40
Discounters 2,263 5.37
They are becoming opinion leaders in chilled food, in particular via their 1,000
Minimal stores. Chilled distribution within their 6 regions is starting to work.
Full-range grocery retailer.
Aldi
Aldi Nord GmbH & Co. oHG Aldi Sd GmbH & Co. oHG
Eckenbergstrae 16 Burgstrae 37-39
D - 45307 Essen D 45476 Mlheim a.d. Ruhr
Total food turnover in 2001 totalled 17.71 bn (18.87 bn estimate for 2002).
Turnover splits into 81% food and 19% non-food.
The discounter chain has a total of 3,800 outlets in Germany.
Aldi is a private company established in 1963 and owned by brothers Karl and
Theo Albrecht. They have pioneered the discount concept in Germany.
Originally, the stores were located in high-streets and covered 300-400sqm.
Since the late 80's outlets have become larger (800 sqm) and are found more
in peripheral locations with parking. By 2000, 75% of outlets were based on
this concept.
Aldi's product range mainly comprises exclusive labels since Winter 99
(delisted Nestl Chocolates, Kelloggs).
In Germany, Aldi is divided into 2 regions: Aldi North 2,400 stores, 750 items
(10.8bn), 35 depots. Aldi South 1,400 stores, 640 items (10.8bn), 27
depots. The split between North and South runs along a line dividing Germany
at the level of Cologne. Scanner cash desks in all Aldi South outlets since Oct.
2000 and in several Aldi North depots. Both are increasingly showing interest
in product differentiation.
Aldi has the best logistics system in German food retailing.
Other markets include: Austria Hofer, Netherlands, Belgium, Lux., Denmark,
France (end 02: 498 outlets), UK, Ireland, USA (10% of No.2 retailer
Albertson + discounters in Mid-West), Australia, Spain (12 outlets in late 02).
Limited range discounter.

Metro
Metro AG
Schlterstrae 41
40235 Dsseldorf
Metro group was Europe's No. 1 retailer until the Carrefour-Promods merger.
Metro is Germany's No. 1 hypermarket operator with 246 "real" stores and
No. 1 cash & carry operator with 108 outlets.
Head office and buying are based in Dsseldorf.
Metro's total food turnover in 2001 amounted to 14.21 bn.
Turnover split into 45.2% food, 54.8 % non-food.
In 1998, to block Wal*Mart's progress on the German market, Metro bought
Allkauf and Kriegbaum, both regional hypermarket operators. This added
approx. 90 further outlets to the "real" fascia and left Wal*Mart with very few
additional regional expansion opportunities.
Full-range grocery retailer and C+C.

C+C Metro/Schaper 108 6.44
Hypermarkets real 246 8.27
Superstores Extra/Comet 494 3.28
Dept. Stores Kaufhof (25 with food) 134 4.13
Lidl & Schwarz

Lidl Stiftung & Co.KG
Rtelstrae 30
D 74172 Neckarsulm

Turnover split: 80.3% food, 19.7% non-food.
The Lidl group is based in Neckarsulm, N. of Stuttgart, and Heilbronn
(Kaufland) and is owned by D. Schwarz who passed ownership on to the
Dieter Schwarz Foundation GmbH in 1999.
Lidl has a total of 2,673 outlets in Germany.
The group is split into two separate entities: the highly profitable discount
group with 2,300 outlets and the hypermarket division.
Full-range grocery retailer (Kaufland) and limited range discounter (Lidl).
Food retail split:

Hypermarkets Kaufland/Kaufmarkt 297 5.67
Superstores Handelshof 76 1.04
Discounter Lidl 2,300 6.53
They are the No 1 hypermarket group in East Germany with 125 Kaufland
outlets.
Lidl have 4 depots for Kaufland and 21 regional depots for Lidl discount.
There is currently not much potential beyond basic chilled ranges.
Their central distribution now works very well, covering 60-70% of turnover
in Kaufland and all of Lidl- Discount.
Lidl is also established in France (end 02: 1,017 outlets), UK, Ireland,
Belgium, Greece, Italy, The Netherlands, Portugal, Spain and Austria (since
Oct.1998), Finland, Croatia, Poland, Slovakia, Czech Republic.

Karstadt
Karstadt Warenhaus AG
Theodor-Althoff-Strae 2
D 45133 Essen
Total food turnover in 2001 amounted to 708m.

Turnover split: 11.2% Food and 88.8% non-food.
Head-office and buying is situated in Essen.
Karstadt is the leading department store chain in Germany with Karstadt,
KaDeWe (Berlin flagstore), Wertheim, Alsterhaus.
It has a total of 188 Karstadt department stores - 81 have food departments.
Other business sectors include mail order, travel, IT, finance and property.
Range: gourmet foodhalls
3.2 Promotional Activities

The majority of retailers have introduced a loyalty card for their customers: either
one that offers discounts on purchases or one that offers participation in lotteries.
Other promotional activities include product leaflets and advertising.
Edeka / AVA:
Edeka spends approx. 7m per year on advertising, mostly press. They offer a
customer loyalty card "Edecard". Customers owning a loyalty card automatically
participate in lotteries. Edeka offer a weekly customer magazine available for
"Edecard" owners. Marktkauf, AVA's hypermarket fascia, is also currently
considering launching a customer card with an integrated lottery.
Rewe
Minimal and HL, Rewe's supermarket fascia, arrange joint promotions on special
occasions. Rewe is planning the launch of a non-personalised club card which is
expected to offer extra benefits, e.g. in co-operation with hotels, travel agencies,
cinemas. The card is expected to be launched in the 2nd quarter of 2003.
Aldi
Both chains only do the minimum amount of promotional activities. Aldi North and
Aldi South both intensified their advertising as of April 2002. Advertising includes
newspaper advertisements (twice per week), in-store posters and leaflets. The
leaflets mainly promote special offers, focusing on non-food products.
Metro
The total advertising expenditure of the Metro group (including Real, Extra,
Kaufhof, non-food hypermarkets Praktiker and Media-Saturn) amounts to approx.
500m annually. For their department store Kaufhof, sport-fascia Sport Arena
and hypermarket fascia real, they offer a customer card called "Payback card", a
debit card that offers discounts on products purchased. The customer card also
provides special offers for card owners in co-operation with Lufthansa.
Lidl
Lidl's promotional activities are very similar to Aldi's. Lidl only advertises twice
per week in the regional press (colour advertisement). They also use in-store
posters and handouts, mainly promoting special offers and non-food products.
Karstadt
In 2001 and 2002, Karstadt advertised heavily on television using celebrities.
Karstadt also offers a customer loyalty card, launched in 1996. Customers receive
discounts on products purchased with the card and it is also available as a debit
card. In 2002, 8.2m loyalty cards was issued, 1m of which were debit cards.

4 Retail Store Checks
Methodology
Store checks were conducted in the following stores in March 2003:
- Metro Group: real,- (hypermarket), Kaufhof (food hall). Metro is

the No 1 hypermarket operator with their real,- stores in Germany.
- Rewe Group: Toom (hypermarket)
- Edeka/AVA Group: not covered because there are no stores
available in the area.
- Aldi: Aldi South (hard-discounter)
- KarstadtQuelle: Karstadt (food hall)
- Lidl & Schwarz Group: Lidl (hard-discounter)
Those Top 6 retailers represent 75% of German retail.
All of the 5 selected dairy product categories i.e. cheese, yoghurts, dairy
desserts, dairy drinks and UHT milk were analysed in detail.
Key dairy products i.e. leading brands/private labels were observed by

manufacturer, brand name, flavours, product variations, pack sizes and
formats, pricing and weight.
Germany: Number of references / private label per retailer

METRO REWE ALDI LIDL Kaufhof Karstadt
(real,-) (Toom)
Cheese (Packed) 308 289 7 10 129 139
Private Label 42 17 25 69 - -
Yoghurt 273 177 - 4 133 105
Private Label 15 25 35 17 5 5
Desserts 131 71 - 8 54 64
Private Label 6 - 32 13 - -
Dairy Drinks 96 98 - 1 28 36
Private Label - - 10 12 2 -
UHT Milk 12 9 - - 9 9
Private Label 6 5 2 2 - 2
Source: FFB Germany, Store Checks
Summary Results Analysis
Product ranges do not vary very much in terms of pricing, composition of

assortments, flavours etc. from one full-range grocery retailer to another full-
range grocery retailer. Therefore, dairy assortments in leading hypermarket
chains of METRO (real,-), EDEKA (Marktkauf) and REWE (Toom) are very
similar.
Product assortments and the number of dairy SKUs vary a lot from fascia to
fascia within one retailer mainly due to the limited shelf space of smaller
outlets. Smaller outlets e.g. supermarkets such as HL from REWE do not have
all different varieties of a brand or many specialities whereas Toom, the
hypermarket fascia, sells them all.

The cheese assortments of larger outlets, in particular those of hypermarkets,
include different pack sizes of one product, e.g. cheese in slices, 150g cheese
block, 500g cheese block. Sliced cheese in innovative convenience plastic
packs is not sold through discounters.
The main hard-discounters ALDI and LIDL have only a limited range of dairy
products which is part of their strategy and they sell only high volume
products.
Although the absolute number of private label references seems to be low,

private label in total represent significant volumes within the observed
categories in German retail.
Food halls have also a smaller product portfolio compared to hypermarkets

within the different dairy categories, but they sell only the key brands and
lead products of each category. Their competence is more on deli-counter
cheese and cheese specialities because they cannot compete on pricing and
offer a qualified service behind the counter instead.
The following table shows the price differentials of key products between retailers
by selecting one key product per dairy category.
Germany: Price differentials of key products between retailers

(real,-) (Toom)
Cheese 1.19 1.09 0.99 1.05 1.35 1.39
(Packed)
Kraft,
Philadelphia,
200g
Yoghurt 0.35 0.35 0.34 0.25 0.45 0.39
Ehrmann Fruit
Yoghurt, 150g
Desserts 0.45 0.55 0.29 0.39 n.a. 0.55
Mller Rice
Pudding, 200g
Dairy Drinks 0.55 0.65 n.a. 0.44 0.69 0.75
Mller, Milk
Mix Drink,
500ml
UHT Milk n.a. 0.69 0.59 0.55 0.89 0.79
Schwlbchen,
1l, 3.5% fat

5 The Market
5.1 Milk Production
Milk Production in Germany
In 2002, 27.8m tonnes of cow's milk were produced in Germany, of which 26.7m
tonnes were processed. The production rate dropped by 1.4% (2001: 28.2m
tonnes), the processing rate went down by 1.6%. The German dairy industry
turned over 19.21 billion (2001: 21 billion) with approximately 37,000
employees. In total, 5.5 million tonnes of drinking milk were produced (+0.1%),
211m tonnes of buttermilk (+0.5%), 2.7m tonnes of fresh dairy products, of
which 1.5 million tonnes were yoghurt (+0.3%). 540,000 tonnes of cream and
cream products were produced in 2002, 5.6% less compared to the previous
year, and 1.9m tonnes of cheese (-0.3%). Export accounts for 17% of total
turnover (3.52 bn).
Key Suppliers of Milk
Chart 17 gives an overview of the top ten dairies in Germany. The 10 biggest
dairy producers process 53% of the national milk production and account for over
half of the total turnover of dairy products. Key suppliers include Nordmilch
group, Humana Milchunion eG, Campina GmbH, Alois Mller, Hochwald, Zott,
BMI, Bayernland, Omira/Neuburger and Hochland.
a) Nordmilch group is a registered co-operative and has 12,453 milk producing

members, 21 of which are dairies. All others are privately-owned farms. In
2001, the members of Nordmilch eG produced 3,800 billion kg of milk and
turned over 2.242 billion.
b) More than 8,000 members delivered 3.2 billion kg of milk to Humana

Milchunion eG in 2001. Three sales companies, Humana Milchunion eG,
Humana GmbH and Euro Cheese Vertriebs GmbH, which are owned by
Humana, sell the key branded products (Ravensberger, Sanobub, Osterland,
Humana, Humana Vital, Sonana, Landhof, Golden Cheese and Mascarpone
Casarelli) and private label products directly to retailers.
c) Campina GmbH, the Dutch-owned group, has more than 5,600 members and
turned over more than 1.2 bn in 2001 with a production of more than 1.6
billion kg of milk.
d) Bayerische Milchindustrie eG (BMI) turned over 220m and produced

114,286 tonnes of dairy products, mainly milk and buttermilk, milk powder and
whey powder. A planned merger with Bayerland eG failed last year.
e) Bayernland eG processed 140,000 tonnes in 2001 and turned over 507m.

Bayernland mainly produces yellow line products, i.e. cheese and butter.
Bayernland is also the leading distributor of Swiss and Italian cheese (Galbani)
in Germany. Since 2000, Bayernland is also the sole distributor for all products
(excl. whey products) of Kserei Bayreuth eG (co-operative cheese factory
with a turnover of 145m).
f) Omira / Neuburger, Ravensburg, processed 842m kg of milk in 2001 and

turned over 452m. Omira Group specialises in dried milk products, but also in
UHT milk, butter and cheese.

Imports of milk and dairy products vs. domestic production
Imported dairy products include milk with 858,706t (+38.7%), 856,891t

(+38.8%) of which were imported from EU countries, milk powder with 76,804t,
of which 42,297t were imported from EU countries and cheese with 391,798t, of
which 356,776t were imported from EU countries. Imports of plain yoghurt and
other acidified milk products accounted for 31,128t, of which 29,884t were
imported from EU countries (-41% compared to 2001), imports of yoghurt and
other acidified milk products with admixtures amounted to 61,501t, 57,621t of
which were imported from EU countries (+61.2%). Total yoghurt and
buttermilk powder exports in 2002 grew by 133.8% to 21,555 t, of which
21,541t originated from other EU countries. Milk mix drinks imports totalled
43,488t (-7.9%), of which 41,370t were delivered from EU countries. Whey and
concentrated whey imports amounted to 132,807t (-32.4%), of which 117,450t
were imported from EU countries. Chart 18 shows the amount of different dairy
products which were imported in the year 2002.
Total drinking milk imports amounted to 27,300t in 2001 (12.8m) and total
cream imports to 7,500t (10.8m). Imports of bulk milk accounted for 601,700t
(202.8m), of which 46,100t (15.3m) were imported from France, 186,500t
(63.4m) from Belgium/Luxembourg and 201,400t (66m) from Austria. Imports
of bulk cream amounted to 44,600t in 2001 (71m), of which 5,300t (10.3m)
were imported from France, 3,200t (5.2m) from Belgium/Luxembourg, 8,800t
(13.6m) from the Netherlands and 14,600t (23.6m) from the UK.
The main EU import countries for Germany are Denmark, France, Belgium/
Luxembourg and Austria. In 2001, 1,600t of milk worth 1m were imported from
Denmark. 24,200t of milk worth 11.1m were imported from Austria. In total,
55,000t of yoghurt and buttermilk products were imported, 20,200t of milk mix
products (19.6m) and 48,700t of milk mix drinks (53.8m).
In 2001, 5.5m t of drinking milk were produced in Germany (+1.1% compared

to 2000). A total of 2.3m tonnes of milk mix products was produced (-1.7%), of
which 1.9m tonnes were yoghurt, kefir and similar products (-1.2%). Cheese
production reached its peak in recent years with a total production of 1.9m
tonnes (+4.5%), which means that more than 40% of raw milk in Germany is
processed into cheese. Figures also show that production grew more than
consumption: exports increased, imports decreased. Germany has become
market leader in cheese production in Europe. 25% of European consumption is
produced in Germany.
Domestic production of drinking milk in 2001 amounted to 5.5m tonnes,

buttermilk to 210,000t. 2.7m t of fresh dairy products were produced, of which
1.5m t were yoghurt and yoghurt products, 378,000t cocoa products and milk
mix drinks, 560,000t cream and cream products, 415,000t butter and 1.8m
tonnes cheese.
Exports of dairy products
In 2002, export accounted for 3.2 billion, which is 10.3% less compared to the
previous year (2001: 3.5 bn). The most important German dairy products for
export are cheese, fruit yoghurt, milk powder and butter. On average, more
than two thirds of all dairy exports are delivered to EU countries, only one third to
non-EU countries. Germany's reunification in 1991 led to a considerable
expansion of cheese production capacity, which in turn increased Germany's
international importance as a cheese exporter.

Exported dairy products include milk with 1,736,412t (-1.4%), of which
1,713,674t (-1.4%) were exported to EU countries, milk powder with 153,685t,
of which 124,019t were exported to EU countries and cheese with 473,849t, of
which 374,161t were exported to EU countries. Exports of plain yoghurt and
exported to EU countries (+0.1% compared to 2001), exports of yoghurt and
other acidified milk products with admixtures amounted to 331,371t, of which
277,878t were exported to EU countries (-0.3%). Total yoghurt and buttermilk
powder exports in 2002 dropped by 16.5% to 12,345t, of which 11,083t went to
other EU countries. Milk mix drinks exports amounted to 68,391t (-4.7%), of
which 62,272t were delivered to EU countries. Whey and concentrated whey
exports totalled 167,773t (-76.6%), of which 162,256t were exported to EU
countries. Chart 19 shows the export figures of various dairy products for the
year 2002 (Jan - Nov).
The main EU export countries for Germany are Italy, France, The Netherlands
and Belgium/Luxembourg. In 2001, 167,900t of milk worth 73m were exported
to Italy. A total of 140,300t of milk (58.5m) was exported to The Netherlands,
79,200t (30m) to France and 114,800t of milk worth 44m were exported to
Belgium/Luxembourg .
Italy is the most important export country for German dairy products, followed by
France and Russia.
How many farmers are involved in domestic production
The German dairy industry comprises 118 companies, 258 production sites and
36,900 employees. It is one of the most important industry categories in
Germany with a 127 bn turnover (2001).
In 2002, 126,300 farms with milk production facilities (2001: 129,900) and
dairies in Germany with 4.4m cows were producing 27.8m tonnes of milk. Most
farmers with privately owned farmyards and privately owned dairies are
organised into a total of 378 registered co-operatives. Those co-operatives or
associations either provide the facilities for processing the milk into dairy products
and selling them to retailers or for selling the milk on to processing companies.
The largest co-operatives are Nordmilch eG, Humana Milchunion eG and
Bayerische Milchwerke eG, which are among the top ten dairy product suppliers.
Total turnover of all dairy co-operatives amounted to 0.5 billion in 2001.
Only a small share of privately owned dairies or farms, such as the Rcker-Group
or Friesenmilch GmbH, for instance, sell directly to retailers, schools, bakeries,
private households and cafs.

5.2 Dairy Product Market
5.2.1. Market Overview
The German dairy market can be divided into two basic segments: the cheese
market on the one hand and the white dairy products such as milk, milk drinks,
quark, dairy desserts and yoghurt etc. on the other. Due to the colour of most
cheese products this segment is called yellow line and the mostly white milk
products are called white line. This report will follow that breakdown.
(1) Market Overview Yellow Line
Cheese production and consumption in Germany increased in 2001 versus the

previous year, but there was a stagnation of cheese consumption in 2002.
Germany shows a per-capita consumption of 21.6 kg. Hard, sliced and soft
cheeses account for more than 50% of total cheese consumption. The volume of
cheese consumption reached a level of 1.75 m. t. Since 2000, the volume of
cheese exports is higher than the one of cheese imports.
Basically, the market share of German cheese has increased from 60% in 1998 to
64% in 2001 which affected the cheese imports from other countries adversely.
British cheese exports declined continuously between 1999 and 2001: 6,5t
were imported in 1999, they went down to 5,6t in 2000 and reached 4.9t in 2001,
a decrease of 12.5% versus previous year. In total, British cheese declined by
21% (2001 vs. 1998). This development can be seen as a result of BSE and foot
and mouth disease.
The most important cheese exporting countries for Germany are the Netherlands,
followed by France and Denmark.
Growth of the German cheese market has slowed down significantly in 2002 after
its double digit growth rates in 2001 which were a result of the positive
replacement effects of meat products by cheese due to both crises BSE and foot
and mouth disease.
In terms of distribution channels more than one third (35%) of cheese is sold
through hypermarkets. Discounters incl. Aldi account already for 47% of total
volume. Smaller supermarkets add another 13%. Delicatessen shops, weekly
markets and other distribution channels are of less importance for cheese
products.
Cheese
The market for cheese can be divided into two different selling formats: as
packed cheese sold on the shelves in the dairy sections of supermarkets or
individually chosen from a deli-counter with service personnel.
According to latest Nielsen figures, 503.5m kg cheese in total was sold between
January and November 2002. The total cheese market excluding Aldi (not covered
in Nielsen data) amo unted in this period to about 3,526.4 m.

Packed Cheese
Packed cheese is the larger segment within the cheese market, accounting for
75% of total volume (65% of total value).
The market for packed cheese reached 377.1m kg between January and
November 2002, an increase of 5.3%. In terms of value, packed cheese showed
with 5.9% an even higher growth rate and amounted for this period to
2,306.6m.
Deli-Counter Cheese
Cheese sold through deli-counters in supermarkets only accounts for 25% of total
volume (35% of total value). The trend towards packed cheese can be clearly
seen by the significant decline in volume and value of deli-counter cheese. Deli-
counter cheese declined by 18.9% to 126.4m kg and sales have decreased by
15.5% to an amount of 1,219.8 m from January to November 2002.
(2) Market Overview White Line
White line products are one of the most important segments in retail: White line
dairy products are basic foodstuffs purchased by 99.9% of people. Research
showed that these products are the most important snacks for German
consumers and also play a major role at breakfast.
The white line market can be subdivided into various segments, which include
quark, yoghurt, dairy desserts, chilled dairy snacks, dairy drinks (milk mix drinks,
yoghurt drinks), set milk, whey, buttermilk, kefir and milk. The relevant ones, i.e.
yoghurt, dairy desserts, yoghurt drinks / milk mix drinks and UHT milk, will be
discussed individually in detail below.
White line consumption trends
There are 6 main trends to be identified within the white line product range.
1. Fat-reduced products
Low-fat dairy products are becoming increasingly popular, with above-average
growth rates. This applies especially to the segment of yoghurts with 0.1% fat,
but also to other white line segments, e.g. quark. The reason for this
development is a general food consumption trend towards less fat and more
health-conscious eating habits.
2. Creamy products
The polarisation of taste (low-fat vs. very rich and creamy) is a phenomenon
especially of the white line segment. The creamy products, especially desserts
with more than 3.5% fat content, are growing considerably. This is due to
another important food trend towards pampering oneself and indulgence.
3. Fruit products
Fruitiness has always been a very important topic for dairy product
manufacturers. It is now as important as ever. Not only the amount of fruit of a
dairy product (yoghurt, desserts) is relevant but also the quality and the
creativity of the combination of yoghurt and fruit has become increasingly
important.

4. Convenience
Changing lifestyles and eating habits have caused a considerable increase in the
importance of out-of-home consumption and snacking. As dairy products are an
important segment within the snack market, this relevance also applies to the
dairy market. Smaller packaging units, re-sealable packaging and products with a
spoon, for instance, are all issues that are currently being discussed and
developed in the white line market.
5. Origin of products
Increasingly, manufacturers are aware that the consumers' trust in products is
very important in gaining their loyalty. By emphasising the local or regional origin
of the products, manufacturers try to influence consumers in their choice of
products.
6. Ingredients
In previous years, vanilla was a very important taste ingredient for dairy
products, e.g. yoghurts, quark etc. This trend has now moved towards chocolate
ingredients. After the successful first introduction of yoghurt with chocolate
flakes, this became a major trend within the white line market in order to add
value to products.
Consumers' perceptions of dairy products are very positive despite BSE. Dairy
products have a positive reputation among 80% of the German population
(source: MIV) who regularly consume dairy products. This also applies to the
safety of dairy products. 90% of consumers feel confident purchasing dairy
products without having safety concerns.
Per-capita consumption of milk amounted to 63kg in 2001. Consumption of

chilled dairy products increased by 0.8kg to 26.7kg. This includes yoghurt, of
which per-capita consumption grew by 0.7kg to 15.4kg. Cream and cream
products are also one of the most popular segments with a per-capita
consumption of 7.8kg.
Total consumption of white line products in 2001 amounted to 3.9 billion, with
sales of 1.8 billion kg. Compared to the previous year, this is only a marginal
growth of 0.1% on average for white line sales. Due to price increases, sales
dropped particularly in the dessert segment.
The dairy industry, however, is rather optimistic and expects a continuous

growth in demand which will be supported by constant new product
developments. Chart 20 shows the development of per-capita consumption of
various dairy products over recent years.
Chart 12 shows that 44.1% of all white line products were sold in discounters in
2001 with an increasing trend (2002: 49%). Thus, discounters are the most
important distribution channel for white line products, followed by small
supermarkets (12.9%), large supermarkets (11.9%) and hypermarkets (11.6%).
Due to the increasing difficulties for the dairy industry provided by the economic
situation, research (HBV) shows that the trend towards mergers among dairies is
likely to continue and even increase. Due to increasing competition it is expected
that of the 120 independent dairies in Germany (2001), only 30 will have
survived by 2010.

Organic dairy products
Organic milk is expected to show a stable growth rate of 40% in 2003. In 2001,
more than 35m litres of organic milk were sold (2000: 18m litres). This means a
turnover share of 4% of the total milk market. 20% of total organic fresh milk is
sold by retailers.
Organic milk is still a niche product in Germany, although due to BSE in 2001 this
market segment has grown considerably. The market share of organic milk rose
from 2.2% to 3.5% (Dec 2000 Dec 2001), which is the highest growth rate of
all organic products. The peak of organic milk sales was achieved in April 2001
with a market share of 3.7%. After this period, organic milk sales decreased to
77.1 m litres per month.
Bavaria is the German state with the highest production of organic milk, followed
by Baden-Wrttemberg and Schleswig-Holstein.
The importance of organic products for retailers depends very much on the size
and the type of retailer (see Chart 21). Organic milk sells best in supermarkets
where it has a share of 5.8% of total milk sales, whereas discounters only have a
share of 0.3% of total milk sales. The second most important retailer type for
organic milk are small supermarkets with a share of 5.5%, followed by large
supermarkets (4.9%) and retailers with less than 400 sqm (2.6%). Private label
products are becoming more important in this segment as well: they grew from
49% to 63.5% of total organic milk sales in the period Dec 00 to Dec 01.
Research (ZMP, CMA, A C Nielsen) shows that young families with small children
are the main buyers of organic products, especially of organic milk, along with
households with above average income. Organic products are hardly relevant for
single person households, young couples and families with teenage children.
Due to the current market development in the organic dairy market (especially
the nitrofen crisis), prices were dramatically reduced by up to 60%. Chart 22
features the players in the organic dairy market in Germany, who were all
affected by this particular crisis in Germany. For instance, one of the most
important organic dairies, Andechser Molkerei Scheitz, had to reduce its organic
dairy production from 120m kg (2001) to 80m kg (estimate) in 2002. One of the
most important retail groups, Rewe, expects sales figures to be at the same level
as three years ago, when organic products were not popular in Germany.
According to the dairy industry, organic milk shares are expected to grow to max.
1% of the total milk market as consumers are becoming increasingly price-
sensitive. The price of organic milk exceeds the price of non-organic milk by more
than 40% due to high production costs for farmers. Thus, it is thought that
organic milk will continue to be a niche product in the dairy market. Additionally,
even though demand is not increasing, production of organic milk is still growing.
In 1991, 60,000t of organic milk were produced. In 2000, production amounted
to 250,000t (+416%), which makes this particular niche market even more
competitive.

5.3 Key Players
(1) Yellow Line - Cheese Segments
Hard and Sliced Cheese
Leerdammer Company Deutschland GmbH & Co. KG is market leader in hard

and sliced cheese with a market share of 11% within deli-counter cheese.
They have about 70 employees and turned over 133.6 m in the first half of
2002. Leerdammer Company is located in Dsseldorf, but was taken over by
the French company Fromagerie Bel S.A. in Paris in the end of 2002.
Apart from their umbrella brand Leerdammer the name Caractre is used as
a premium brand for a specific sliced cheese which is characterised by special red
smear flavoured cultures.
Frico Cheese Deutschland GmbH, based in Essen, is one of the leading

German suppliers of hard and sliced cheese in both segments packed and deli-
counter cheese. The German subsidiary of the Dutch Frico Cheese is the largest
division of Friesland Coberco Dairy Foods.
Frico is the main brand of Frico Cheese Deutschland GmbH and a second
brand is called Schaap. Apart from those two brands they produce cheese under
private label as well. The branded business accounts for about 30% of total
volume meantime. Frico is the No 2 cheese brand in terms of packed cheese in
German retail. They show a market share of 9% in packed cheese.
European range management will replace the rather locally concentrated product
development. Their focus is now on eating and usage situations such as bread
toppings, cuisine and snacking instead of different cheese categories. Frico
Cheese aim at developing new products with real added value character.
Their product range consists of 29 different types of hard and sliced cheese. Frico
Cheese also entered the snacks market in 2002. They launched two cheese
snacks such as a cheese cube mix called Frico-Mixitos in 150g re-sealable
pouches and Frico Cheezit, a cheese snack bar containing 2 20g bars in an
easy to open flow pack.
Soft Cheese
The 3 German subsidiaries Bongrain GmbH, Haute Fromagerie GmbH and Alliance
Fromagerie were merged into Bongrain Deutschland GmbH in January 2003
which is located in Wiesbaden, near Frankfurt. They are clear market leader of
the soft cheese segment.
Bongrain Deutschland GmbH turned over 320 m. with 150 employees of

which 70 are working as sales representatives. 70% of their total cheese volume
is packed cheese, 30% is sold through deli-counters.
Their brand portfolio consists of 12 brands, e.g. Le Tartare, Gramont, Saint

Albray, Chaumes, Henri, Suprme, Saint Agur, Bresse Bleu, Rambol,
Etorki, Fol Epi and Le Truffier. 5 of those brands (Gramont, Le Tartare, Fol
Epi, Chaumes and Saint Albray) are advertised on TV.

The new Bongrain Deutschland GmbH is aiming at enlarging and strengthening
their cheese brands. The development of strategic umbrella brands will also be
targeted.
Another important cheese manufacturer of soft cheese is the dairy Kserei

Champignon. Kserei Champignon is part of the Hofmeister group and is based
in Lauben, Bavaria. The group process 440m kg milk per year and turned over
385m with 1,000 employees in 2001.
Their production comprises soft cheese, cream cheese, hard and processed
cheese. The product range of Kserei Champignon includes a lot of well-know soft
cheese brands such as Champignon Camembert, Rougette, Mirabo and
the leading blue cheese brand Cambozola.
Cream Cheese
The market leader of packed cream cheese is Kraft Foods Deutschland GmbH
in Bremen with their brand Philadelphia, followed by Karwendel-Werke
GmbH & Co. KG in Buchloe, near Augsburg (Exquisa, Mire) and Arla
Foods GmbH in Dsseldorf with their brand Buko.
Arla Foods GmbH is the German subsidiary of the Danish-Swedish dairy

company, Europes largest dairy corporate group. Their national turnover was
306 m in 2001 with a volume of 65,000 t of cheese. Buko is their most
important brand on the German market. Apart from that, Finello and Havarti
belong to their product portfolio. Arla Foods is No 4 cheese manufacturer in
Germany and has just created a new umbrella brand under Arla in order to
concentrate on and visualise a uniform international appearance.
Cream cheese is the segment with the highest advertising expenditure and the
most heavily advertised brands.
Processed Cheese
The market leader in the category is Hochland AG. Hochland AG, located in
Heimenkirch, Bavaria, is a family-owned company and the largest cheese
manufacturer in Germany. They produced 215,000 t in 2001 and turned over
790 m of which 60% is achieved in the domestic market. They have 3,200
employees of which 1,500 are working in Germany. 20% is export business. Their
product range consists of 4 umbrella brands: Almette (cream cheese), Patros
(Feta), Valbrie (soft cheese) and Hochland (Processed and sliced cheese).
Feta
Feta made from cows milk is clearly dominated by German manufacturers.

Hochland AG, Heimenkirch, Bavaria produce not only their brand Patros, they
are also a supplier of private label feta cheese and supply discounters such as Aldi
or Lidl with feta as well. Patros is the only brand of national importance. It
achieved a market share of 28.4% by value in the first half of 2002. Patros has
been on the market for ten years and the success of Hochlands consequent
brand policy can now be clearly seen.

(2) White Line Key Players
In this chapter, the various key players for each relevant sub-segment will be
introduced. Generally, key players in the white line market include Mller, Onken,
Weihenstephan, Ehrmann, Bauer, Danone, Campina, Zott, Nestl, Schwlbchen
and Strothmann (acquired by Campina in 2003). As the hierarchy of main players
varies according to each sub-segment, their market shares will be listed for each
relevant sub-segment. Each company will then be introduced in detail.
Chart 23 shows the Top Players in the German white line segment. 6 of the Top
Eight Players (except Mller and Zott) have lost market shares to private label
products. In terms of volume, Mller is market leader with a share of 13.5%. Due
to the merger with Tuffi Campina emzett, Campina is now in second place
(market share volume: 8.7%), followed by Ehrmann (7.2%), Danone (7%) and
Bauer (4.1%). Mller is also leading the Top Eight in terms of value, followed by
Danone (11%), Campina (9.2%), Ehrmann (7.9%), Zott (4.3%), Bauer (4%),
Nordmilch and Nestl.
b) Yoghurts
Plain Yoghurts
Within the manufacturers brands, the top market leaders are Onken and
Weihenstephan. Other main competitors include Mller and Milchwerke
Schwaben.
Onken GmbH turned over 200m in 2002, an increase of 1.4%. 25% of turnover
is achieved abroad. Onken proved to be one of the most successful dairy brands
in 2002 due to a successful packaging relaunch and increased POS activities.
Onken has relaunched all products under their umbrella brand "Onken". In the
plain yoghurt market, Onken offers only two brands ("Bioghurt" and "Der
Fettarme"), which include full fat, low-fat and virtually fat-free plain yoghurts. In
this particular segment, they are one of the top market leaders.
Weihenstephan, which since 1999 has been owned by Molkerei Alois Mller,
turned over 205m in 2001 with 210 employees. Weihenstephan is Mller's
premium dairy brand. Products are all under the blue umbrella brand
"Weihenstephan". Their product range includes yoghurt, milk (fresh and UHT),
desserts, butter, cheese, yoghurt drinks and buttermilk.
Milchwerke Schwaben eG have 2,400 milk producing members and process

approx. 310m kg milk per year, 50% of which are processed into cheese. They
are one of the market leaders in the plain yoghurt segment, other products in
their range include desserts and butter. Most products are offered in family-size
packs (e.g. 1,000g yoghurt pots). Their brand portfolio includes their umbrella
brand "Weideglck". They also very successfully serve the food service sector.

Fruit Yoghurts
The fruit yoghurt sub-segment is led by Ehrmann (17.7% market share) and
Bauer (14.5%), followed by Mller (13%), Campina and Zott (10.2% each).
Ehrmann AG is a family-owned company based in Oberschnegg, Southern

Germany, with 863 employees. In 2001, it turned over 423m, of which export
accounted for 63.4m. Its product range includes yoghurt, yoghurt drinks, sour
cream, quark and quark desserts. Ehrmann's brand portfolio includes Almighurt,
Bighurt, Cremighurt, Genu Dit (yoghurt), Ehrmann Sahne Pudding, Ehrmann
Pudding Traum, Ehrmann Dessert plus Sahne, Ehrmann Grie Traum (desserts),
Fruchtsalat mit Joghurtcreme (fruit salad and yoghurt), Monsterbacke,
Knisterspa (children's desserts), Frchtetraum (quark dessert). All products are
sold under their umbrella brand Ehrmann.
Mller is based in Aretsried near Augsburg (Southern Germany) and is market

leader in the fruit yoghurt segment with a market share of 17.7% and a
production of more than 800m yoghurt pots per year. It is privately owned by
Theo Mller. Mller Milch turned over 2.2 billion (+12%) in Europe in 2001 with
3,000 employees. A turnover of 1.2 billion was achieved in Germany with 1,430
employees. In Germany, it has a market share of 13.5% (volume) and is market
leader (both volume and value) in the white line segment.
Mller has an extensive product range including buttermilk, set milk, fruit
yoghurt, low-fat yoghurt, kefir, sour cream, rice pudding, fruit drinks etc. Its
brand portfolio includes Dit-Schlemmer-Joghurt, Knusper Joghurt, Mller
Joghurt, Schlemmer Joghurt, Froop, Crema Yogurt (yoghurts), Mller Milchreis,
Dit Mller Milchreis (rice pudding), Mllermilch (milk mix drinks), Buttermilch
(buttermilk), Froop Trinkjoghurt (yoghurt drink), FruchtMolke (whey drink),
Peppo (cream cheese snack), Drink (various wellness drinks), Crema
Puddingcreme (dessert) and Griebrei (semolina dessert). It heavily promotes
Mller as the umbrella brand. In 2002, Mller entered the savoury dairy snack
market for the first time with "Peppo". Mller is the best known brand in the white
line market with an aided awareness of nearly 100% and is known for using
celebrities to heavily promote its products.
J. Bauer KG is based in Wasserburg, Southern Germany, and turned over 297m

in 2001 with 628 employees. In Germany, it has a market share of 4% (value)
and is among the Top Eight market leaders. Its guarantees to work only with
regional dairies in order to be as environmentally friendly as possible and also to
be able to supervise the quality of the milk they are processing.
The product range includes more than 100 different varieties of yoghurt and 25
different cheeses, but also sour cream, plain yoghurt, yoghurt drinks, children's
desserts and also fruit yoghurt for the food service sector. The brand portfolio
includes Der groe Bauer, Die Feinen, Doppelherz Omega 3, Premium Joghurt
(yoghurt), Bel Fiore, Knirps, Innperle, Tegernauer, Diplomat, Royalp (cheese),
Mvenpick (license from Nestl / yoghurt and desserts), Jofinesse (cream
yoghurt) and Fru Fru (UHT yoghurt). In the 250g-pot segment, Bauer holds a
share of 75% with its brand "Der groe Bauer".
Bauer has bought the license to sell the Mvenpick yoghurt brand, a premium
product. It is also co-operating with Doppelherz, a manufacturer of a tonic for
elderly people, to sell a new product under the Doppelherz brand, a yoghurt
called Doppelherz Omega 3 containing Omega 3 fatty acids and supporting a low-
cholesterol diet.

Low-Fat Yoghurts
Market leaders in the low-fat plain yoghurt segment in 2001 were Ehrmann (14%
share), Danone (11.8%), Bauer (10.7%) and Campina (9.8%). The sub-segment
low-fat fruit yoghurt is led by Ehrmann (17.7% share), Bauer (14.5%) and Mller
(13.0%), Campina and Zott (each with 10.2% share).
Danone GmbH is based in Munich and turned over 433m in 2001. Danone is
the second strongest player in the white line segment in Germany with a market
share of 11% (value).
Danone's product range includes mainly probiotic drinks, yoghurts and yoghurt
drinks, desserts and cream cheese. Its brand portfolio includes Dany Sahne
(dessert), Actimel (probiotic drink), Galbani (mozzarella), Obstgarten (fruit quark
dessert), Fruchtzwerge (children's dairy products), Fruchtzwerge drink (children's
yoghurt drink), Danone & (yoghurt).
After losing market share in the dessert segment, Danone completely relaunched
its dessert product "Dany Sahne", a move which proved to be very successful.
Even though the price for this product was increased considerably in order to
position the dessert as a premium product, sales increased.
In general, Danone heavily promotes its products by secondary displays,

samplings and added value promotions.
Zott GmbH & Co. KG, is based in Mertingen, Southern Germany, and turned
over 501m in 2001. It has a market share of 4.3% in Germany in the white line
segment. Zott is privately owned by the Weber family.
Zott's product range includes yoghurt, children's desserts, kefir, evaporated milk
cheese and desserts. Its brand portfolio includes Zott Monte (children's desserts),
Sahne Kefir (kefir), Sahne Pudding, Mousse, Tiramisu (dessert), Kaffeesahne
(evaporated milk), Gourmet Dit, Mocca, Jogol, Starfrucht (yoghurt), Toasty,
Zottarella, Allgutaler (cheese).
c) Desserts
Market leader of the manufacturers' brands in the dessert segment is Campina

with its brands "Landliebe" and "Puddis" (market share 16.4%), followed by Dr.
Oetker (11.5%), Nestl (9%), Danone (7.5%), Zott (6.6%), Onken (5.3%),
Ehrmann (5.2%) and Strothmann (3.3%).
The two German subsidiaries of Campina Melkunie (Netherlands) Sdmilch AG

/ Stuttgart and Tuffi Campina Emzett / Cologne / Berlin merged into Campina
GmbH located in Heilbronn (N. of Stuttgart). Factory sites are now located in
Heilbronn (yoghurt, desserts), Cologne (fresh milk, soft curd cheese, cream,
yoghurt), Wuppertal (yoghurt, desserts), Elsterwerda (milk, yoghurt, cheese,
distribution), Prenzlau (soft curd cheese, milk, butter) and Strothmann/Gtersloh
(desserts).
The Campina group turned over 3.91 billion in total and 950m in Germany in
2001 and is third in the ranking list of the Top Eight German white line producers
with a market share of 9.2% (value). It processes approx. 1.4 billion litres milk
annually and has 2,000 employees in Germany.

Campina's extensive product range includes fresh milk, butter, yoghurt, quark,
cream and desserts. The brand portfolio includes Campina, Landliebe, Puddis,
Fruttis, NutriStart, the regional brands Sdmilch, Tuffi and Mark Brandenburg
(mainly Eastern part of Germany). In the first half of 2001, 500 items were taken
out of the product range of 1,300 articles in order to decrease production costs.
Nestl Milchfrischprodukte GmbH, Frankfurt is Nestl's subsidiary for dairy

products and is based in Frankfurt. It is number eight of the Top German Key
Players in the white line segment and has a market share in Germany of less than
4%. Nestl Milchfrischprodukte GmbH turned over 900m in 2001. This figure
includes dairy products, dietary products and ice cream.
The product range includes evaporated milk, cocoa, milk mix drinks, yoghurt,
dried milk products, cream, dairy desserts, ice cream, baby food. Its brand
portfolio includes Brenmarke (milk, cream, evaporated milk), LC1 (probiotic
drinks, probiotic yoghurts), Lnebest (yoghurt), Nestl desserts (mousse,
semolina desserts, dessert crmes).
Molkerei Strothmann, based in Gtersloh, was taken over by Campina in

January 2003. In 1996, Strothmann relaunched its company as an added value
milk supplier. Within six years, Strothmann increased its turnover by 56% (1995:
84.5m, 2001: 132m) with 350 employees. Compared to 2000, growth
amounted to 4.3% of turnover.
It is planned that Strothmann will continue to concentrate on yoghurt, desserts

and whey products. Focus will also remain on product innovation and premium
products. Growth in the manufacturers' brands market amounted to 28% in 2001
(1999: +25%, 2000: 36%).
The key brand portfolio comprises Crme Compos, Vanillakiss, Chocokiss,

Toffeekiss, Mousse (desserts), Vanilla Cocktail, Creamy Cocktail, Circolo, Alive
0.1% (yoghurts), Molke Drink, Strothmann's Vital Drink and Reine Molke (fitness
drinks).
In order to improve productivity, the product range will be reduced from a total of
135 products to 105. This includes not only own label business but also the
Strothmann product range. Food service business will dramatically decrease as
this segment is not as successful as expected.
d) Dairy / Milk Drinks
Buttermilk
Plain buttermilk is dominated by market leader Mller Milch, whereas
Nordmilch e.G. leads the fruit butter milk segment.
Kefir
Market leader of the smallest dairy drinks segment is Mller Milch.
Flavoured Milk Mix Drinks

The segment of flavoured milk mix drinks is clearly dominated by only one major
manufacturer: Mller. They are market leader with a share of 38% by volume
and 40% by value in German retail excl. Aldi (source: A.C. Nielsen 2001). Their
product range consists of the flavours chocolate, banana, strawberry, vanilla,
cappuccino style, coconut-chocolate in 500ml plastic pots with a clear emphasis
on chilled products. In terms of variety and seasonal flavours, Mller Milch
shows the widest product range within the segment of dairy drinks.

Immergut follows with their brand Drink fit. Drink fit is only sold in the
ambient section for dairy products. Their market share is 14% by volume and
12% by value.
DrinkFit GmbH (Immergut) is a medium-sized company which was taken over

by Friesland Coberco Dairy Foods Holding N.V. recently and is located in
Schlchtern (Hesse). Immergut has about 175 employees and turned over 87
million in 2001. Their main production is a range of milk mix drinks without sugar
additives in 6 different flavours. They only use long life milk for the processing.
According to their own figures, they are the market leader of long life milk drinks
in German retail, targeting mainly children and young people.
Their product portfolio includes Drink fit milk drinks, Drink fit yoghurt drinks and
special Drink fit drinks. Their flavours are chocolate, strawberry, banana, vanilla,
forest berries and diet-cocoa available in tetra packs with straw. Drink fit is
used as an umbrella brand for their entire product range.
Campina entered this particular segment and launched 2 new dairy drinks
(chocolate and vanilla) under the brand Landliebe in 250g plastic pots in 2001
which are quite successful.
Drinking Yoghurt
The market leader in volume terms is the Campina group. Market leader by
value is still Danone with Fruchtzwerge-drinks.
Pro-biotic drinking yoghurt is a sub-segment of drinking yoghurt and is dominated

by three main players e.g. Danone GmbH with their brand Actimel, Nestl
Milchfrischprodukte GmbH with LC1 and Yakult. Market leader Actimel
achieved a market share of 35% (value), LC1 is follower brand and Yakult is
No 3 with a market share of 8%.
With the Netherlands, Belgium, the UK and France, Yakult Deutschland GmbH
is one of 5 European subsidiaries. The launch of Yakult in Europe and Germany
(Yakult has been launched national in 1999) marked the start of the pro-biotic era
in the healthy food market.
A factory in the Netherlands was built in 1994 to provide the European market
with the product. It has a production capacity of 7.5 m. bottles per week and
covers Germany, Belgium, UK, France, Spain and the Netherlands. The company
turned over 61.7 m. in 2000 (Total Europe).
Whey Drinks
There are basically 4 main players within the segment of whey drinks. The two
suppliers Strothmann and Bad Kissinger are most established manufacturers in
this particular category. High growth rates of the whey segment over the last two
years, resulted from the introduction of many new products. Zott entered the
market and became No 1 in whey drinks by value in June 2002. The newcomer
Milram, whey drink brand of Nordmilch e.G. is now No 2 in the segment. Due
to the dynamics of this segment, Mller Milch has decided to enter the market
as well.

e) UHT Milk
Main players of manufacturers' brands in the UHT milk market are Schwlbchen,
Weihenstephan with their premium products and Friesland Deutschland.
Schwlbchen Molkerei Jakob Berz AG, based in Bad Schwalbach (near

Frankfurt), turned over 103m (+13.9%), processing 183.4m kg milk (+0.9%) in
2001. The group has 304 employees. The product range comprises 55 products
all sold under their umbrella brand "Schwlbchen". Products include milk (fresh
and UHT), buttermilk, set milk, whey drinks, yoghurt, kefir, cream products and
butter.
Milchunion Hocheifel eG (MuH) is located in Pronsfeld, Rhineland Palatinate,

and achieved a turnover of 393m (+19%) with 463 employees. It processed
741m kg of milk in 2001 with 2,455 milk suppliers. With a daily milk processing of
2.5 m kg on average and more than 950m packaging units in 2001, it is one of
the largest milk processing factories in Europe. Its product range includes 49%
UHT milk, 5% milk mix drinks, 12% cream, 26% evaporated milk, 3% sour
cream products and 5% evaporated milk in small cans. Approx. 17% of
production were exported to EU countries. It sells under its own label (MuH) and
also produces private label brands (90% of production).
Friesland Deutschland GmbH, Kalkar, based in North Rhine-Westphalia,

belongs to the Dutch company Friesland Coberco Lochem. Friesland Germany has
150 employees and turned over 87m in 2001. It specialises in UHT milk and UHT
milk mix drinks under the brand "Domo lang lecker". It introduced the "Walkie-
can", a re-sealable carton can for its milk mix drinks "+milch-kakao" and is
expecting sales to increase from 2m litres to 10m litres within the next few years.
Sales of the branded UHT milk "Domo lang lecker" are expected to increase to
43m litres in 2003 which would mean an increase of approx. 20% compared to
2000. Sales of UHT milk amounted to 4.1m (36m litres) in 2000.

5.4 Retail Market Segments
5.4.1 Cheese
Top Line Information / Yellow Line - Cheese Segments
Packed Cheese
The total market for packed cheese amounted in the first half of 2002 to 1,227.4
m. This is an increase of 5.1% versus the previous year. In terms of volume
packed cheese increased by 2.7% to 199,444.9 tonnes in the first 6 months of
2002. Charts 24 and 25 in the appendix show the development of packed cheese
by volume and value in detail. Hard and sliced cheese and semi-hard cheese are
the most dynamic two cheese categories.
Hard and sliced cheese represent nearly one third of total packed cheese. It
reached 362.8 m in the first half of 2002, an increase of 21.4%. Sales figures
improved significantly due to price increases as a result of packaging innovation
of packed sliced cheese.
The segment of hard and sliced cheese is composed of two different packaging
formats: portions and slices. Sliced cheese accounts for 62% of total volume of
this category, portions accounting for 38%. 59,764.8t of hard and sliced cheese
were sold in the first 6 months of 2002. This was an increase of 12.1% versus the
previous year.
Soft Cheese
Soft cheese represents 16% of total packed cheese volume. It is the second
largest segment of packed cheese by value. Sales improved by 3.4% to 202.6
m. and the volume of soft cheese grew by 3.6% to 29,070.8 t.
Cream Cheese
Cream cheese is still the second largest product category within the yellow line
(packed cheese) by volume, but has lost 6.6% in volume (8.3% in value) in the
first half of 2002 versus previous year. 32,192.4t were sold in that period
amounting to 190.4 m. turnover.
There is a trend towards low fat or fat reduced versions and also towards
cream cheese variations with additional ingredients such as herbs, onions, red
peppers, garlic etc. Manufacturers often add other dairy products such as yoghurt
or butter milk as well in order to vary the texture and to give added value to the
category. Cream cheese is a segment where consumers are extremely aware of
the fat content. Fat content is often seen as an indicator for healthy food.
That new category of fat reduced versions represents already more than 25% of
packed cream cheese. 15,372 t were sold between January and October 2001, an
increase of 14.4% versus previous year.

Processed Cheese
Processed cheese consists of 2 sub-segments: portions and slices. Slices account

for 50.5% in value and 40.6% in volume. Slices showed a much better
performance than portions. They grew by 6.2% (value) and 4.5% (volume). This
development was mainly supported by the market leader Hochland and the
steady growth of their Sandwich-Slices (now four variations) which were
launched in 1999.
The total category of processed cheese showed a slight decrease in volume and
value in the first half of 2002. It declined by 1.2% to 30,669.3 t and by 0.7% to
an amount of 160.5 m.
Grated Cheese
Grated cheese was one of the trend cheese categories in 2000 and 2001, showing
a slightly negative development for the first time in 2002. According to Nielsen
figures (which exclude Aldi), grated cheese decreased by 1.9% (volume) between
January and June 2002. 14,306.8t were sold with a stagnating turnover of 99.5
m. (+ 0.3%).
But that negative development of grated cheese is only related to the classic
German retail whereas discounters such as Aldi still show nearly double-digit
growth rates of this particular segment. The main reason for this is a shift of
volume and sales to Aldi. Only the market leader Arla Foods was able to assert its
position.
Mozzarella
The situation of mozzarella is very similar to that of grated cheese. It shows no

growth in German retail. Volume went down by 3.3% to 11,789.1 t. Due to price
increases in the first half of 2002, sales improved by 3.3% and amounted to
64.0 m. versus previous year.
Galbani Deutschland GmbH in Munich, the German subsidiary of the Italian

supplier is market leader in value followed by ex- Danone-owned Zott GmbH &
Co. in Gnzburg, Bavaria.
Semi-Hard Cheese
Apart from hard and sliced cheese, semi-hard cheese was the only other category
which showed a double digit growth in 2002 (Jan.-Jun.). It grew by 11%
(volume) and 10.2% by value. Sales reached a level of 61 m. Slices account for
about 60% of total volume.
The most important manufacturer of semi-hard cheese is Bel Adler Allgu

GmbH in Taufkirchen, Bavaria, with their brands Bonbel, Mini Babybel and
Babybel. Bel Adler also produces Adler Edelcreme, a processed cheese, and
benefits most from that growth.

Feta
Feta is a typical seasonal product and sales usually increase when the warmer
season starts in May and ends in September.
80% of total Feta volume comes from cows milk. In 2001, the total volume
including Aldi is 23,000 t. Feta made of ovine milk adds another 4,600 t.
Due to the fact that about 60% of total volume of feta is generated by
discounters, the dominance of discounters in this particular segment is clear.
Blue Cheese
The category of blue cheese still shows a weaker development of sales than of
volume. This is a result of the strong increase in private label within the segment.
The share of private label (volume) grew to 34%. 3,226.2 t were sold and
generated a turnover of 21.7 m. Gorgonzala and Roquefort achieved a
share of 10% by value.
Rotschmier Cheese
The category of classic red cultures cheese includes Limburger which accounts
with for 73% of total volume, Romadour, Kloster-, Mnster- and Wein-
cheese.
Sales by volume and value showed a slight increase from January to June 2002
versus previous year and reached 22 m. with 2,501.7 t.
The most important supplier of this category is the dairy Mang-Ksewerk

GmbH & Co. KG in Kammlach, Bavaria, a part of the Hofmeister-Champignon
Group.
Deli-Counter Cheese
The importance of cheese deli-counters in supermarkets can be seen in the

variety of products they offer, the competence of the service personnel behind
the counter and the freshness of the products. All these factors determine the
differentiation to packed cheese.
The general development of cheese segments bought at deli-counters is shown in

Chart 26 and 27 in the appendix.
Due to the need for well-educated service personnel, deli-counters are generally
more cost-intensive, but they offer usually higher margins and they build a
positive image for the retailer.
But the continuing trend towards shopping in discounters results on the one hand
in a strengthening of their position and an increasing share of private label. On
the other hand the decreasing interest of retailers combined with their self-
destroying and restrictive personnel policy have lead to a continuing decline in
cheese deli-counters in supermarkets, but it has also influenced the sales of
packed cheese positively. Chart 28 shows the decrease of stores with deli-
counters.

Retailers try to stop that decline by complementing deli-counters with open and
flat self-service shelves where they put pre-packed cheese, i.e. cheese portions
and slices which were cut and packed in the store. These counters are called
Theken fr Eilige or Schnelle Theke (counters for people in a hurry or quick
counter).
They can not be seen as full replacements of deli-counters. They are only a
sensible solution for selected cheese categories which are supposed to be fresh,
but do not need any further product explanation.
Evolution of Yellow Line
Growth and Consumption Trends
Basically, two main trends can be seen in the cheese market:
Convenience
The increasing trend towards convenience products within the cheese market
refers mainly to the packaging of the most important cheese segment: hard and
sliced cheese.
Convenience of sliced cheese means that the individual slic es should have four
corners, but no rind.
Convenient packaging of sliced cheese primarily meet the following criteria:

cheese portioning which refers to consumers demand, practical and clever
packaging and ready-to-use for different kinds of usage (as snack, bread topping,
ingredient etc.)
The trend towards convenient packaging ideas result in product benefits such as
improved aroma protection, cheese slices which are easy to open and to take out
as well as re-sealability of the pack.
Light Products
Due to the increasing trend towards well-being, consumers are particularly

interested in low fat or fat reduced cheese products. The increase of specific light
versions of standard brands reflects that trend.
The trend towards light and low fat versions of cheese products can be seen
mainly within the segment of packed cheese. Cream cheese, mozzarella and hard
and sliced cheese are the sub-segments with the highest growth potential in this
particular area.
Market leader in light cheese brands within the segment of hard and sliced cheese
is Westland Kaasspecialiteiten in Huizen, Netherlands. 70% of their sales still
come from deli-counters although their share in packed cheese steadily grows.
They plan to extend Westlite as umbrella brand of light cheese. 4,000 t of
Westlite is sold in Germany. One third of the category light hard and sliced
cheese which is sold over deli-counters is generated by Westlite. Old
Amsterdam, Botta and Litedammer are also part of their brand portfolio.

In spite of all low-fat product innovations they still play a rather minor role
compared to the standard cheese product ranges. Low-fat and fat reduced
variations are much more important within the white line segments yoghurt and
quark.
Snacking
The trend towards snacking is another area which can be noticed in particular
within the segment of hard and sliced cheese. Apart from the usage as classic
complement for bread, cheese is also used more and more as a snack product.
A few suppliers developed new products whic h meet that specific consumer
demand for small snacking units of cheese.
Umbrella Brand Strategies
This trend can be seen rather as a marketing trend than a consumption trend.
More and more dairy companies try to concentrate their tight marketing budget
by advertising only a few brands. Building umbrella brands for entire product lines
helps saving marketing and advertising expenditure in a cost-effective way.
Development Private Label (Market Shares)
The increase of private label can clearly be shown in each cheese segment. In
addition to that a shifting of cheese volume from classic German retail to the
discounters such as Aldi and Lidl in particular can also be stated.
The following chart shows the market shares of private label within the main
segment of packed cheese for each category:
Germany: Market Shares of Private Label (%) in Packed Cheese, 2001

Market Shares Volume 2001 Value 2001
Hard and Sliced Cheese 58% n.a.
Soft Cheese 31% 23%
Cream Cheese 19% 12%
Processed Cheese 61% (Slices) n.a.
Grated Cheese n.a. n.a.
Mozzarella n.a. n.a.
Semi-Hard Cheese n.a. n.a.
Feta 55% 43%
Blue Cheese 34% n.a.
Red Smear Cheese n.a. n.a.
Total 42% 33%
Source: AC Nielsen
Private label in packed cheese is relatively strong in the segments of hard and
sliced cheese, processed cheese in slices and feta. Private label brands is less
important within the segments of cream cheese because this particular segment
is dominated by major brands (Kraft, Exquisa, Buko and Almette).
Private label of the segments soft cheese and blue cheese account for approx.
one third of total volume in 2001.
For details on required shelf life please see Chart 34.

Innovations (e.g. new products)
Product innovations in the cheese sector refer to the main consumptio n trends
which were described above. Chart 29 in the appendix shows the most important
product innovations in these three areas.
Areas of Product Innovation
Convenience
Snacking
Light Products
5.5 Yoghurt
Top Line Information / White Line - Yoghurts
Yoghurt is the most popular dairy pro duct among German consumers. Sales of
yoghurt amounted to 545.5m kg (JanOct 2001), a plus of 2.7%, and a turnover
of 1.07 bn. Yoghurt is the most important white line segment and can be divided
into the following sub-segments:
Plain Yoghurts
From Jan Oct 2001, plain yoghurt sales increased by 9.4% to 127.9m kg (8.94%
of total white line sales) compared with the same period of the previous year.
Turnover grew by 10% to 191.1m, which is 6.74% of total white line turnover.
Fruit Yoghurts
Fruit yoghurt sales increased by only 0.1% to 417.6m kg worth 874.2m
(+4.9%) (Jan-Oct 2001). Sales amounted to 29.2% of total white line sales,
turnover accounts for 30.85%.
Low-Fat Yoghurts
Low-fat yoghurts are the latest trend in the yoghurt market in Germany.
Producers now offer a wide range of low fat yoghurts in order to meet consumers'
requirements. Compared with last year (Jan-Oct 01), sales of low fat yoghurts
grew by approx. 80%.

Evolution of Yoghurts
Charts 30 and 31 show the development of the yoghurt category.
Pro-biotic Yoghurts
Yoghurt is the most important segment within the probiotic dairy market.
Probiotic fruit yoghurt is the second strongest sub-segment after probiotic
yoghurt drinks. From January to May 2001, 38% of volume (+13.6%) and 29%
of value (+2%) of probiotic dairy product sales were generated by probiotic fruit
yoghurts. Sales dropped from 15,254t to 14,898t (turnover -5.6% to 25.8m).
Only 9.6% of total fruit yoghurts account for probiotic fruit yoghurts. Plain
yoghurt is rather insignificant within the probiotic yoghurt segment. Only 17% of
volume (6,550t) and 15% of turnover (11.2m) were achieved by this sub-
segment (both -20%). In terms of product innovations, probiotic products are
decreasingly important for dairies. Probiotic products are starting to be replaced
by products with other ingredients which are beneficial to health such as whey
drinks, vegetable drinks and added vitamins.
Trend towards Combining Product Categories
Adding flavours and / or ingredients to yoghurts in order to add value is a current

trend of yoghurt processors, especially in the cream yoghurts segment.
Consequently, the cream yoghurt segment and the dessert segment are starting
to merge into one.
Trend towards Seasonal Flavours
Another trend in flavouring is seasonal flavours and limited flavour editions. For
instance, Landliebe and Onken have introduced seasonal flavours to combine
product innovations and a constantly changing product range as well as to ensure
staying listed with retailers by continuously offering a changing product range.
Chart 32 shows some samples of the seasonal product range.
In terms of sales, the plain yoghurt sub-segment increased by 2.9% in the first
half of 2002, turnover increased by 0.4%. As this is a particularly low-interest
product, private label products are extremely powerful with a market share of
39% (volume) and 28.3% (value).
The fruit yoghurt private label products have a market share of 19.7% (volume)
and 13.5% (value).
Chart 14 gives a detailed outlook on the share of private label products within

Innovations (e.g. New Products)
Product innovations are vital in the dessert segment in order for manufacturers to
retain their listings and keep up market share. In 2000, 300 new dairy products
were developed and launched in the German market. This is triple the amount of
new products compared with the previous year. Approximately 80% of dairy
product innovations are related to the cheese, yoghurt, desserts and milk drinks
segments. Not only "real" product innovations are important for this sector but
also new packaging versions etc. Chart 33 gives a detailed overview of the
number of product innovations for each white line segment.
Generally, new product innovations in the yoghurt segment concentrate

predominantly on the ingredients side rather than e.g. on the packaging.
Developments in both the consumption trends, well-being and enjoyment are
reflected in product innovations.
In the plain yoghurt market, manufacturers (e.g. Mller) have started to offer
plain yoghurts with added glucose in order to make this particular segment more
appealing to consumers and expand the product variety.
The Swiss manufacturer Emmi launched a yoghurt with Aloe Vera flavour in the
fruit yoghurt segment. This is especially targeted at the health-conscious
consumer. The product is also available as a yoghurt drink.
Bauer recently launched a fruit flavoured yoghurt containing Omega 3 fatty acids
which are known for supporting a low-cholesterol diet. This product was
developed in co-operation with Doppelherz, a well-known brand offering a special
tonic for elderly people, and is also sold under the Doppelherz license.
Chart 32 shows examples of the above mentioned products.
Trend towards New Product Categories (Froop, Jobst)
Continuing the trend towards new flavours and added ingredients, key players
such as Mller (Froop) and Dr. Oetker (Jobst) have developed a new product
category which is sold within an existing product category. These new products
contain 50% plain yoghurt and 50% fruit and are sold within the fruit yoghurt
segment. This recipe does not meet industry fruit yoghurt standards as it contains
too much fruit. However, manufacturers are aiming to develop products according
to consumers' needs rather than according to industry standards and to develop
new product categories. Please see Chart 32 for examples of these products.
Required Shelf Life for Dairy Product Categories
Please refer to Chart 34 in the appendix.

5.5.1 Dairy Desserts
Top Line Information / Dairy Desserts
The segment of dairy desserts accounts for around 14.9% in volume and 17% in
value of total white line. Desserts are the second strongest segment within the
white line product range. The product category of dairy desserts comprises dairy
desserts with cream, dairy desserts without cream, buttermilk desserts, semolina
desserts and rice pudding. The following chart breaks down the sub-segments:
Dairy Desserts
Dairy Desserts with

Cream
Dairy Desserts without Cream
Buttermilk Desserts
Semolina Desserts
Rice Pudding
Generally, price increases in the dessert market have led to a decrease in

demand. Sales dropped by 5.2% to 215 m kg. However, due to price increases
turnover grew by 2.6% to 496.4 m (excl. Aldi).
Evolution of Dairy Desserts
Market leader is Campina with its brands "Landliebe" and "Puddis" (market share
16.4%), followed by Dr. Oetker, Nestl (9%), Danone (7.5%), Zott (6.6%),
Onken (5.3%), Ehrmann (5.2%) and Strothmann (3.3%). In the rice pudding
sub-segment, Mller is market leader with a market share of 80% (2001). The
rice pudding segment dropped by 5.1% (volume) and 0.9% (value) to 29.5m kg /
55.3m.
Growth Trends / Consumer Trends
The Chart 35 shows that desserts with cream sell best in the dessert segment,
but they still sold 10% less than in 2000, i.e. 126.7 m kg. Despite price increases,
turnover for this segment dropped by 2.1% to 283. 7 m. Desserts without cream
increased in sales by 4.7% to 55 m kg (turnover: +9.3% to 121.1 m).
Buttermilk desserts increased sales by 1.7% to 7.8 m kg (turnover: +6.8% to
12.5 m). This particular segment is mostly sold by Aldi and other discounters.
Semolina dessert sales accounted only for 38.7 m t (-7.1%) and achieved 6.5%
less in turnover ( 105 m). Rice pudding decreased by 5.1% in volume to 29.5 m
kg and turned over 55.3 m (-0.9%).
In comparison, water- and fruit-based desserts dropped by 7.6% to 23.7 m kg

(turnover: -1.9% to 69.8 m).

The Trend towards Indulgence Ingredients
Following the trend towards vanilla flavours and ingredients, the current trend is
now towards chocolate flakes ingredients. Manufacturers (e.g. Ehrmann) are
also developing this trend further and are adding toffee splits etc. The use of
these ingredients reflects consumer trends towards indulging in and enjoying
food. The pleasure aspect is one of the most important reasons for consumers to
buy desserts. But added sauces and fruit also deliver additional taste and a
feeling of luxury for consumers enjoying desserts.
Trend towards Italian Specialities & from the Confectionery Market
Manufacturers try to differ from private label products through constant product
development. In the dessert market, one of the latest trends is towards Italian
recipes. Ingredients such as zabaione and stracciatella communicate a "holiday"
feeling and a sense of extra-indulgence to consumers.
Increasingly, manufacturers also copy trends fro m the confectionery market

and transfer them to the dessert segment. The latest trend in the dessert
segment is dark chocolate flavour, e.g. Nestl's dark chocolate mousse. Products
with new recipes like this, for instance, became very successful by way of
additional promotions, e.g. dark chocolate mousse with Bailey's.
Chocolate bar recipes are also becoming increasingly important in the dairy
dessert market. Desserts such as Lion, M&Ms, Smarties and Bounty - yoghurt
with added chocolate - have been launched very successfully in the market.
The threat of private label products for industry brands also exists in the dessert
market. The share of private label in the cream dessert market accounts for 35%
(volume) and 21% (value), followed by desserts without cream with 19%
(volume) and 17% (value) and by water and fruit desserts with 9% (volume) and
4% (value). Chart 14 breaks down the share of private label products in the
dessert and rice pudding segments.
New product developments are essential in order to be able to compete with

other brands in the dessert segment. Strothmann, now merged with Campina, is
one of the major dessert manufacturers and known for its product innovations. In
2002, Strothmann developed a dessert for 2 ("Kiss for 2") with zabaione flavour.
The newly developed product, a sponge ball covered in chocolate and set on
flavoured cream, proved to be very successful (35% growth in value).
Ehrmann developed a semolina and cream dessert accompanied by fruit. This

dessert is available in various flavours (strawberry, cherry, peach and apple-
cinnamon) and has been integrated into their "Traum" brand range.
Further new products have been developed in the custard ("Pudding") segment
(Campina, Weihenstephan, Mller). Added cream, fruits and sauces turn this into
a value-added segment. Chart 36 shows some recently launched products.
Required Shelf Life for Desserts

For information on required shelf life for desserts, please refer to Chart 34.

5.5.2 Yoghurt / Milk Drinks
Top Line Information / Yoghurt/Milk Drinks
The segment of milk drinks accounts for around 10% by volume and 8.6% by
value of total white line. The product category of milk drinks consists of butter
milk, kefir, flavoured milk mix drinks, drinking yoghurt incl. pro-biotic drinking
yoghurt and whey. The following chart shows this segmentation:
Milk Drinks
Buttermilk
Kefir
Flavoured milk mix drinks
Drinking Yoghurt
Whey
Sales of milk drinks as a category increased by 7.9% to 254.3 m. Drinking

yoghurt is the largest product group within the category. It accounts for 39% by
value of total milk drinks, followed by butter milk and flavoured milk mix drinks
which account for 25.2% and 24.8% respectively of total milk drinks.
The development of all 5 milk drinks categories between January and June 2002
was positive, although they all show different growth rates. Three categories
increased by two digit growth rates e.g. drinking yoghurt by 11% up to 98.2
m., whey by 10.4% up to 19.2 m. and kefir by 10% up to 9.6 m.
Pro-biotic drinking yoghurt is part of the drinking yoghurt segment. Nearly

60% of the total value of pro-biotic products is pro-biotic drinking yoghurt.
Although there was a price increase in the first half of 2002, sales dropped by
3.5% versus previous year and achieved 55.3m. Pro-biotic products are starting
to be replaced by products containing other health benefit ingredients such as
whey drinks, vegetable and fruit drinks as well as added vitamins
Butter milk grew by 9% and now reached a level of 64.2 m. Sales rose by
7.2% in volume and reached 71,784t. Flavoured milk mix drinks showed the
lowest growth rate, they only grew by 1.4% up to an amount of 63.1 m. versus
the previous year (January June). Chart 37 shows the development (by value)
of the different categories in detail.

Evolution of Drinking Yoghurt / Milk Drinks
All dairy drinks seem to be more or less influenced by weather and

temperature conditions. As soon as the temperatures get warmer in May/June,
sales of dairy drink categories increase.
Buttermilk
The sub segment of fruit butter milk showed a higher growth rate (+9% in
value). Plain butter milk stagnated in the first half of 2002. There is a seasonal
peak of butter milk consumption in warmer months when it is used as a
refreshing drink or as a snack or meal replacement.
Kefir
Kefir is the smallest category within dairy drinks. It grew by 10% in value and
3.2% in volume. 7,634 t were sold and achieved a turnover of 9.593 m.
The segment of flavoured milk mix drinks is a predominantly branded market.

Mller Milch dominates this particular segment, but private label products are
becoming stronger in this segment as well.
It seems that consumers often switch from flavoured milk mix drinks to
similar categories such as whey and drinking yoghurt. The launch of Landliebe
drinks from Campina in 2001 which comprises 2 milk drinks and 3 different
flavours of drinking yoghurt, all with the same packaging design, can be seen as
an answer to this trend.
In terms of flavours chocolate and cocoa are the classic ones: 57% of total
production volume is chocolate and cocoa. The rest of the segment comprises the
flavours banana, strawberry and vanilla. The more exotic a flavour is the more
likely it will become a niche product.
Almost 50% of flavoured milk mix drinks are bought in hypermarkets and
superstores which are the most important distribution channels for this type of
product.
Drinking Yoghurt incl. Pro-biotic Drinking Yoghurt
Sales increased by 40% in value in 2001 due to the high average price of 3 new
drinking yoghurt variations from Landliebe. In general, drinking yoghurt is
branded market, dominated by Campina and Danone.
In the pro-biotic drinks market, the small bottles are the most successful
compared to other sorts of packaging. A significant part of pro-biotic drinks is also
sold through the hard discounter Aldi.

Whey Drinks
The segment of whey drinks is growing basically due to new product launches.
Fruit whey drinks with added vitamins which give added value to the consumer
are a good example.
Due to the increasing well-being trend and the growing number of health-
conscious consumers, whey drinks are often seen as the ideal combination
of low-fat products with healthy and tasty ingredients.
The importance of private label within the product groups of milk drinks e.g.
butter milk, kefir, flavoured milk mix drinks, drinking yoghurt and whey is not
very high compared to other dairy products.
Only private label milk mix drinks and butter milk show double digit shares, e.g.
17.4% by volume with milk mix drinks and 16.1% with butter milk (13.7% share
by value for milk mix drinks and 11.5% for butter milk).
The share of private label in drinking yoghurt is relatively small. Private label does
not play a large role within this segment holding a share of 2.5% by volume and
2.3% by value. Chart 14 in the appendix shows the shares of private label of
selected white line dairy products.
For years the share of dairy drinks has increased compared to the total market of
dairy products and has shown a dynamic development. Well-being, light and
enjoyment/taste are current trends within the segment. Another issue which is
becoming increasingly important refers to new packaging solutions. With regard
to this, four areas of product innovation can be noticed:
Additional:
New Flavours Vitamins,
Minerals,
Cereals etc.
Low-Fat Products
New Packaging
Solutions
Examples of those areas of product innovation which follow the current trends are
given in Chart 38 in the appendix.

5.5.3 UHT Milk
Top Line Information / UHT Milk
The retail UHT milk market amounted to 1.2 billion in 2001 (+17.1%) with sales
of 2.05m tonnes (-3%). An estimate of 3.4m tonnes of UHT milk was produced in
Germany in 2002 (+0.7%). UHT milk accounts for 63% of total milk sales (= 1.8
bn in 2001). The UHT milk retail market is dominated by domestic companies and
dairies. More than half of all UHT milk is sold in discounters.
UHT milk is called "H-Milch" (Haltbare Milch) in Germany. According to legislation,

UHT milk must be easily recognised by consumers. Thus, UHT milk must be
labelled H-Milch.
There are three legal heat treatment processes for milk in Germany:
pasteurization, ultra-high temperature treatment (Ultrahocherhitzung) and
sterilisaton. In Germany, the ultra-high temperature treatment process is applied
for UHT milk. All UHT milk must be homogenized.
In the ultra-high temperature treatment process, milk is pumped from a tank to

the homogenizer by the heat exchanger. The heat exchanger heats the milk from
4C to 85C (homogenizing temperature) for homogenization. After the
homogenization process, the milk is heated to a temperature of approx. 105C.
The third step is the actual UHT treatment process, in which milk is led through
tubes. The tubes are surrounded by vapour which must heat milk to 135C to
150C for 2-8 seconds (indirect process). Alternatively, milk is heated to 135C
150C by injecting steam and extracting oxygen (direct process). After this time,
the milk is shock-cooled down to 105C, then down to 27C. Then the milk is
cooled down to the required filling temperature.
Requirements for UHT milk:

Filling must be absolutely aseptic and packaging must protect milk from light.
Sterilisation must last 3 minutes. The milk must be best unopened for 15 days at
30C or 7 days at 55C without any alterations of the product.
Legislation requires a minimum shelf life for UHT milk of 6-8 weeks (see Chart
34).
Evolution of UHT milk
Trend towards Full-fat Milk
Within the UHT milk segment, the trend towards full-fat milk is increasing. In
2001, nearly 60% (3.23 m tonnes) of milk produced was full-fat milk. This is a
growth of 1.2% compared with the previous year. Low-fat and virtually fat-free
milk accounted for 2.17m tonnes (-2.1%). This trend towards full-fat products
can also be observed within the UHT milk segment.
Packaging
Discounters are not alone in managing to increase their market share within the
UHT milk segment. Premium quality brands are also trying to establish
themselves on the UHT milk market. In order to do so, manufacturers' brands
have to communicate via packaging. Thus, the packaging of branded UHT milk is
unique and consistent in order to ensure that the brand is easily recognised by
the consumer.

Origin of the Products
Manufacturers' brands communicate the origin of the product in order to appeal

to the increasing "home-based" feeling of the consumer. The regional origin of
the product is perceived to be a unique selling point, suggesting a superior
quality.
67.2% of all UHT milk sold is private label. Aldi has a market share of 15% in the
UHT milk segment. The main processors of UHT milk, especially of private label,
include Nordmilch eG, Humana Milchunion eG and Milchunion Hocheifel. Humana
have approx. 15% market share within the private label market. As UHT milk is
an extremely low-interest product, private label share is very likely to continue
growing.
Omira Oberland Milchverwertung GmbH has recently introduced a niche product,

UHT milk which is low in lactose. This product is suitable for people suffering from
a lactose intolerance. MinusL is the first low-fat milk available on the German
market with less than 0.1% lactose. There is only one competitor on the lactose-
low market, Breisgaumilch GmbH, offering a lactose-free milk with 3.5% fat
called Lactofree.
Another recent product innovation is extended shelf life milk (ESL). Even though
ESL- milk does not count as UHT milk but as fresh milk, the segments UHT milk
and fresh milk are starting to merge into one. ESL milk is only a niche segment
(4.2% of milk sales) but it is estimated that this segment will become increasingly
important for the milk segment. Only one product, Nestl's Brenmarke ESL milk,
is nationally distributed and is market leader for this particular niche. Other
competitors include Milchwerke Berchtesgadener Land, Meierei Trittau eG and
Molkerei Regensburg eG. All three companies distribute their ESL milk regionally.
Chart 39 shows samples of the newly launched products.
Shelf Life
For the required shelf life for UHT milk, please refer to Chart 34.

5.6 Packaging/Labelling & Legislation/
Format
The German retail market offers a wide variety of different types of packaging.
Regarding the size or format, there is no regulation by law. In the beverage
market in general there is still a large spectrum of different sizes. The preferred
sizes are 100, 125, 150, 200 and 500 ml. Mineral water is usually sold in 750,
1,000 and 1,500 ml bottles. Tetra blocks are used e.g. for juices or milk in
various formats.
In the milk mix drinks section, the market is dominated by the 500 ml package
size with a share of nearly 74% (Feb.00 Feb. 01), followed by 3x200 ml and
1,000 ml with 8.7 % each. 330 ml is in 4th position with 3.5%, 750 ml follows
with 2.3% and others with 2.9%.
500 ml is the most common size and will continue to lead in this category. Milk
mix drinks are mainly one-person-household products. They usually are not
shared e.g. amongst families or with friends. The product is bought and drunk
straight away.
UHT milk is usually offered in 500ml and 1,000ml tetra packs, some of which are
resealable (e.g. premium brands).
Dairy desserts and yoghurts are mostly offered in round or square-shaped

plastic pots, some of them in two-chamber pots (e.g. Mller Schlemmer Yoghurt,
Landliebe desserts). The largest share of pot sizes includes 100g, 125g, 150g,
175g and 500g plastic pots. However, also 400g (Bauer Premium yoghurt) and
115g (Danone Dany Sahne) pots and multi-packs (6x60g Nestl Nesquik
dessert, 4x62,5g Frischli Leckermulchen Fruchtpudding and 4x125g Danone
& Frucht yoghurt) are available. Yoghurts are also available in 500g recyclable
glass jars (Landliebe, Ehrmann).
Packaging
German producers of dairy products have not been very creative in the past in
giving their products a proper kind of packaging which fits the needs of
consumers. In practical usage the lack of convenience is apparent. For instance,
in the milk mix drinks segment, the market is dominated by 500 ml soft plastic
pots which are not re-sealable and therefore quite hard to handle in certain
situations e.g. whilst driving, walking, etc. Their market share is 42 %.
Following pots there are non-returnable bottles, glass or plastic, with around
17%, blocks with 13 % and bricks with at least 9.2%. Tetra bricks have a 5.6%
market share, returnable bottles 4.9% and finally all others 8.2%.
A slight increase in blocks, non-returnable bottles and Tetra bricks is apparent but
pots are still not decreasing.

Labelling Requirements
Milk mix beverages can only be sold in Germany if they conform to the German
milk products directive. Special requirements have to be fulfilled with regard to
the packaging.
General Requirements
description of product
name of company + address of producer
table of contents (in order of shares)
net weight
best before date (chilled/non-chilled)
heat treatment (UHT/sterilized/pasteurized)
Special Requirements:
share of fat (in %)
Green Dot
Genutauglichkeitskennzeichnung (EU dairy code)
Furthermore, the following indications are permitted by law: the expression

fettarm (low fat) can be used for products with less than 40 % fat per 100g, the
expression leicht / light for products with less than 1.8% fat and less than 126
kj per 100g.
Legislation Issues
Deposit
On 1 October 2002, the Federal Government introduced a deposit on all
carbonated non-returnable plastic and glass bottles and cans. Currently, dairy
drinks in non-returnable packaging, such as plastic pots and bottles, are excluded
from the regulation. However, it is planned to include them in due course. It is
also planned to continue excluding milk cartons and pouch packs from the deposit
system. This regulation would affect approx. 1.3 billion packs containing drinking
milk, buttermilk, milk mix drinks and yoghurt drinks.
Leading manufacturers will be dramatically affected as this means that both

discounters and most retailers will de-list the products due to the dramatic
increase in costs that will follow with the installation of an appropriate recycling
system. Especially Mller (with a production of approx. 500m pots) and foreign
companies, such as Danone, Campina and NM, will be affected as 90% of milk
drinks sold in plastic bottles originate from EU countries. Drinking yoghurts and
other milk drinks in PET bottles are the most important export articles to
Germany for the Austrian dairy NM.
Members of the German dairy industry are fighting strongly against the expansion
of the deposit law as this would increase costs dramatically and thus endanger
many jobs.

Example:
Description of product
Heat treatment
Contents
Best before date
Name of company / Share of fat

Address of producer
Net weight
EU dairy code
Green Dot

5.7 SWOT Analysis
Strengths of Market for Dairy Products
The dairy sector comprises the most diversified product categories of total
food and is also very dynamic.
The dairy sector shows many product innovations not only in recipes,
flavours and light versions, but also in packaging design and new eating
situations (snacking).
Regional dairies have certain strengths with their products or brands in

specific regions or key account groups in retail.
Weaknesses of Market for Dairy Products
Due to the immense variety of products in the dairy sector and the large
number of product innovations, expectations of both retailers and
consumers are very high and therefore the risk of a flop as well.
Opportunities of Market for Dairy Products
Hardly any other sector lives more from new launches and product
innovations than the segments of dairy (white and yellow line) products
in Germany. Therefore, there should be still enough space for further new
products and brands to be introduced into the market.
In terms of cheese products, other countries such as France, Switzerland

and Spain seem to be very active and clever in promoting their cheese
specialities by using specific campaigns. A similar approach in order to
build brand awareness of British cheese could be considered.
Specialities (e.g. cheese) from other countries are not focused primarily on
the price issue. Other elements such as origin, ingredients, taste and
quality are becoming more important.
Threats of Market for Dairy Products
Although consumers are willing to buy new products and very often to try
product innovations within both dairy product lines (yellow and white),
the speed of product innovation has increased for manufacturers.
To build up a strong brand, particularly within white line product

categories, it is more or less necessary to spend significant amounts of
money in classical advertising, especially TV.
Further increases in private label and growing sales through discounters

within all segments of dairy products are expected.

6 Food Processing Market
6.1 Size of the Market

Overall Food Processing Size
The total market value of food processing reached 126.6 bn in 2001.
Breakdown by Major Sectors

The breakdown by major sectors is shown in detail in Chart 2 in the appendix. It
can be stated that dairy is the most important sector within the total market
for food processing in Germany. Dairy products account for 19% of total value
and reached 24.1 bn in 2001. The share of meat products is nearly the same
with 19% of total value and alcoholic beverages follow with 11% of total value.
6.1.1 Key Suppliers
The Top 10 German milk processing companies are shown in Chart 17 in the
appendix. Most of the Top 10 key suppliers (apart from Zott for which data are
not available) will be presented in the following section.
(1) Nordmilch e.G.
Nordmilch e.G. is based in Zeven/Bremen, is Germanys largest dairy producer

and processes 3.967 bn kg of milk i.e. 14.2% of the total milk volume in
Germany. The total turnover of the Nordmilch group amounted to 2.56 bn in
2001. Nordmilch's national turnover amounted to 2.3 bn in 2001. In the white
line segment, they are on rank 7 of the Top 8 German manufacturers with a
market share of less than 4%.
In 2001, they produced 347,245 t of fresh dairy products with a turnover of

411.2m. Hard and sliced cheese accounted for 94,758t (470m), preserved milk
products for 296,000 t (397m), milk powder amounted to 114,988 t (307m)
and butter to 50,482 t (259m).
(2) Humana-Milchunion
Humana comprises of Humana Milchunion eG, Humana GmbH, Euro Cheese

Vertriebs GmbH (all three produce and sell brands "Ravensberger",
"Sanobub", "Osterland", Humana", "Humana Vital", "Sonana", "Landhof", "Golden
Cheese" and Mascarpone "Casarelli" as well as private label products), Milchwerke
Thringen GmbH, Milchwerke Oder-Spree GmbH, Kurhessische Molkereizentrale
AG, Kstenland Milchunion Mecklenburg-Vorpommern eG and dairy Borgmann
GmbH & Co.KG. Humana Milchunion eG in Everswinkel have taken over Sanobub
Produktions Gmb H, an ice cream manufacturer (annual capacity 17m litres) in
order to expand their ice cream business segment. From 1s t November 2001,
Humana Milchunion have taken over privately owned dairy Borgmann GmbH &
Co. KG, Coesfeld, a specialist in yoghurt and dessert products, which Humana
plan to turn into their dessert production centre.

More than 8,000 dairies deliver 3.2 bn kg of milk to Humana annually. Humana
achieved a total turnover of 2.36 bn in 2001. They also plan to co-operate with a
producer of baby food next year.
(3) Campina Group NL and D
The two German subsidiaries of Campina Melkunie (The Netherlands),

Sdmilch AG (Stuttgart) and Tuffi Campina Emzett (Cologne and Berlin)
me rged in 2001 into Campina GmbH in Heilbronn. Factory sites are now located
in Heilbronn (yoghurt, desserts), Cologne (fresh milk, soft curd cheese, cream,
distribution) and Prenzlau (soft curd cheese, milk, butter).
This merger has resulted in another big dairy player in the German market with
2,000 employees and a turnover of 3.9 bn (2001). This catapulted Campina to
No. 3 of the biggest German dairies.
In January 2003, Campina GmbH took over Strothmann dairy / Gtersloh. In

2002, Strothmann turned over 120m with 330 employees. Strothmann had a
reputation for being one of the market leaders in new dairy product development.
With the takeover of Strothmann, Campina is following its strategy to expand
their dessert segment and become market leader in this particular segment in
Germany.
(4) Alois Mller
In 2000, Alois Mller bought the government-owned dairy Weihenstephan

(premium dairy brand "Weihenstephan") which enabled them to expand their
portfolio and offer strong and well-established premium segment products and
thus strengthen their position in the market.
The Mller group turned over 1.69 bn with 3,900 employees. They processed
1.8 bn litres of milk. With a market share of 13.8% (volume), Mller is still the
market leader in the white line market (Jan- July 02).
(5) Hochwald Nahrungsmittel-Werke GmbH
The merger in 2001 with dairies Eifelperle Milch, Milchwerke am Burgwald

and Molkerei Borken made Hochwald the fifth biggest dairy in Germany. By
taking over these dairies, Hochwald expanded their previous product portfolio of
drinking milk, UHT milk and evaporated milk by adding yoghurt and sliced
cheese. The tot al group turnover amounted to 625 m with sales of 982 m kg of
milk.
(7) Bayerische Milchindustrie eG (BMI)
In December 2002, Bayerische Milchindustrie (Bavarian Dairy Industry) took

over Franken-Milch Langenfeld-Uffenheim GmbH. Langenfeld processes
approx. 100m kg of milk, 80% of which are exported, and turned over 37m in
2001. Langenfeld is BMI's 12th production site and raises their annual cheese
production to approx. 28,000 tonnes.

A merger between Bayernland eG, Nuremberg, and BMI is also planned in the
near future. Bayernland sells more than 100,000 t of cheese per year and is one
of the biggest German cheese producers. A merger between these two would give
BMI the opportunity to successfully enter the German cheese market.
(8) Bayernland e.G.
Bayernland eG, Nuremberg, processed 140,000 tonnes of milk in 2001 and

turned over 507m. The company mainly produces yellow line products, i.e.
cheese and butter. 73% of their product portfolio is cheese, 7% is processed
cheese and the rest is butter. Bayernland is also leading distributor of Swiss and
Italian cheese (Galbani) in Germany. Since 2000 Bayernland is also sole
distributor for all products (excl. whey products) of Kserei Bayreuth eG (a co-
operative cheese factory with a turnover of 145m in 1999).
(9) Omira Group
Omira / Neuburger in Ravensburg, processed 842m kg of milk in 2001 and turned

over 452m. The Omira Group specialises in dried milk products and also in UHT
milk, butter and cheese. Their product range is marketed under the regional
brand Bodensee (= Lake Constance).
(10) Hochland AG
Hochland AG in Heimenkirch, Bavaria, is a family-owned company. They are the

largest cheese manufacturer with a cheese production of 215,000 t in Germany in
2001. They achieved a turnover of 790 m. Processed cheese is their main
domain, but they also produce soft cheese, hard and sliced cheese, cream cheese
and cows milk feta.
Those 10 dairy producers process 53% of the national milk production and
achieve more than half of the total turnover made with dairy products in
Germany.
6.1.2 UK Dairy Exports in Food Processing
Apart from cheese, which is rarely a product which goes into further
processing, only loose cream in bulk was imported into Germany. 14,600 t
were imported in 2001. It achieved an estimated turnover of 23.6 m.
Imports of loose cream from the UK account for 33% of total cream import
volume and value. Much of this is used by the German yoghurt industry.
Loose cream is mainly needed to produce cream and butter products.
Britis h cream in bulk is obviously quite competitively priced and what seems
to be also important is the fact that cream from the UK is not subject to
veterinary observation.
British cream is sold through wholesalers to German dairies. Those
dairies use it for the processing of cream and butter products.
The export of skimmed milk powder plays a rather minor role. Only 100 t
were exported from the UK and turned over 0.26 m in 2001. The UK export
of skimmed milk powder accounts for only 0.3% of total volume or 0.4% of
total value.

7 Conclusions & Recommendations
7.1 Conclusions on Market Potential
7.1.1 Cheese
Cheese in Germany is consumed primarily at main- meal occasions, not often
after main meals and also on open bread rather than crackers. In addition, it
is a regular breakfast component.
This means that mainstream products are primarily sliced and mild (opening
the market historically for Dutch suppliers).
Unlike France, Italy and Holland, Britain does not benefit from a well-known
cheese heritage. Indeed it suffered badly due to BSE and even had a limited
regional ban in Northrhine-Westphalia.
British cheese, being mainly in block and hard cheddar form makes it a
speciality. Food from Britain's first recommendation would be with a
committed supplier to examine the opportunities for sliced, pre-packed
cheddar.
The areas of consumer and trade communication should also be
examined. Sales of British cheese are now recovering following the effects of
BSE/Food and Mouth disease in recent years. However, unlike other countries,
British products have never benefited from wider consumer or trade
advertising.
Opportunities also exist for products that match the overall trends for
convenience food. The market for baked camembert for example continues
to grow. British suppliers such as Abergavenny Fine Foods have good ranges
of products in this category.
7.1.2 Yoghurts / Dairy Desserts

Consumption of yoghurt in Germany is at a higher per-capita level than the
UK. Similarly, there are a wide range of successful, innovative German dairies
who supply the market. Some imports form France exist, otherwise the
market is exclusively serviced by domestic suppliers.
Due to the high competition and industry over-capacity, price levels are
extremely low. This would make a launch by British companies extremely
difficult and financially even more so due to the pre-requisite of high media
expenditure.
The success of Mller on the British market summarises chances in this
category.
7.1.3 Dairy / Milk Drinks

The largest category is drinking yoghurt, where Danone and Campina are
market leaders. Although both are foreign suppliers, they produce locally,
Campina following their acquisition of the Sdmilch co-operative in the late
90's. Opportunities could exist with the right product, but a branded approach
will be expensive and a private label difficult to launch profitably.
Milk mix drinks offer more potential. Research in 2001 with a British product
range showed excellent results. Price range and shelf life are the major issues
to be overcome.
Buttermilk is dominated by Mller and Nordmilch and a classical German
product which could be difficult to compete against.

7.1.4 UHT Milk
This product category has become a classical discounter commodity

product which retails at 0.45 0.55 per litre in a market with over-capacity.
Food from Britain considers there to be little opportunity for British suppliers
without an additional USP.
7.2 The Route to the Market

There are several alternative routes to market which depend on scale of
objectives and type of customer.
a) Acquisition:
This is the most successful route for a leading dairy company and the route
practised by such Dutch companies as Campina and Coberco. Danone also chose
this route. This was also the last stage in Mller UK's spectacular success.
b) Strategic Alliance
This is a route FFB would recommend for a medium- large scale British supplier.
The pre-requisite is a complementary product range and ideally extended shelf-
life products. It is certainly a route to follow once a product has proved itself
successfully in the market.
c) Distributor / Importer
This is the method chosen by most low-volume cheese exporters. A variety of

German companies such as Scheer, Zuck etc. offer a range of imported products
and are particularly well-represented at the premium end of retail distribution.
d) Direct to Retail
This route is becoming more feasible as retailers a) improve their logistics and b)
accelerate the trend towards private label. A British supplier should evaluate this
carefully if it plans to launch a volume item.

7.3 Levels of Investment
Here, one must differentiate between a branded and non-branded launch.
Branded products need support. Support means a combination of trade, in-

store and ideally consumer advertising, more so in white line than yellow line
products.
The Top 5 spenders in 2001 invested over 110m in TV alone, which was by
far the most important medium. Danone, the largest spender, accounted for
40% of the total of the Top 5.
Non-branded means primarily private-label which automatically in Germany

means low value, but compensated to a certain extent due to the size of the
overall market by extremely high volumes.
A distributor in whatever form would expect support in his promotional
strategy. This can include product sheets, listing fees, contribution to retailer
weekly flyers and in-store demonstrations, the most effective vehicle for a low
volume speciality product.
7.3.1 Product Category Grouping Approach
This is certainly a concept worth evaluating for example for a Regional Food
Group with a complementary range of products. It would make listing and
transport much simpler, but the pre-requisite is commitment and one
company / person as the lead group.
FFB recommends, in terms of logistics, to contact the British division of

Germany's leading chilled delivery company, Nagel, in Dover. This company
has a regular service to all regional grocery retailer depots and can
consolidate in Dover.

5 THE MARKET............................................................................... 113
5.1 MILK PRODUCTION.......................................................................113
5.1.1 Key Suppliers of Milk ..........................................................116
5.2.1 Market Overview................................................................118
5.2.2 Key Players.......................................................................118
5.2.3 Retail Market Segments ......................................................120
5.2.4 Trends per Product Category................................................122
5.2.5 Legislation/Labelling ...........................................................123
5.2.6 SWOT analysis of Market for Dairy Products............................124
5.3 T HE ORGANIC MARKET ..................................................................125
6 FOOD PROCESSING MARKET........................................................ 126

6.2 KEY SUPPLIERS ...........................................................................127
6.2.1 UK Dairy Product Exports in Food Processing ..........................130
7 CONCLUSIONS & RECOMMENDATIONS......................................... 131

7.1.1 Cheese ............................................................................131
7.1.2 Yoghurts ..........................................................................131
7.1.3 Dairy Desserts...................................................................131
7.1.4 Dairy/Milk Drinks ...............................................................131
7.1.5 UHT Milk ..........................................................................131
7.2 T HE ROUTE TO MARKET..................................................................132
7.2.1 Retail...............................................................................132
7.2.2 Catering ...........................................................................132
7.2.3 Food Processing.................................................................132
7.3 LEVELS OF INVESTMENT NECESSARY ...................................................133
7.3.1 Product Category Grouping Potential .....................................133
8 APPENDICES............................................................................... 134
8.1 APPENDIX 1 DAIRY PRODUCT SALES .................................................134
8.2 APPENDIX 2 MARKET SHARES ........................................................135
8.3 APPENDIX 3 - CASE STUDIES ...........................................................146
8.3.1 Case study - Fresh Milk at Delhaize .......................................146
8.3.2 Case study - Biamo cheese..................................................147
8.3.3 Case study - Stassano: dairy drinks in PET bottles...................148

Belgium
Land area 30.518 km
Population (2001) 10.3 million
Inhabitants per km 337.5
Capital Brussels
Language Dutch (55%), French (44%), German

(1%)
Currency Euro
VAT on food products 6%
GDP (2001) 254.3 billion
GDP growth rate (2001) 2.75%
Unemployment (2001) 4.2%
International status EU member
Total food and drink turnover (2001) 16.7 billion
UK food and drink exports (2001) 285 million

8.2 Country Data
Main regions:
- Flanders:
the Northern half of Belgium
the highest number of inhabitants
Dutch speaking
- Wallonia
the Southern half of Belgium
French (over 98% of the population) and Germa n speaking
- Brussels Capital
Brussels and surrounding cities
The smallest region - 979,000 inhabitants, 162km surface
French and Dutch speaking (bi-lingual)
Capital of Europe, NATO headquarters
In Flanders and Brussels the main economic activities are in the service sector,
whereas in Wallonia there is more heavy industry and production.
Other factors
- Belgium is a small country with a lot of diversity. It is the meeting
point of Europes two main cultures: Germanic and Latin.
- It is an excellent test-market for products destined to be sold
throughout the continent.
- Belgium is the commercial axis within Western Europe.
Map of the country
Flanders
Brussels
Capital
Wallonia

Table 1 Belgium: Population Growth, 1990-2020

1990 1997 1998 1999 2000 2001 2010 2020
(f) (f)
Population 9.92 10.17 10.19 10.21 10.23 10.26 10.53 10.73
(million)
Year-on- 0.25% 0.24% 0.19% 0.19% 0.19% 0.29 % 0.29% 0.2%
year growth
(%)
Source: National Statistics
Over half of Belgians live in the North (Fla nders). One out of 3 lives in Wallonia
and 9% in Brussels Capital region. The population density is the highest in
Brussels, followed by Flanders and Wallonia.
Table 2 Belgium: Population by Region, 1992-2001

(000s) 1992 1995 2000 2001 % share 2001
Flanders (Dutch) 5,794.9 5,866.1 5,940.3 5,952.6 58%
Wallonia (French) 3,275.9 3,312.9 3,339.5 3,346.5 33%
(including German speaking) (70.0) (0.68 %)
Brussels Capital region 951.2 951.6 959.3 964.4 9%
(Dutch and French)
The foreign population, totaling 0.85 million is largely made up of French and
Italians, followed by Moroccans and Turks.
Table 3 Belgium: Number of Foreigners, 1997-2001

1997 1998 1999 2000 2001
Foreigners 903,120 891,980 897,110 861,685 846,734
Growth -8,801 -11,140 +5,130 -35,425 -14,951
Birth 9,265 8,697 8,540 8,223 n/a
Death 5,295 5,224 5,422 5,565 n/a
Source: Ecodata
8.3.2 Population by sex and age group

Table 4 Belgium: Population per Age Group, 1998-2001
1998 1999 2000 2001 2001 (%)
Total 10,192,264 10,213,752 10,239,085 10,263,414 100
Aged 0-19 2,430,706 2,425,617 2,419,964 2,412,224 24
Aged 20-64 6,082,967 6,090,682 6,104,028 6,121,455 60
Aged 65 + 1,678,591 1,697,453 1,715,093 1,729,735 17
Men 4,982,672 4,993,718 5,006,014 5,018,019 49
Aged 0-19 1,243,294 1,240,900 1,237,139 1,233,250 12
Aged 20-64 3,059,739 3,063,187 3,069,738 3,077,631 30
Aged 65 + 679,639 689,631 699,137 707,138 7
Women 5,209,592 5,220,034 5,233,071 5,245,395 51
Aged 0-19 1,187,412 1,184,717 1,182,825 1,178,974 11
Aged 20-64 3,023,228 3,027,495 3,034,290 3,043,824 30
Aged 65 + 998,952 1,007,822 1,015,956 1,022,597 10

Table 5 Belgium: Population per Age Group, 2010-2020
2010 2010 (%) 2020 2020 (%)
Total 10,529,690 100 10,723,828 100
Aged 0-19 2,344,140 22 2,274,612 21
Aged 20-59 5,681,656 54 5,521,385 51
Aged 60-64 649,030 6 722,633 7
Aged 65 + 1,730,746 16 1,854,864 17
Table 6 Belgium: Household Numbers, 1991/2000

1991 2000
No. of households (000) 3,953 4,237
Av. number of persons per household 2.54 2.41
Table 7 Belgium: Households Development, 1991/2000

Number Percentage
Type of household or family cell 1991 2000 1991 2000
Number of households 3,953,125 4,237,775 100% 100%
Non- family households
- men living alone 466,169 591,624 11.8% 14.0%
- women living alone 657,502 729,973 16.6% 17.2%
- people that are not part of a family
cell 119,805 189,795 3.0% 4.5%
Other households 2,709,649 2,726,383 68.5% 64.5%
Type of family cell
Family cells 2,740,490 2,758,074 100% 100%
Married without children 928,584 965,818 33.9% 35.0%
Married with one child 612,713 533,134 22.4% 19.3%
Married with two children 548,111 511,587 20.0% 18.6%
Married with 3 or more children 266,703 248,309 9.7% 9.0%
Fathers with 1 or more children 81,963 122,265 3.0% 4.4%
Mothers with 1 or more children 302,416 376,961 11.0% 13.7%
Chart 2 Belgium: Distribution of Household Size, 2000
6 people or more
5 people
2%
5%
4 people 1 person
14% 31%
3 people
17%
2 people
31%

The service sector dominates the Belgian economy: 70% of GDP

Export oriented production: more than 70% of GDP is exported
Most companies are small or medium sized
High quality industrial sites
Skilled and productive workforce
Open economy
As in other European countries, the Belgian economy is still growing, but very
much slowing down since 2002. For the forthcoming period, the economy is
expected to stagnate.
Table 8 Belgium: Economic Indicators, 1997-2002

1997 1998 1999 2000 2001 2002(e)
GDP ( bn) 217,44 225,87 235,54 248,34 256,59 263,65
GDP Growth (%) +3.9 +4.3 +5.4 +3.3 +3.3 +2.8
GDP per capita () 21,380 22,161 23,061 24,254 25,000 25,943
Inflation (%) 1.6 1 1.1 2.5 2.5 1.5
Consumer Expenditure ( bn) - - - 120.14 - -
Consumer Expenditure - - - +4.0 - -
Growth (%)
Unemployment Rate (%) 13 12.4 11.5 10.9 10.8 11.2
Balance of Trade ( bn) N.A. N.A. N.A. 11.76 13.05 18.60
Predictions on GDP (and other economic indicators) are not very reliable at the
moment - most figures are being corrected in a negative way. It is expected that
the government will lower the interest rate on loans for companies, which should
stimulate investments again.
Overview of the latest economic facts in Belgium (February 2003):
- Consumer price index

- War threat oil prices inflationary pressure
- Energy prices
- Wages < prices purchasing power of families
F inflation increases
- Slow economic growth Slight increase

- Moderate wage increase of inflation
- Strong Euro
F inflation decreases

8.5 Consumer Trends

In total, Belgian families spent 120.14 billion in 2000. This is on average,
28.356 per family. Total consumption value increased by 4% from 99 to 00.
The majority is still spent on rent or mortgage, transport and communication
(increasing due to sales of cell phones and internet connections), and food,
drinks & tobacco (decreasing due to the overall increase in disposable
income).
There are important regional differences in household spending. In Flanders,
each family spent on average 29,431 in 2000, this is 1,515 more than an
average family in Brussels and 2,843 more than a family in Wallonia.
In Brussels and Wallonia, families spend relatively less on clothes, shoes,
hotels, restaurants and cafs, leisure time, home improvement and gardening
than families in Flanders. They spend relatively more on transport,
communication and health care, than the families in Flanders.
Table 9 Belgium: Evolution of Household Expenditure by Sector, 1979-2000

(%) 1979 1988 1996 1999 2000
Food, drinks and tobacco 22.2 19.0 17.5 15.8 15.6
Clothes and shoes 7.9 7.4 6.1 5.3 4.9
Rent or loan for house 17.8 21.0 21.2 21.2 20.8
Energy 6.5 5.9 5.2 4.9 5.3
Health care 3.3 3.7 4.5 4.7 4.2
Transport / communication 10.9 11.0 12.6 14.5 16.2

Reduction in household size:
- In the last decade, relatively more people are living alone or in single-
parent households.
- The number of married couples with children is declining.
- In Brussels there are clearly more men and women living alone than in
the rest of Belgium.
Less time spent on cooking:
- People are working longer hours.
- More demand for leisure time (not cooking).
- Demand for convenience products, ready meals, etc.
More working wome n (with a full time job)
Higher disposable income (household budget increases year after year)
Increase in snacking:
- As a result of working more and longer hours, the demand for snacks
increases (convenience) - especially healthy snacking.
Growth of foreign foods.
- Population is becoming more multicultural.
- Frequent traveling and a increasing choice for exotic destinations also
increases the interest in ethnic food.
- Ethnic ready meals and ingredients are fast growing categories
Growing health orientation:
- Consumers are becoming more health conscious.
- Light products are no longer only for women on a diet.
- Belgian consumers will only choose a light product if it tastes good.
- Popularity of functional foods increases.
- Key criteria: cholesterol, calories, salt content, fat content, fibre.

Growing demand for safety:
- Following the different food crises, people want to be sure that what
they eat is safe.
- Increasing demand for quality labels and traceability.
Growing demand for convenience.
- Change from the traditional 3 meals/day towards less regular eating
patterns (more eating moments): snacking and grazing (snack meals).
- 90% of the population has at least one hot meal per day, on which
they spend less than 1 hour (by 72% of the population). As a result
consumers buy fewer ingredients and would rather turn to convenience
food. Retailers have yet to adopt their offer to answer this evolution.
In addition shopper behaviour has also witnessed some changes:

As individual consumption increases, more individual portions and smaller
packaging units are purchased.
Increase in impulse buying:
Only 39% shop with a shopping list.
70% of all brand and/or product purchase decisions are made in store.
1 out of three purchases are unplanned before entering the store.
Cheese consumption in total keeps rising and is being driven by self-service

products in attractive and convenient packaging. Cheeses for culinary
preparations at home have become more popular (convenience trend).
Light products are the fastest growing category in dairy products, especially
for cheese and yoghurt.
Health conscious consumers have led to a boom in the organic market, but
this has now reached a peak and sales are stable with no significant further
growth expected.
Everything that has to do with the Mediterranean kitchen (which is perceived
as a healthy way of cooking) has become popular (e.g. Italian cheese doing
well).
Food and drink retail purchases hold a share of 14.9% (on total expenditure).
Horeca (Hotel, restaurant and caf) hold a share of 4.9%, which is increasing
both in absolute figures and in share.
The Belgian consumer is very flexible, and behaviour is hard to predict.
This behaviour also implies an openness towards non-Belgian products.
The open-mindedness is
On the one hand, an advantage: the Belgian consumer is
open to new tendencies, new products.
On the other hand, this is a disadvantage as well: the Belgian
consumer is hard to keep, which is reflected in low product
loyalty figures.
This absence of loyalty in consumption is also reflected in the Belgian
shopping behaviour: the consumer visits 5.5 different stores per quarter
(compared to 4.2 in 1985). Factors that play an important role in this
proposition are:
Advertising methods
Small distances
Belgian consumers mainly shop by car
High retail density: high outlet number per 1000 inhabitants


A majority of the information gathered in this chapter originates from the
ACNielsen Voedingsuniversum in Belgi 2002.
AC Nielsen defines 4 categories of store types:

- F1 stores: National Retail: Colruyt, Delhaize supermarkets, Carrefour
Group (Carrefour + Super GB), Cora, Match, Mestdagh (SuperM +
Champion)
- F2 Integrated (I) stores: Aldi, Delhaize2&Delhaize City, Lidl, Louis
Delhaize (Profi+Smatch), Laurus
- F2 Non integrated (NI) stores: Alvo, AD Delhaize, Superettes+Proxy
Delhaize, Super GB Partner, Super GB Contact, Intermarch,
Ecomarch, Samgo, Spar, Cash Fresh, other independent
supermarkets > 400m
- F3 stores: all self service stores < 400m + traditional stores
Belgium presents a high degree of concentration of outlets: there is 1 food

shop per 1,117 inhabitants and per 3.3 km surface (Europe: 868 inhabitants
and 8.3 km).
Only the total surface of F1 and F2I has increased significantly. For F1, this is
due to the extension of existing stores, whereas for F2I, the increase comes
from the opening of new stores.
The decline in the surface of the F2NI is mainly due to the closure of smaller
stores, whereby only the largest stores survive.
Table 10 Belgium: Evolution of the Average Store Size, 1995/2001

Surface in m Average surface in
m/store format
1995 2001 Evolution 1995 2001
F1 stores 1,042,500 1,158,400 +11.1% 2,141 2,249
F2 integrated stores 363,600 423,600 +16.5% 548 572
F2 non-integrated stores 950,300 870,500 -8.4% 781 835
F3 superettes 576,700 435,800 -24.4% 241 200
F3 traditional 344,000 212,200 -38.3% 42 45
Total 3,277,100 3,100,500 -5.3% 253 337
Source: Nielsen 2002
Table 11 Belgium: Turnover per Store Type, 1995/2001

Turnover in per m
1995 2001
F1 stores 6,595 7,515
F2 I 5,472 6,011
F2 NI 3,722 4,756
F3 superettes 1,363 1,880
F3 traditional 2,341 2,381
Total 4,270 5,387

Planning laws
In 1975, planning laws were introduced preventing the opening of new stores
above 750 m for major multiples, resulting in:
o A franchised network: e.g. AD Delhaize and Unic & Nopri, now
changed into GB partner.
o Diversification: ex. GB diversified into catering, DIY, fast food and
textiles while Delhaize expanded into drugstore & pet shops.
o Internationalization (see below).
Compared to the UK, large supermarkets hold a larger share (73%).

o Partly due to absence of many hypermarkets.
o Partly due to Belgian preference for urban supermarkets.
o However, Belgian hypermarkets are much larger than UK ones
(10,000m to 15,000m).
The share of the traditional stores is decreasing.
Table 12 Belgium: Share of Turnover per Store Format, 2000

Belgium UK Europe
Hypermarket (>2500m) 14.3% 46% 34.7%
Large supermarket (1000-2500m) 45.6% 28% 23.3%
Small supermarkets (400-1000m) 29.2% 13% 24.6%
Superettes (<400m) 7.9% 8% 12.3%
Traditional stores 3.0% 4% 5.0%
Trends affecting the retail environment:

o Hard discounters now represent an important part of retail trade.
o Hypermarkets and large supermarkets have gained shares at the
cost of the traditional stores.
o New concept stores are being opened by the leading retailers
(Colruyt with Okay-stores) or existing formulas are modernised
(Profi to Smatch).
At the end of 2001, 9,192 stores were registered. This number has been
falling since 1970. Only in the period 1991/921995 did the number remain
more or less stable.
By store type, the following trends are evident:
o F1: has become more prominent over the years, despite slightly
decreasing in 2001, to 515 stores (-2: 01/00).
o F2 I: increased by 54 stores, from 686 to 740 at the end of 2001,
following the positive trend over the last 5 years of new store openings
(mainly discounters and convenience outlets).
o F2 NI and F3: both numbers are decreasing, resulting in 1,043 (-26)
and 6,894 (-725) stores at the end of 2001. F3 has seen its share
halved in the last 15 years.
There has been a significant increase in the number of discounters: +59, to
874 stores in total, which is the highest number of discounters since this
formula has been introduced in Belgium (of which 364 soft discounters and
510 hard discounters). Their market share continues to increase, up to 29.5%
in 2001 (27.3% in 2000) (soft: 17.1%, hard: 12.4%)

Table 13 Belgium: Number of Stores per Format, 1985-2001
1985 1990 1995 2001
F1 447 462 487 515
F2 I 642 719 664 740
F2 NI 930 1,108 1,216 1,043
F3 13,583 11,497 10,585 6,894
Total 15,602 13,786 12,952 9,192
Chart 3 Belgium: Number of Stores per Format, 2001
Number of Stores Self-service Sector
8,000 6,894 4,800 4,715
6,000 4,700
4,600
4,000 4,477
4,500
2,000 515 740 1,043
4,400
0 4,300
F1 F2I F2NI F3 Self Service Non Self-Service
Chart 4 Belgium: Market Shares by Store Format, 1985-2001
100%
14.2 11.4 7.9
90% 18.9
80% 24.8
25.3 25.3
70% 22.9 F3
60% 15.3
13.7 14.2 F2 NI
50% 12.3
F2 I
40%
F1
30%
45.9 46.8 49.1 52
20%
10%
0%
1985 1990 1995 2001

9.1.3 Shares per Retailer Fascia
The Carrefour group continues to loose market share, mainly in favour of

Delhaize (affiliated stores AD Delhaize)
After acquiring GB in 2000, in 2001 Carrefour fully integrated Maxi GB and
began implementing Carrefour systems. Therefore from 2002 there will be a
clearer picture of how market shares will evolve.
The third placed retailer, Colruyt has grown steadily over recent years and in
2003 acquired the Belgian operation of Laurus.
Table 14 Belgium: Carrefour Market Share Evolution, 2001-2002

% Q4 2001 Q4 2002 Evolution
Carrefour integrated 22.12 21.7 -0.42
(Carrefour, Maxi GB, Super GB)
Affiliated Carrefour 9.48 9.27 -0.21
Total Carrefour 31.6 30.9 -0.7
Source: AC Nielsen
Table 14 Belgium: Delhaize Market Share Evolution, 2001-2002

Delhaize SM, Delhaize City 16.1 16.35 +0.25
Affiliated Delhaize 7.9 8.13 +0.23
Total Delhaize 24.0 24.4 +0.4
Source: AC Nielsen
Carrefour sells a large amount of non-food. Delhaize only sells a very limited
range of non-food.
Food market shares differ widely category per category.
Table 15 Belgium: Market Share Evolution by Retailer, 2001-2002

Colruyt 16.2 16.65 +0.45
Mestdagh 2.9 2.4 -0.5
Match 2.86 2.3 -0.56
Profi 1.12 1.04 -0.08
Laurus (now Colruyt) 4.10 3.6 -0.5
Intermarch 1.89 1.7 -0.19
Makro 3.5 3.45 -0.05
Cash Fresh 1.24 1.0 -0.24
Aldi Lidl 11.86 12.8 +0.94
Source: AC Nielsen
Table 16 Belgium: Retailer Ranking by Turnover and Number of Outlets, 2001

Food retailing Carrefour Super GB GB Partner/ Delhaize Colruyt
Contact total
Financial year 2001 2001 2001 2001 2001-2002

Total sales 2,260 m. 940.5 m 1,600 m 3,200 m. 2,392.1 m
(+2.1%) (-0.4%) (-3.1%) (+ 6.6%) (+12.1%)
Market share 21.7% 9.3% 24.4% 16.6 %
Number of POS 56 73 290 675 158
Source: AC Nielsen

Major player initiatives
Delhaize:
o In 2003, Delhaize will open +/- 30 stores, mainly small format stores
and 2 stores in Germany (Aachen).
o Delhaize is confirming its new strategy (2002) of Every day fair price.
o Delhaize is further pushing its communication towards quality-retailer,
food specialist and innovator.
o The organic store which was open as a test has closed down. Delhaize
wants to push organic products as a whole within its supermarkets.
Carrefour:
o In 2003, Carrefour is further profiling itself as the bargain retailer,
with heavy national advertising camp aign.
o Carrefour continues integrating its logistics system, with the opening of
new warehouses in order to better cover the entire country.
Colruyt:
o Colruyt is concentrating on increasing its market share within the
Belgian market. Its target is to achieve a 25% market share.
o In 2003, it has acquired 26 stores and all the wholesale activities of
Laurus Belgian unit.
Trends in food retail
Customer:
Quality & safety
Environment
Convenience
Service
Variety =
Price
Store formats:
E-commerce
Convenience
Specialty
Supermarkets =
Discounters =
Hypermarkets
Cash & Carry

9.2 Private Label
After some years of stagnation, private label products in retail reached a

share of 30.1% in 2001.
The success of private label can be explained by a number of different factors:
o Improvement of the quality of the products.
o A larger offering.
o Improved distribution within the same retail format.
Chart 5 Belgium: Evolution of Private Label in Retail (% value)
35 29.1 30.1
27.6 28.8 28.6
30 25.1 26.3
25
17.3
20
% 13.7
15
10
5
0
1985 1990 1995 1996 1997 1998 1999 2000 2001
Source: ACNielsen
Frozen food is by far the largest category for private label, followed by dairy
products. This trend has been driven mainly by improved quality.
In confectionery and alcoholic beverages, the share of private label is still very
limited because of the required innovation and high investment in brand
building.
Chart 6 Belgium: Share of Private Label per Category, 2001 (% value)

50%
40%
49%
30% 39%
35% 34% 34%
29%
20% 26%
10% 18%
17%
0%
iry
v
ery
en
od
ct
sc
ev
ev
Be
Da
nfe
oz
tfo
Bi
cB
tB
oc
c.
Fr
k&
Co
Pe
Gr
Ho
Al
Al
Ba
N-
Source: ACNielsen

Table 17 Belgium: Private Label Penetration per Product Category, 2001-2002
Volume Value
% private label per product category 2001 2002 2001 2002
Milk 75.7 76.3 66.7 68.5
Brie 65.2 63.5 58.1 56.1
Weak cheese nature 52.1 51.0 38.2 38.2
Blue cheese 49.9 50.2 43.8 43.2
Chocolate milk 50.8 49.6 33.7 33.5
Non drink yoghurts 38.1 36.3 25.0 25.0
Camembert 32.3 33.4 22.6 23.6
Fresh cheese (flav.) (excl dipping) 37.7 31.5 20.0 15.9
Drink yoghurts 33.9 30.4 17.0 14.7
Weak cheese fruit 31.9 28.1 21.5 18.9
Processed cheese 30.4 26.9 18.8 16.3
Chilled desserts 20.3 20.9 19.9 20.0
topping cream 3.1 3.5 2.3 2.9
Mousse 5.1 5.5 6.9 7.0
Rice 9.1 9.0 4.8 4.5
Milk specialties 1.8 1.6 4.9 4.5
Flan 1.2 1.3 1.0 1.1
Butter milk 8.6 20.5 6.3 14.2
Fresh cheese (unflav.) (excl dipping) 18.0 18.9 12.1 12.2
White skin cheese 12.2 8.3 12.2 8.8
Red skin cheese 7.0 7.4 6.8 8.2
Probiotic drinks 0.0 0.0 0.0 0.0
Soya drinks 0.0 0.0 0.0 0.0
Source: ACNielsen Scantrack 2003
There are 4 main factors behind the success of private labels:

o The guarantee given by the retailer to the consumer for private
label.
o The emotional difference between A brands and private labels is
narrowing.
o The consumer perception of value for money.
o The advertising pressure.
Private label is mainly carried out by GB and Delhaize: share goes up to 30%.
In certain categories, positioning has moved away from price towards quality
and innovation. The image of private label as a cheap, lower quality product is
diluting or, the perceptual difference between private label and A-brands is
narrowing.
There have been a vast number of private label introductions since the early
nineties. However, due to a low degree of investment and marketing support,
private label introductions are limited to me-too products, following brands,
and are not valid for innovative concepts.

Logistical systems in place:

- Quite sophisticated logistics, very similar to the UK.
- Apart from some exceptions, systems are mainly centralised delivery to
one depot per category per retailer.
Direct supply from manufacturer to retailer is quite feasible.
Less need for intermediates (importers, agents).
- Retailers are capable of handling short shelf life products via daily store
deliveries.
Logistical issues:
- There is a trend towards the use of returnable crates, which is expected to
develop in the coming 2-5 years (UK supplier to evaluate local consolidator
or solve return of empty crates / CHEP option available in Belgium).
- Use of Europallets highly recommended by retailers.
- Outercase must not be too large for reasons of shelf life - rotation - waste.
Most likely: in 6s (up to a maximum of 12 consumer units).
- Order lead-time depends on a) retailer preference and b) product shelf
life. Most likely A for C (if shelf life > 12 days), for chilled (under 12 days
shelf life: A for B)
- In some cases, slot booking has to be agreed.
Margins for dairy products:

- Average retail margin is around 30%, with variation between 15-40%
depending on the food category and product offering.
- In the dairy market, expected margin levels are between 25-35% of net
RSP depending on the total contribution made by the supplier including
direct support such as folder advertising, in store promotions, overriders,
other discounts and rebates
- The stronger the brand, the lower the margins.
- The margin is calculated on the total RSP including the VAT.
- Realistically, the retailers buying price will be multiplied by 1.6 to 1.65 to
achieve the RSP.
Listing fees and promotional support for dairy products:

- Listing fees can be (on average) around 15,000-20,000 per item for
branded products. For private label there are no listing fees.
- Promotional support is important for dairy desserts, milk drinks and
drinking yoghurts. These categories are evolving fast and it is important to
provide something new, eye catching and dynamic. Promotional support is
therefore an excellent tool to differentiate your product from the
competition.
- Part of the price for promotional support can be included in the listing fee.
VAT rates:
- A 6% VAT rate is applicable on all food products in Belgium.
Payment terms:
- All invoicing and payments are to be in Euros.
- In most cases, payments are carried out by bank transfer.
- Terms vary among retailers and are usually part of the negotiation:
o Carrefour: on average 60 to 90 days from invoice.
o Delhaize: on average 45 days (2 payment days per month).
o Colruyt: on average 30 days.

Table 18 Belgium: Retailer Logistics
Group/Fascia Logistics (for dairy products)
1. Carrefour * No. of distribution depots: 2 (1 for North and for South)
* Central ordering but split per warehouse
* 1 invoice per warehouse
2. Delhaize * No. of distribution depots: 1
* Central ordering
* 1 invoice
3. Colruyt * No. of distribution depots: 1
* Central ordering
* 1 invoice
9.4 Retailer SWOT
Table 19 Belgium: Retailer SWOT

1. Carrefour - N1 retailer in Belgium - Very strong relationship
- Brand-led with Danone
- Centralised delivery - Very large assortment
- Expensive retailer (listing
fees + promotions)
2. Delhaize - Private label approach - Can require exclusivity
- Excellent integration of all - No price promotion
store formats
- Efficient logistics
- An innovator
3. Colruyt - Best performing Belgian - Soft discounter
retailer - Very expensive retailer
- Efficient logistics - Is a follower, not an
innovator

10 Retailer Profiles
10.1 Carrefour Belgium

Carrefour Belgium
Avenue des Olympiades,
1140 Bruxelles
Tel: 02/729.21.11
Fax: 02/729.20.96
Company Background/Structure
The former GB Group, now known as Carrefour Belgium, was the food chain of
a major concern called GB-Inno-BM (GIB group) whose creation dates back to
1860.
The 1s t Supermarch GB was opened in 1958, followed by the opening of the
first hypermarket in 1961.
In the 90s, new formulas appeared: GB Express, Super GB Partner for the
Unic and Nopri stores, Contact GB.
In 1998, Promods took a 27.5% share of the GB Group.
Following the merger of Carrefour with Promods in 1999, Carrefour took over
the remaining 72.5% share of GB.
In 2001, Carrefour invested 166 million for the renovation and the
transformation of Maxi GB into Carrefour hypermarkets.
For some time Carrefour/GB has been the largest food retailer in Belgium.
However, they have suffered a negative trend over the past ten years, due
mainly to their We are the largest and best attitude.
Currently, Carrefour Belgium employs 18,000 people in Belgium, of which
70% are female.
The food retailing part operating under the fascias Carrefour and GB Super,
GB Super Partner, has a share of 26.2% in Belgian retail (-0.9%), i.e. the
leading retailer.
Food retailing Carrefour GB Super GB Partner & Contact

Financial year 2001 2001 2001
Total sales 2.26 billion 940.56 million 1.60 billion
(+2.1%) (-0.4%) (-3.1%)
Sales per store 40.04 million 12.87 million 5.52 million
Sales per m 6,227 11,758 6,130
Market share 18.01% 8.10%
Number of POS 56 73 290
Total sales area 364,000 m 109,500 m 261,000 m (+5.9%)
Av. sales area 6,500 m 1,500 m 900 m
Food retailing GB Express ROB Ready.be
Financial year 2001 2001 Stopped in 2001
Total sales 24.61 million 18.46 million
+300% (+7.2%)
Sales per store 1.07 million 18.46 million
Sales per m - 10,588
Market share - -
Number of POS 23 1 (=)
Total sales area - 1,700 m
Av. sales area 60-200 m 1,700 m

Trends:
The impact of Carrefour on the Belgian retail scene and food and drink market
was noticed as of the 2nd semester of 2001: assortment becoming more
French, including French suppliers, aggressive promotional policy: price war
with Colruyt.
The new Carrefour strategy has a direct influence on private label
development.
The relationship between supplier/retailer is more confrontational, less of a
partnership.
Private Label
Private label brands:
GB: 3,500 references (= 30% of the sales).
GB Bio: organic range of 224 products.
Carrefour.
Souvenirs du Terroir: 90 regional products from Belgium.
Reflets de France/Escapades Gourmandes/Destinations Saveurs: a total of
120 products dedicated to specific cuisines.
Private label strategy:

Private label development slowing down because of 2 fascias.
Confusing strategy between private label and A-brands.
Limited product innovation.
Promotional Activities
Since the take-over by Carrefour, very aggressive promotional policy.
Weekly in-store magazine: Ma Semaine for Super GB and affiliated +
Carrefour magazine. Door-to-door distribution.
Loyalty card presents.
Strategy
Commercial strategy is two-fold:
Carrefour: The largest offer possible in food and non-food at competitive
price with an assortment of over 60,000 products.
Super GB: Quality and freshness at an attractive price.
Promotional: very aggressive to attract new customers in store.
Logistics: centralised in 2 warehouses.
e-commerce: has been abandoned because of high costs.

10.2 Delhaize Le Lion Group
Delhaize Le Lion/De Leeuw sa/nv
Rue Osseghemstraat, 53
1080 Bruxelles/Brussel
Tel: 02/412.21.11
Fax: 02/412.21.19
Founded in Belgium in 1867, Delhaize Group operates in 10 countries and on
three continents. The principal activity of Delhaize Group is the operation of
food supermarkets in North America, Europe and Southeast Asia.
As of December 31, 2001, Delhaize Group had a sales network (which
includes directly operated, franchised and affiliated stores) of 2,444 stores
and employed approximately 147,000 people. Store formats are primarily
supermarkets, which represent 85% of Delhaize Groups sales network.
Delhaize Groups sales network also includes other store formats such as
neighborhood stores, convenience stores and speciality stores.
In addition to food retailing, which accounted for approximately 95% of
Delhaize Group's sales in 2001, Delhaize Group operates food wholesaling to
stores via its sales network and in nonfood retailing of products such as pet
products and health and beauty products.
Operations are located primarily in the US and Belgium. Other operations are
in Greece, Czech Republic, Slovakia, Romania, Thailand, Singapore and
Indonesia. The first store in Germany was opened in March 2003.
Belgium represents 15% of the groups world-wide turnover.
Sales increased by +6.6% to 3.2 billion in 2001, on a selling area of
537,916m (i.e. +12% year-on-year).
Retail market share Delhaize Belgium: 19.6% (+0.3% share)
The most reliable & steady grower since the end of the 1960s (based on
market share).
Different stores/store formats:
Delhaize SM equals traditional multiples.
AD Delhaize and superettes are the franchise formula and
Delhaize2 and City are the proximity stores.
Food retailing Delhaize Delhaize 2 Delhaize AD &

supermarkets Delhaize City Superettes
Financial year 2000 2000 2000
Total sales 2,031.3 million 42.6 million 770 million
(+4.3%) (+15.4%) (+11%)
Sales per store 17.5 million 3 million 2.7 million
Sales per m 9,070 4,184.6 3,862.5
Market share 16.48% 8.5%
Number of POS 116 (+1) 14 278 (+27)
Total sales area 223,937 m 10,180m 199,352m
Av. sales area 1,930m 727m 717m
Food retailing Delhaize total

Financial year 2001
Total sales 3,200 million
(+ 6.6%)
Sales per store 4.74 million
Sales per m 5,948.88
Market share 24.4%
Number of POS 675
Total sales area 537,916m
Av. sales area 798m

Trends
Delhaize has entered new retail formats: e.g. petrol forecourts: Shopn Go
with Q8 and is further developing convenience stores (Delhaize City).
It has performed well as a challenger to GB/Carrefour and has an
entrepreneurial mentality.
Relationship between supplier/retailer: partnership if possible.
Private Label
Private label brands: Delhaize (Derby for the C-brand).
Private label strategy:
Focus on private label development.
Organic products are private label (with a few exceptions).
Tend to agree on exclusive listings, being an equivalent to a
private label.
Since January 2002, Delhaize has stopped all price promotions = > fair price.
In-store magazine: Le Caddy. Distribution is limited to presence in store.
Focus on new products, recipe ideas and theme -based.
Loyalty card is a powerful medium. 80% of Delhaize shoppers have a card.
Strategy
Product range: the best products at the best quality.
Price: Every day fair price.
Promotional: no price promotion.
Logistics: centralised.
e-commerce: is developed on the existing basis of the home delivery system
Caddy-Home.

10.3 Colruyt
Colruyt nv
Edingensesteenweg, 196
1500 Halle
Tel: 02/360.10.40
Fax: 02/360.02.07
Colruyt began as a small family business in 1925 and has grown into a major
company over the years. The first store was opened in 1964, with a
supermarket chain Cash&Carry, which later became the Colruyt stores. This
was the fisrt discount store on the Belgian market.
The formula has proven very successful thanks to a very low structural cost
and very efficient stock management.
In 1998, Colruyt opened its first Okay store, a convenience store with a
surface of 400m and also started developing its home delivery service.
As well as food retailing, Colruyt also has activities in the printing, toy retail
and computer sectors.
International investment is limited to the acquisition of the French distributor
group Ripotot in 1996.
Sales increased by 12.16% to 2.392,17 million (VAT excluded) in 2001/02.
Market share Colruyt (Belgium): 13% (+0.3%)
Since 1985, Colruyt can be considered as the biggest overall winner in Belgian
retailing in terms of market share, turnover and profitability.
Food retailing Colruyt Colruyt

Financial year 2000-2001 2001-2002
Total sales 2,132.73 million 2,392.17m
(+9.86%) (+12.16%)
Sales per store 13.7 million 15.1 million
Sales per m 10,250 11,350
Market share 12.7% 13%
Number of POS 156 158
Total sales area 207,870m 210,720m
Av. Sales area 1,340m 1,340m
Different stores/store formats:

Colruyt supermarkets.
Okay stores: small format.
Bio Planet: 2 shops dedicated to organic products with 7,000 references.
Private Label
Colruyt does not own a private label as such but buys exclusive brands from
a buying central (BLOC) (Eldorado, Galaxi, Ringis,).
Private label strategy: not a focus for Colruyt.
In-store magazine: folder published every 3 weeks and sent to customers.
Strategy
Colruyt wants to become n 2 within the Belgian market.
Supplier/retailer relationship is confrontational.
Product range/price: quality at the best price.
Promotional Red prices: products on promotion in the folder or in other
retailers to which Colruyt would react.
Logistics: centralised.
e-commerce: Colruyt.be webshop: 20,000 products available on the internet.

11.1 Cheese Overview

Carrefour has the highest number of cheese SKUs and also the highest
number of facings per SKU.
Delhaize has the highest share of private label and of organic products.
There are more speciality cheeses at Delhaize, than at the other two
retailers. Carrefour and Colruyt have a more general range of cheeses.
Colruyt has fewer varieties per cheese than the other two retailers.
Table 20 Belgium: Overview of Cheese at the Top 3 Retailers

Cheese Carrefour % Colruyt % Delhaize %
Total number of SKU's 368 215 290
Private label SKU's 46 13% 44 20% 132 46%
Branded SKU's 322 88% 171 80% 158 54%
Organic 4 1% 5 2% 10 3%
Table 21 Belgium: Carrefour Number of SKUs of Cheese per Category

Carrefour
Category Brand # SKU Category Brand # SKU
Melt cheese La vache qui rit 6 Camembert Cur de lion 3
Private label 1 President 3
Total 21 Le rustique 3
Apericubes La vache qui rit 7 Private label 3
Total 7 Organic 1
Melt cheese Maredsous 5 Total 14
Total 16 Brie Cur de lion 3
Cheese slices Private label 11 Prsident 5
Organic 3 Private label 2
Total 63 Total 16
Parmesan Galbani 4 Mould rind Total 15
Total 15 Washed rind Herve 5
Grated cheese Private label 8 Private label 2
Total 27 Total 22
Mascarpone etc. Galbani 5 Blue cheese Private label 1
Private label 3 Total 12
Total 15 Goat cheese Chavroux 9
Abby bloc Private label 1 Private label 2
Total 12 Total 21
Fromage frais
Bloc Gouda Private label 6 flavoured Broursin 6
Total 14 Total 16
Fromage frais
Bloc Emmental Private label 2 plain Kraft 8
Total 9 Private label 3
Bloc specialties Comt 4 Total 23
Fromage frais
Private label 1 snacking La vache qui rit 7
Total 16 Kiri 3
Total 14

Table 22 Belgium: Colruyt Number of SKUs of Cheese per Category
Colruyt
Gouda Westlite 3 Hard cheese Total 2
Feta/goat /sheep
Organic 1 cheese Chavroux 2
Private label 10 Private label 2
Melt cheese
Total 26 (container) Maredsous 5
Emmentaler/gruyre Private label 6 Private label 1
Organic 1 Organic 1
Total 10 Total 19
Melt cheese La vache qui
Grated cheese Private label 8 (portions) rit 5
Organic 1 Effi 4
Total 14 Maredsous 3
Fresh spreadable
cheese Philadelphia 7 Private label 1
Private label 1 Total 26
Organic 1 Melt cheese (slices) Ziz 3
Total 34 Private label 1
Soft/blue cheese Total 31 Total 10
Half hard cheese Private label 14
Total 43

Table 23 Belgium: Delhaize Number of SKUs of Cheese per Category
Delhaize
Fromage frais
Bue cheese Private label 8 (light & healthy) Private label 1
Organic 1 Organic 3
Total 12 Philadelphia 5
Washed rind Private label 6 Benecol 4
Total 16 Total 20
Hard and half hard Private label 33 Melt cheese Private label 7
Total 40 Maredsous 6
Goat and sheep
cheese Private label 7 La vache qui rit 4
Total 12 Effi 3
Soft cheese Private label 12 Total 23
Total 38 Sliced cheese Private label 6
Snack Total 12 Hochland 4
Fromage frais
(plain) Private label 5 Organic 1
Organic 3 Total 37
Fresh pack sliced
Philadelphia 2 cheese Private label 19
Total 14 Total 19
Fromage frais
(flavoured) Private label 5 Grated cheese Private label 15
Boursin 3 Organic 1
Total 18 Total 21
Mozzarella Private label 4
Galbani 4
Organic 1
Other Italian Private label 4
Total 8

11.2 Dairy Overview (excl. cheese)
In all retailers, the category with the highest share in private label is milk. At
Colruyt and Delhaize this is especially true.
For Carrefour desserts are the second biggest private label category, at
Delhaize the second biggest private label category is yoghurts and at Colruyt
both yoghurts and fromage frais share that place. In all categories, private
label represents a share around 30%.
Most organic (and organic private labels) dairy products are found in the
yoghurt and milk categories.
For the other categories, organic is in limited availability.
Table 24 Belgium: Private Label & Total SKUs per Dairy Category at the Top 3
Retailers
Private label
per category Carrefour Colruyt Delhaize
SKU's # PL % SKU's # PL % SKU's # PL %
Chocolate milk 27 5 19% 16 3 19% 13 4 31%
Fruit milk 31 5 16% 13 0 0% 11 0 0%
drinks
Soja drinks 28 0 0% 19 0 0% 23 1 4%
Probiotic 7 1 14% 6 0 0%
Drink yoghurt 15 0 0% 9 0 0% 9 0 0%
Drinks total 108 11 10% 57 3 5% 62 5 8%
Plain yoghurt 35 10 28% 14 5 36% 22 9 41%
0% yoghurt & 52 1 1% 31 1 3%
fruit
Soya or 43 18 42% 7 0 0%
organic
yoghurt
Skimmed 55 11 20% 42 23 55%
yoghurt & fruit
Full fat 43 11 25% 13 3 23%
yoghurt & fruit
Yoghurt total 228 51 22% 27 8 30% 102 33 32%
Fromage frais 28 1 4% 22 5 23% 27 6 22%
and fruit
Fromage frais 27 2 7% 13 6 46%
Mini cheese 17 9 53% 10 3 30% 10 3 30%
kids
Fromage 72 12 17% 45 14 31% 37 9 24%
frais total
Dessert 15 2 13% 23 4 17%
Pudding
Dessert with 15 7 47%
topping
Dessert 15 2 13% 7 1 14%
mousse
Dessert flans 10 4 40% 6 1 17%
etc.
Dessert total 55 15 27% 36 6 17% 47 11 23%
Milk 74 31 42% 19 13 68% 42 25 60%
Milk total 74 31 42% 19 13 68% 42 25 60%

Table 24 Belgium: Organic and Total SKUs per Dairy Category at the Top 3
Retailers
Organic per Carrefour Colruyt Delhaize
category
SKU's # % SKU's # % SKU's # %
org. org. org.
Chocolate milk 27 1 4% 16 1 6% 13 0 0%
Fruit milk drinks 31 0 0% 13 0 0% 11 0 0%
Soja drinks 28 1 4% 19 0 0% 23 1 4%
Probiotic 7 0 0% 6 0 0%
Drink yoghurt 15 0 0% 9 0 0% 9 0 0%
Drinks total 108 2 2% 57 1 2% 62 1 2%
Plain yoghurt 35 0 0% 14 2 14% 22 1 5%
0% yoghurt and
fruit 52 0 0% 31 0 0%
Soya or organic
yoghurt 43 35 81% 7 1 14%
Skimmed
yoghurt and
fruit 55 0 0% 42 5 12%
Full fat yoghurt
and fruit 43 0 0% 13 1 8%
Yoghurt total 228 35 15% 27 3 11% 102 7 7%
Fromage frais
and fruit 28 0 0% 22 1 5% 27 1 4%
Fromage frais 27 0 0% 13 1 8%
Mini cheese kids 17 0 0% 10 0 0% 10 0 0%
Fromage frais
total 72 0 0% 45 2 4% 37 1 3%
Dessert Pudding 15 0 0% 23 0 0%
Dessert with
topping 15 0 0%
Dessert mousse 15 0 0% 7 0 0%
Dessert flans
etc. 10 0 0% 6 0 0%
Dessert total 55 0 0% 36 0 0% 47 2 4%
Milk 74 6 8% 19 2 11% 42 3 7%
Milk total 74 6 8% 19 2 11% 42 3 7%

11.3 Total Dairy Overview
Delhaize has as many references for cheese as for the other dairy products. At
Carrefour, cheese represents only 41% of the total dairy category whereas at
Colruyt this is 54%.
For the total dairy sector, most private label is found at Delhaize. Especially
for cheese, Delhaize has a high % of private label.
In the total dairy category, the three retailers have almost the same
percentage in Organic. First Carrefour, than Delhaize and Colruyt.
Table 25 Belgium: Overview of Private Label and Organic for the Total Dairy
Sector
Carrefour Colruyt Delhaize
SKU's PL % SKU's PL % SKU's PL %
Cheese 368 46 13% 215 44 20% 290 132 46%
Other 537 120 22% 184 44 24% 290 83 29%
dairy
Total 905 166 18% 399 88 22% 580 215 37%
SKU's Org % SKU's Org % SKU's Org %
Cheese 368 4 1% 215 5 2% 290 10 3%
Other 537 43 8% 184 8 4% 290 14 5%
dairy
Total 905 47 5% 399 13 3% 580 24 4%
11.4 Key Brands

As concluded before, private label represents an important share in the dairy
sector.
Danone is by far the most popular brand.
Nestl is the third biggest brand at Carrefour and Delhaize.
Alpro is the third biggest brand at Colruyt and Delhaize.
At the 3 retailers, the 6 biggest brands represent almost 60% of the total
SKUs.
Table 26 Belgium: Key Dairy Brands at the Top 3 Retailers

Carrefour Colruyt Delhaize Products
SKU % SKU % SKU %
Alpro 33 7% 17 9% 27 9% Soya drinks, Yofu,
Dessert
Danone 95 21% 46 25% 81 28% Yoghurts, Dessert,
Fromage frais, Milk,
Drink yoghurt
Private 120 27% 44 24% 83 29% Milk, yoghurt, fromage
Label frais, dessert, etc.
Nestl 69 15% 13 7% 25 9% Yoghurts and desserts
Nutricia 24 5% 9 5% 11 4% Milk drinks and desserts
Stassano 46 10% 15 8% 22 8% Yoghurt (drinks), milk
(drinks), yoghurt,
fromage frais
Yoplait 50 11% 6 3% 10 3% Yoghurt and desserts
Total 537 184 290

11.5 Prices
Delhaize is more expensive than other retailers for most products.
Colruyt is in general cheaper, but sometimes Carrefour has the lowest price.
The price difference between products at Colruyt and Carrefour is smaller that
the price difference between those two and Delhaize.
Table 27 Belgium: Price Differences of Key Products at the Top 3 Retailers

Colruyt Carrefour Delhaize
Private label - semi skimmed milk - 1 litre - UHT
carton 0.51 0.52 0.63
Stassano - semi skimmed - 1 litre - UHT carton 0.66 0.74 0.73
Nutricia - cecemel - chocolate milk - 750ml - glass
bottle 1.39 1.38 1.45
Stassano - Fruitswing - milk drink - 1 litre - PET
bottle 1.79 1.61 1.97
Nutricia - Fristi - red fruit - 1 litre carton 1.14 1.19 1.29
Alpro - Soy drink - organic - 1 litre carton 1.21 1.29 1.59
Danone - Actimel - 8x100g - small indiv. PVC
bottles 3.71 3.98 4.24
Danone - Dan'up - yoghurt drink - 600g - PVC
bottle 2.8 2.82 2.93
Danone - Skimmed fromage frais - 1x500g 2.72 2.78 3.1
Danone - Danio - Fromage frais with fruit - 200g 4.2 4.45 4.55
Danone - Danette - Vanilla - 6x125g 3.0 2.6 3.01
Private label - Rice pudding - Vanilla - 1x200g 1.2 1.2 2.45
Danone - skimmed yoghurt - strawberry - 4x150g 2.75 2.9 2.41

11.6 Packaging
The three retailers, and especially Colruyt, try to differentiate themselves by
offering different sizes of packaging.
Colruyt guarantees that is has the lowest price for the exact same products
as in other retailers in Belgium and in the same area. This is why at Colruyt
you often find different sizes of packaging than in the other retailers (as the
products are non-comparable, they can raise prices).
At Carrefour there are more family packs (e.g. individual packaging sold per
12). In Delhaize there are more individual packs and at Colruyt there are
more larger size packs (e.g. 1 litre instead of 4*250ml).
Cheese
- A lot of cheese is sold in slices and are plastic wrapped.
- Other cheeses are pre-packed in plastic per piece (bloc).
- There is a trend towards resealable plastic trays for sliced cheese.
- Grated cheese is mostly sold in plastic bags of 100g or in bags of 500g.
Milk
- Mostly in cartons of one litre.
Milk drinks and drinking yoghurts

- Market leader in fresh milk drinks Stassano sells the product in
transparent PET bottles. See also Appendix 3.
- Other fresh milk drinks are in PVC bottles.
- Long-life milk drinks are mainly sold in 1-litre or in 3x200ml cartons.
Yoghurts
- Mainly individual portions in plastic cups. Sold per 1, 4, 6 or more.
- Also containers of half a litre or one litre, in plastic or in glass.
- Organic yoghurts are often sold in glass containers.
Dairy desserts
- Mainly individual portions in plastic cups. Mainly sold per 3 or 4.

12 The Market
12.1 Milk Production

There are no figures available on the domestic production of milk in Belgium in
value, but prices are evolving in a positive way. Looking at the average price in
2001, reveals that the value of domestic milk production is around 1.1 billion.
After the price recovery in 2000, the price of milk increased further in 2001 to its
highest level in the last 10 years. In 2001, farmers got 0.31 per litre, 4.3%
more than the year before and 12.7% (or 0.03) more than in the dioxin year
1999.
In 2001, the total production of milk for consumption remained stable at a

volume of 671 million litres. As one factory closed down at the end of July 2001,
this means that the remaining factories produced more milk than the year before.
The share of semi-skimmed milk has increased up to 376.5 million litres,
representing 56% of the total volume. The shares of skimmed milk and full fat
milk decreased significantly.
Table 28 Belgium: Milk Production by Cows, 1996-2001

1996 1997 1998 1999 2000 2001
Milk production (in 000 tonnes) 3,416 3,213 3,418 3,382 3,436 3,425
Milk deliveries (in 000 tonnes) 3,003 2,970 3,027 2,985 3034 3,026
Milk cow numbers (in 000
heads) 650 640 632 619 594 596
Yield per cow (kg/year) 4,900 4,830 5,100 5,200 5,200 5,300
Source: BCZ annual report 2002
Table 28 Belgium: Share in Production of Milk for Consumption, 1984-2001

1984 1995 1997 1998 1999 2000 2001
Full fat milk 73.7 34.6 35.5 35.7 35.3 30.8 29.7
Semi skimmed milk 11.7 49.9 52.0 50.6 50.0 53.6 56.1
Skimmed milk 10.8 12.3 9.6 10.3 11.1 11.3 9.8
Butter milk 3.8 3.2 2.9 3.4 3.6 4.3 4.4
The number of fresh dairy products produced in Belgium keeps growing. In

2001, 18 million liters more were produced, which means +3.6%, totaling 513
million litres.
In 2001, total milk powder production increased up to 162,296 tonnes. More
than half (51.9%) of this is full fat milk powder, of which production increased
by 24.1%. Production of skimmed milk powder decreased by 12,000 tonnes to
63,998 tonnes in total.
Without taking melted cheese into consideration (major decrease in
production in 2001), Belgian cheese production appeared to recover in 2001,
growing to 61.8 million kg. Italian cheeses, in particular, have become more
popular and increased to almost 15 million kg.

Table 29 Belgium: Dairy Production by Product, 1990-2001
(in 000 litre or tonnes) 1990 1998 1999 2000 2001 01/00 %
CONSUMPTION MILK (000 l)
full fat milk 366,695 245,232 215,312 206,457 199,060 -3.6
AA 62,499 30,585 29,352 26,428 23,396 -11.5
Normal 304,196 214,647 185,960 180,029 175,664 -2.4
semi-skimmed milk (incl AA) 329,114 346,864 332,281 359,775 376,547 4.7
skimmed 91,769 77,041 64,500 76,093 66,167 -13.0
butter milk 18,590 25,189 26,345 28,840 29,398 1.9
TOTAL 806,168 694,326 638,438 671,165 671,172 0.0
FRESH DAIRY PRODUCTS (000 l)

milk drinks 76,998 96,962 96,851 97,592 0.8
chocolate milk 59,169 69,119 90,041 89,152 88,127 -1.1
with vitamins 7,879 6,921 7,699 9,465 22.9
yoghurt 83,676 54,916 64,582 68,725 6.4
plain 32,892 28,180 35,145 30,890 -12.1
others (+ fruit,) 50,784 26,736 29,437 37,835 28.5
fermented milk 132,221 147,249 157,357 176,536 12.2
plain 29,377 47,112 55,590 64,411 15.9
others( + fruit,..) 102,844 100,137 101,767 112,125 10.2
consumption cream 43,938 90,218 89,019 94,612 94,897 0.3
desserts (puddings, flans,) 52,321 81,383 79,173 81,195 74,880 -7.8
TOTAL 464,496 467,319 494,597 512,630 3.6
BUTTER
dairy farm butter 55,050 35,249 37,692 35,505 33,949 -4.4
reprocessed 31,552 29,660 30,002 33,632 12.1
> 90% fat 74,147 71,854 75,199 74,300 -1.2
TOTAL 140,948 139,206 140,706 141,881 1.0
MILK POWDER (tonnes)

non fat free 34,625 77,939 60,287 67,459 83,718 24.1
fat free 84,893 55,408 82,160 75,799 63,988 -15.6
others (butter milk + whey) 5,446 11,605 13,735 14,464 13,590 -6.0
TOTAL 124,964 144,952 156,182 157,722 162,296 2.3
CHEESE (tonnes)
fresh cheese 23,480 19,413 13,674 9,415 10,329 9.7
nature cheese 39,539 50,796 46,172 49,275 51,468 4.5
Gouda 8,399 4,994 4,075 5,186 2,600 -49.9
Cheddar 8,565 12,004 12,243 8,256 7,828 -5.2
other hard and semi-hard 19,677 32,516 25,641 26,210 25,616 -2.3
Herve 993 286 418 510 646 26.7
Italian (Mozarella,) 1,905 996 3,795 9,113 14,778 62.2
melt cheese 42,797 52,906 51,824 55,407 45,534 -17.8
TOTAL 105,816 123,115 111,670 114,097 107,331 -5.9
TOTAL (melt cheese excl.) 63,019 70,209 59,846 58,690 61,797 5.3
EVAP + CONDENS (tonnes) 27,906 72,362 50,147 68,345 74,459 8.9
CREAM - AND MILK (tonnes) 111,732 99,262 86,233 98,811 108,308 9.6

Table 30 Belgium: Import and Export of Dairy Products, 1998-2001 (Volume)
Volume (000 tonnes) 1998 1999 2000 2001 %01/00
Import Milk and cream 778.7 850.4 799.1 839.6 5.1
Milk powder 140.5 126.9 171.4 128.2 -25.2
Fermented products (1) 91.5 113.6 120.3 119.1 -1.0
Whey (2) 135.9 108.2 117.3 124.9 6.5
Butter 99.7 99.9 111.2 101.9 -8.4
Cheese 199.9 197.2 209.2 229.4 9.7
Total 1,446.2 1,496.2 1,528.5 1,543.1 1.0
Volume (000 tonnes) 1998 1999 2000 2001 %01/00
Export Milk and cream 846.4 855.3 788.7 835.0 5.9
Milk powder 239.3 232.5 274.9 219.6 -20.1
Fermented products (1) 183.2 198 228.4 251.0 9.9
Whey (2) 121.3 71.3 82.2 87.2 6.1
Butter 116.6 107.3 117.7 111.8 -5.0
Cheese 120.1 118.8 126.7 129.2 2.0
Total 1,626.9 1,583.2 1,618.6 1,633.8 0.9
(1) including buttermilk
(2) including dairy ingredients
Source: Centrale raad voor het Bedrijfsleven (CRB)
Table 31 Belgium: Import and Export of Dairy Products, 1998-2001 (Value)

Value ( million) 1998 1999 2000 2001 %01/00
Import Milk and cream 464.03 450.29 426.24 481.01 12.9
Milk powder 237.48 222.85 345.15 279.31 -19.1
Fermented
products (1) 81.13 103.61 112.5 115.64 2.8
Whey (2) 50.93 46.46 52.92 62.85 18.8
Butter 325.26 303.78 328.4 317.51 -3.3
Cheese 698.66 686.07 735.23 817.96 11.3
Total 1,857.49 1,813.06 2,000.45 2,074.28 3.7
Value ( million) 1998 1999 2000 2001 %01/00
Export Milk and cream 385.4 379.51 350.42 405.98 15.9
Milk powder 399.92 385.5 526.55 473.9 -10
Fermented
products (1) 148.31 171.25 199 230.74 16
Whey (2) 18.25 20.38 26.6 35.33 32.8
Butter 370.49 312.32 340.65 335.88 -1.4
Cheese 396.31 395.61 417.82 469.41 12.3
Total 1,718.7 1,664.57 1,861.04 1,951.24 4.8
(1) including buttermilk
(2) including dairy ingredients
Source: Centrale Raad voor het Bedrijfsleven (CRB)

12.1.1 Key Suppliers of Milk
The biggest suppliers of milk in Belgium are farmers that are gathered in milk and
dairy cooperations. They are the ones supplying milk to the food processing
industry or often they make finished products themselves.
- Belgomilk c.v. tel: 03/730.18.00

Fabriekstraat 141 fax: 03/575.03.99
9120 Kallo www.belgomilk.be
Activities: Milk collection, marketing, processing
Products: Butter, cheese, milkpowder, mix, cream
Belgomilk is the largest milk cooperation in Belgium, they collect 25% of the milk
quota in Belgium.
- Belgische Zuivel Unie (BZU) tel: 03/326.30.34

Wasserijstraat 5 fax: 03/326.14.25
2900 Schoten www.bzu.be
Products: Cheese, consumption milk, butter and milk powder
Dairy cooperation that gathers 900 milk farms (some in the Netherlands). Owner
of the brands Inza (milk) and Kempica (cheese).
- Campina (Belgium) N.V. tel: 09/325.33.33

Venecolaan 17 fax: 09/374.79.09
9880 Aalter www.campina.be
Products: butter, consumption milk, evaporated milk, milk powder, cream,
fresh dairy products
Dutch company with branch office in Belgium. Owner of the brands Joyvalle
(milk), Stassano (milk and milk drinks), Yazoo (milk drinks) and Passendale
(cheese).
- Inex N.V. tel: 09/363.82.82

Meulestraat 19 fax: 09/362.30.37
9520 Bavergem www.inex.be
Activities: Milk collection, marketing and processing
Products: Butter, evaporated milk, consumption milk, cheese, cream, fresh
dairy products.
Inex processes some 300 million litres of milk per annum, of which they export
more than half throughout the European Union and to the third world.
-Luxlait tel: +35.2/250.280.1

Bote postale 1303 fax: +35.2/45.85.66
L-1013 Luxembourg www.luxlait.lu
Products: Organic dairy products, butter, consumption milk, cheese, cream
and fresh dairy products
Luxemburg based company. Collects around 140 million liters of milk per year.
- Molkerei Walhorn tel: 087/63.91.63

Molkereiweg 14 fax: 087/65.90.22
4711 Walhorn www.walhorn.be
Products: Organic dairy products, butter, evaporated milk, consumption
milk, milk powder and cream.

- Olympia N.V. tel: 054/56.64.23
Steenweg naar Asse 183 fax: 054/56.81.53
1540 Herfelingen
Products: Organic dairy products, butter, consumption milk, cheese, milk
powder, cream, ice cream, fresh dairy products.
In 2001, the number of milk suppliers further diminished. In one year, 3.7% of
suppliers ceased business. There are no suppliers of cream any more in Belgium.
25% of all milk farmers work for Belgomilk. The rest work for smaller
cooperatives.
Table 32 Belgium: Evolution of the Number of Milk & Cream Suppliers, 1984-2001
1984 1994 1998 1999 2000 2001 % %
01/00 01/84
Milk suppliers 37,708 20,702 17,604 16,960 16,475 15,866 -3.7 -57.9
Cream
suppliers 1,846 136 0 0 0 0 - -
Source: Ministry of Agriculture

12.2.1 Market Overview
The below table shows the top 5 selling dairy product categories in Belgium,
ranked on value. Appendix 1 includes a full list of dairy products sales.
Appendix 2 includes information on the volume and value of the leading brands in
each product category.
Table 33 Belgium: Sales by Dairy Sector, 2000-2001

Value ( 000) MAT MAT Index MAT Index
2000 2001 2002
Milk 209,284.7 219,000.5 104.6 234,718.4 107.2
Margarine 162,139.2 167,014.5 103.0 166,664.2 99.8
Non drink yoghurts 157,085.9 161,282.6 102.7 165,939.9 102.9
Weak cheese (fruit)* 73,041.2 83,179.3 113.9 100,916.3 121.3
Chilled desserts 91,317.0 92,337.3 101.1 95,814.2 103.8
Source: ACNielsen scantrack
*Weak cheese is what the UK refers to as fromage frais
12.2.2 Key Players
Appendix 2 includes detailed information on the top brands per category.
The following list is the overall top 5 dairy companies in Belgium (milk processing,
collecting, etc. as well as production of products for retail etc.).
1. Corman
Rue de la Gileppe 4 tel: 087/34.22.11
4834 Goe fax: 087/76.38.25
www.corman.be
- Main activities:
World leader in butters and anhydrous milk fats.
Two production sites, one in Belgium, one in Germany.
Supplier to food manufacturers, invests in food service and
produces finished consumer goods.
- Key brands:
For consumer goods: Balade. Range of low fat, cholesterol free,
etc. cream, spreadable butter and cooking butter.
- Figures:
Production: 100,000 tonnes per year.
Turnover: 388 million.

2. Belgomilk
Fabriekstraat 141 tel: 03/730.18.00
9120 Kallo fax: 03/575.03.99
www.belgomilk.be
- Main activities:
Milk collection: the largest in Belgium, collects 25% of the total
milk quota in Belgium.
Production of branded cheese for retail.
Butter and cream: butter for retail and for food industry, cream
only for the food industry.
Milk powders for food industry. These products are exported all
over the world under the INCO brand name or sold under Private
Label.
Belgomilk produces different types of cheeses for industrial use.
Types are brine and dry salted Gouda, Cheddar, Mozzarella and to
a lesser extent Double Gloucester, Emmenthal and Cagliata.
- Key brands:
Branded cheese: Oud-Brugge, Belgomilk cheese, Brigand.
Milk powders: Inco(lac) or private label.
- Figures:
Production: 8,000 tonnes of butter per year. Delivers 15,000
tonnes of cream per year to the food industry.
3. Campina (Belgium)
Venecolaan 17 tel: 09/325.33.33
9880 Aalter fax: 09/374.05.71
www.campina.be
- Main activities:
Milk collection. Dutch company, but the branch office in Belgium
collects milk in Belgium.
3 production sites in Belgium, one in the Netherlands.
Production of consumption milk, butter, evaporated milk, milk
powder, cream, fresh dairy products.
- Key brands:
Yazoo: milk drinks.
Stassano: consumption milk and milk drinks.
Joyvalle: consumption milk.
Passendale: cheese.
- Figures (for Belgium):
Processes 500 million liters of milk per year.
4. Danone (Belgium)
Broquevillelaan 12/2 tel: 02/776.68.11
1150 Brussels fax: 00/762.84.52
www.danone.be
- Main activities:
Production of consumer dairy products
French company with office, production site and distribution center
in Belgium.
- Key brands:
Actimel, Activia, Danio, Vitalinea, Petit Gervais, Danone & fruit,
Danette, Danone Nature, Danup,
- Figures (for Belgium):

5. Walhorn Molkerei
Molkereiweg 14 tel: 087/63.91.63
4711 Walhorn fax: 087/65.90.22
www.walhorn.be
- Main activities:
Milk gathering.
Production of organic dairy products, butter, evaporated milk,
consumption milk, milk powder and cream.
Production of retail consumer goods and supply of products for food
processing market.
- Key brands:
Not available
- Figures:
12.2.3 Retail Market Segments
Based on ACNielsen scantrack data (in detail in Appendix 1), the total retail
market in value per category is calculated below. Please note that the cheese
category is not complete, hard cheese (Gouda type) is not included and this type
of cheese accounts for 40% of the cheese purchases of Belgian families.
Table 34 Belgium: Retail Sales of Dairy Products, 2000-2002

Value ( 000) MAT 2000 Mat 2001 Mat 2002
Milk 209,284.7 219,000.5 234,718.4
Yoghurt 157,085.9 161,282.6 165,939.9
Yoghurt/milk drinks 88,746.3 99,089.8 111,747.6
Cheese (excl hard
cheese) 294,449.9 319,708.1 352,841.7
Dairy dessert 99,690.3 101,858.0 106,253.0
Total 849,257.1 900,939.0 971,500.6
Source: ACNielsen scantrack 2003
The consumption of milk has been declining year on year and reached an all
time low of only 61 liters per capita in 2001.
The ongoing increase in the consumption of chocolate milk has stalled in
2001.
The consumption of yoghurt has remained stable at just over 10kg per capita.
The consumption of butter is declining and in 2001 was only 2.8kg per capita.
Cheese consumption has remained at around 14-15kg per person per year.
Table 35 Belgium: Per Capita Annual Purchases of Dairy Products, 1980-2001

1980 1998 1999 2000 2001
Milk (l) 72.3 64.3 63.8 64.2 61.3
Butter milk (l) 4.0 1.4 1.4 1.4 1.6
Chocolate milk (l) 1.8 2.2 3.0 3.2 2.9
Yoghurt (kg) 4.8 8.1 10.2 10.4 10.1
Cream (l) 0.7 1.8 1.9 1.9 1.9
Butter (kg) 6.5 3.3 3.3 3.2 2.8
Cheese (kg) 10.2 13.4 15.1 14.9 14.8
Melt cheese (kg) 1.0 1.1 1.2 1.2 1.1
Total 101.3 95.6 99.9 100.4 96.5
Source: BCZ, annual report 2002

General Trends
Low fat products are the fastest growing category in dairy products, especially
for cheese and yoghurt. Light cheeses and light yoghurts (or even 0% fat)
owe their success to the combination of positive health and good taste. Light
cheeses account for a market share of almost 15% in value according to
ACNielsen (in 2001). The light market grew by 7.2% in volume and by 12% in
value in 2001.
Besides light products, also low fat / low cholesterol products and products
with extra vitamins, etc. are selling more and more. This trend can be seen
for UHT milk (semi skimmed instead of full fat), light cream (especially for
culinary purposes), baking butter and spreadable butter (low cholesterol,
vitamins), cheese (light), drinks (vitamins). Also low cholesterol products such
as Soya benefit from this trend.
The health conscious consumer is buying more and more organic products.
This market has boomed since the various food crises in 1999. The market
has reached its peak, however, and at the moment sales are stable with no
major further growth expected. The latest idea is to turn non-organic buyers
into organic buyers, e.g. Biamo (see case studies).
The milk drinks market is stable. The only way to gain market share in this
category is to develop innovative products, concepts and/or packaging a
good exa mple is the case study of Stassano drinking yoghurt (Appendix 3).
Demand is for original and convenient packaging (especially for cheese self
service). The packaging has to be of a very high quality, for the consumer and
for the HACCP hygiene standards. It has to be easy to use, preferably re-
sealable and eye-catching. The consumer prefers more and more individual
packaging. Packaging is an important tool for product differentiation in the
dairy sector.
Well-being has also become an important issue for consumers. This trend is
especially important in the cheese market and explains the success of light
cheeses and other light products.
Everything that has to do with the Mediterranean kitchen (which is perceived

as a healthy way of cooking) is becoming mo re popular. The market share of
Italian cheese has increased, +17.32% in volume (98-99). Butters, spreads,
etc. based on olive oil or containing it, sell well. Varieties (especially cheese)
of Belgian or other cheese with Mediterranean features tend to do well. E.g.
Gouda with southern herbs, a Belgian organic cheese with an Italian name
(Biamo see case studies).
Development of Private Label
Four product categories have a 50% volume share or more for private labels:
milk, Brie, natural weak cheese, and blue cheese. In milk, 76.3% is private
label.
Probiotic drinks and Soya drinks have no private label.
White skin cheese and red skin cheese have the lowest percentage of private
label in the dairy market (except for those products with 0% penetration).

Table 36 Belgium: Private Label Penetration by Dairy Product, 2001-2002
Volume Value
% of private label per product 2001 2002 2001 2002
Milk 75.7 76.3 66.7 68.5
Brie 65.2 63.5 58.1 56.1
Weak cheese nature 52.1 51.0 38.2 38.2
Blue cheese 49.9 50.2 43.8 43.2
Chocolate milk 50.8 49.6 33.7 33.5
Non drink yoghurts 38.1 36.3 25.0 25.0
Camembert 32.3 33.4 22.6 23.6
Fresh cheese (flav.) (excl dipping) 37.7 31.5 20.0 15.9
Drink yoghurts 33.9 30.4 17.0 14.7
Weak cheese fruit 31.9 28.1 21.5 189
Processed cheese 30.4 26.9 18.8 16.3
Chilled desserts 20.3 20.9 19.9 20.0
topping cream 3.1 3.5 2.3 2.9
Mousse 5.1 5.5 6.9 7.0
Rice 9.1 9.0 4.8 4.5
Milk specialties 1.8 1.6 4.9 4.5
Flan 1.2 1.3 1.0 1.1
Butter milk 8.6 20.5 6.3 14.2
Fresh cheese (unflav.) (excl dipping) 18.0 18.9 12.1 12.2
White skin cheese 12.2 8.3 12.2 8.8
Red skin cheese 7.0 7.4 6,8 8.2
Probiotic drinks 0.0 0.0 0.0 0.0
Soya drinks 0.0 0.0 0.0 0.0
Source: ACNielsen Scantrack 2003
12.2.4 Trends per Product Category

Cheese
Cheese consumption in total continues to rise (although by very little) but the
consumption of hard / half hard cheeses has diminished: -2% (1999-2000).
Cheeses for home culinary preparations have become popular (convenience).
Grated cheese in Belgium = Emmental, not cheddar.
For cheese, the traditional counters in the supermarket have almost
disappeared and have been replaced by self-service fridges. Consumer
demand is for attractive and convenient packaging. The fresh-pack for cheese
already has a market share of 12% and continues to grow, while the market
share of regular industrial pre-packaging is static.
Retailers are competing more and more with specialised cheese stores by
widening the assortment and by focusing more on regional cheeses.
Carrefour focuses on French cheeses and major brands with a budget that
allows substantial marketing support
Delhaize focuses more on specialties, ultra fresh packaging, private label and
authenticity. Delhaize has a seasonal trend in their Appelation dOrigine
Control (AOC) range. This is to compete with the traditional cheese shops.
Colruyt sells mainstream cheese in large family / catering packs (cash &
carry).
Organic is not really popular for cheese in Belgium.
More and more individual packaging (1-2 portions).
Shelf life: around two weeks for AOC, longer for other cheeses (especially
branded): around two to three weeks (minimum).

Yoghurt/Dairy Desserts
Dominated by a few (major) players: Danone, Yoplait, Nestl.
Trend towards organic and functional yoghurts.
Shelf-life is minimum 21 days.
Dairy desserts are a small market in Belgium - rather traditional products, not
much innovation: pudding, chocolate mousse, tiramisu.
Major opportunity for UK producers.
Some artisanal products (niche).
Shelf-life: minimum 21 days, 14 days for artisanal products.
Drinking Yoghurts/Milk Drinks

Strong development in recent years.
Strong trend towards convenience, also in the packaging: easy to drink, easy
to use.
Trend towards functional drinks.
Dominated by Danone and Stassano.
Branded offering only, no private label, perhaps an opportunity.
Shelf-life: minimum 21 days.
UHT Milk
95% of all consumer milk is UHT in Belgium.
This is a high volume, low value market which leads to local sourcing.
The fresh milk market is growing, but very slowing.
The RSP for fresh milk is very high.
In fresh milk, organic products are increasing, in UHT it is not a very popular
concept.
The volumes are made up of standard lines in private label. Some innovations
have been seen in the branded products (e.g. functional milk).
12.2.5 Legislation/Labelling
Normal EU regulations apply on dairy products in Belgium.

Labels have to contain all information in French and Dutch (and for Delhaize
also preferably German).
Specification rules on product: legislation is so extensive and complicated that
this has to be analysed case by case. E.g. Belgian law has 3 pages of
legislation on what can be called yoghurt.
UHT process: the UHT milk process in Belgium is to heat the milk up very fast
(in 3 seconds) to 140C.

12.2.6 SWOT analysis of Market for Dairy Products
Cheese
Strengths Weaknesses
Open market Cheese consumption is limited to local
Room for innovative products heritage
Accessible market for UK products and Strong influence from the Netherlands
producers (Flanders) and France (Wallonia)
Good logistical network Perception of the differentiation of UK
No shelf-life issues cheeses is very limited
Limited knowledge of British cheeses
(except Cheddar and Stilton)
Sliced cheese is very popular in Belgium
UK cheese is not very suitable for
slicing
Opportunities Threats
Potential for educating the Belgian Restrictions on the use of raw milk are
consumer on British cheese (promo growing
campaign) Cheddar is not AOC (name is not
Private label friendly market protected) major producer of
Regional authenticity Cheddar is based in Belgium
(Belgomilk).
Yoghurts, Milk/Yoghurt Drinks, Dairy Desserts
Open market Dominance of a few brands
Room for innovative products
Accessible market for UK products and
producers
Good logistical network
Many private label (but still room for Minimum shelf-life is longer than in the
new ones) UK
New Product Development (esp. Different flavour profile of UK products
desserts) (esp. yoghurts different acidity level)
Large challenge to big market leaders
(retailers want to break the dominance)
UHT Milk
High quality UHT Dominated by local suppliers good
contacts and strong positions
High volume low value market too
expensive to transport from UK and
compete with local suppliers
For UHT milk: None Innovations only by big brands
For fresh: opportunity could exist if Government subsidies for local suppliers
value of would be lower (to be able to
compete price wise)
Only opportunity (fresh) if real
innovation (make the same taste as
UHT)

12.3 The Organic Market
Evolution of the market:
- At the beginning of the organic food development, the market was clearly
linked to the environmentally conscious consumer.
- However, after the various food crises at the end of the 90s, the market
was opened up to a wider consumer base and went through a growth
spurt.
- The BSE and dioxin crisis in particular have changed the mentality of the
Belgian consumer. The dioxine crises alone induced explosive growth in
the demand for organic products of 30 to 100%.
- The trend toward functional / wellness foods also boosted organic sales.
- At present, however, the market is relatively stagnant and specialised
organic supermarkets are closing, mainly because of the large organic
offering in traditional supermarkets.
Rules and legislation:

- In order to sell a product as organic, the product and the production has
to meet some specific demands. In Belgium, the Biogarantie-label
guarantees that the product is organic (as per the Soil Association in the
UK): this label is managed by 2 bodies (Ecocert and Blik).
- Also the packaging has to meet some specifications:
Unnecessary packaging has to be avoided
Recycled or recyclable packaging is preferred
Multi-layer packaging with aluminium is not allowed, except for
UHT -products
PVC and plastic that contains chlorine or polystyrene are not
allowed.
The price level of organic products varies in different supermarkets. Colruyt is

the cheapest, followed by Delhaize (19% more expensive). At Cora, organic
products are 50% more expensive than at Colruyt.
Delhaize and Colruyt stock the most organic products. They both opened a
specialised organic store, however, this will be closed in 2003. In their regular
supermarkets, around 2% of the turnover is realized by organic products.
Chart 7 Belgium: Organic Food Price Differentials by Retailer, 2002

(indexed against the cheapest: Colruyt)
50%
0,5
44%
0,45
0,4 35% 38%
32% 35%
34%
0,35 24% 29%
29%
0,3 24% 27%
21%
0,25 19%
20%
0,2
0,15
0,1
0,05
0 0
ur
Cora
M
pion
t
Battard
arche
e
rtner
rtner
Spar
ize2
lhaize
Match
B
ntact
Colruy
Delhaiz
Carrefo
Maxi G
Super
Cham
GB pa
GB pa
Delha
GB co
Interm
AD De
Super
Super
Source: Test-Aankoop nr. 454 May 2002


The food processing industry in Belgium plays an important role in the private
sector in general. Over the years it has developed extremely dynamically in a
competitive market.
Annual turnover: 24.5 billion (2001)

With a 13.5% share of industrial output, food processing is the third most
important industrial sector in Belgium.
Value Add: 5.4 billion (2001)

Or 12.6% of Belgian industry. Ranking third.
Employment: 86,955 employees (2001)

This makes the food processing industry the second largest industrial
employer.
Around 30,000 people work in first stage processing (e.g. barley to malt) and
57,000 in second stage processing (e.g. malt to beer).
Export: 50% of turnover (2001)

84% of exports go to EU countries; 16% is destined for overseas export.
The food processing industry provides a positive contribution to the balance of
payments amounting to 1.86 billion.
Animal products account for a third of total exports. The leaders here are
dairy products such as milk and milk powder with 1.76 billion.
Investments: 0.9 billion (2001)

This ranks the food processing industry third in Belgian industry as a whole,
with a share of 12%.
Diverse branches
The food industry covers many different areas; this is apparent from the table
below which shows the share (in %) of the most important branches
regarding turnover and employment.
Key sectors relevant to UK dairy producers are the dairy industry itself
(accounting for 12.7% of total food processing turnover), meat products
(10.6%), animal feed (10.4%) and bread, bakery and biscuits (9.5%).
Table 37 Belgium: Food Processing Industry Structure, 2001

No. of employees No. of % of Total number % of
per enterprise enterprises enterprises of employees employees
<10 4,999 78.9 16,321 18.8
11-49 1,011 16.0 20,566 23.7
50-99 159 2.5 11,185 12.9
>99 165 2.6 38,883 44.7
Total 6,334 100.0 86,955 100.0
Source: Fevia

Table 38 Belgium: Food Processing Turnover by Sector, 2001
Branch Turnover (2001) Employment (2001)
Dairy products 12.7% 8.3%
Meat products 10.6% 16.0%
Animal feed 10.4% 3.3%
Bread bakery biscuits 9.5% 29.8%
Breweries 8.0% 6.8%
Cacao, chocolate, confectionary 8.0% 8.1%
Grain and pasta processing 7.5% 3.6%
Vegetable and animal fats, oils and
margarines 7.4% 1.3%
Fruit and vegetable processing 7.0% 8.3%
Sugar industries 4.0% 2.0%
Water and carbonated drinks 2.7% 4.4%
Others 12.8% 8.2%
Total 100.0% 100.0%
Source: Fevia
13.2 Key Suppliers

The top ten (according to turnover) companies that are working in the food
processing industry and that use dairy products as an ingredient or
produce/process dairy products are listed below. Companies that provide
ingredients to the food processing industry (e.g. Corman (5.2.2)) are presented
but taken out of the ranking. Nutricia, Friesland Coberco Dairy Foods and
Ijsboerke are also mentioned - they are not in the top 10 of food processing
companies in Belgium, but they do process a significant amount of dairy.
Please note that most of these companies are multinationals, i.e. not all
production is done in Belgium.
1. Unilever (Belgium)
Humaniteitslaan 292 Tel: 02/333.66.66
1190 Brussels Fax: 02/333.63.33
www.unilever.be
Turnover: 635.8 million
Products/brands:
- Becel (baking margarine and cream)
- Bertolli (baking margarine)
- Carte dor (ice cream)
- Iglo (Pizza, ready meals)
- Magnum (ice cream)
- Ola (ice cream)
- Planta (spreadable margarine)
- Solo (baking butter and spreadable margarine)

2. Kraft Foods (Belgium)
Brusselsesteenweg 450 Tel: 02/362.31.11
1500 Halle Fax: 02/362.38.40
www.kraftfoods.com

Products/brands:
- Philadelphia (fresh cheese)
- Other cheeses, ready-meals, etc. in other countries
3. Belgomilk
Fabriekstraat 141 Tel: 03/730.18.00
9120 Kallo Fax: 03/575.03.99
www.belgomilk.be

Products/brands:
- Butter, cheese, milk powder and industrial cheese for the food industry
(Cheddar, Emmental flexible plant to adapt to market needs and pricing)
4. Campina
Venecolaan 17 Tel: 09/325.33.33
9880 Aalter Fax: 09/374.05.71
www.campina.be

Products/brands:
- Yazoo (milk drinks)
- Stassano (milk and milk drinks)
- Joyvalle (milk)
5. Danone (Belgium)
De Broquevillelaan 12/2 Tel: 02/776.68.11
1150 Brussel Fax: 02/762.84.52
www.danone.be

Products/ brands:
- Different brands of yoghurt
- Drink yoghurt
- Milk (Functional)
6. Masterfoods (Belgium)
Kleie kloosterstraat 8 Tel: 02/721.72.22
1932 Sint Stevens-Woluwe Fax: 02/721.49.32
www.masterfoods.be

No production in Belgium
Products/brands:
- Mars ice-cream (and other ice-cream candy bars)
- Mars milk drink
- Milky way

6. Nestl Belgilux
Birminghamstraat 221 Tel: 02/529.52.52
1070 Anderlecht Fax: 02/529.56.00
www.nestle.be

Products/brands:
- Sveltesse (yoghurts)
- Jacky (yoghurts, dairy dessert)
7. Ter Beke
Beke 1 Tel: 09/370.12.11
9950 Waarschoot Fax: 09/370.15.02
www.terbeke.be

Products / brands:
- Biggest producer of lasagne in Europe
- Pizza
- Ready-meals
8. Alpro
Vlamingstraat 28 Tel: 056/43.22.11
8560 Wevelgem Fax: 056/43.22.99
www.alprosoja.com

Products/brands:
- Major competitor for dairy products with functional Soya alternatives for
dairy products.
- Milk, yoghurt (yofu), desserts, cream, spreadable margarine, cooking
margarine, etc.
9. McCain Foods Belgium

Nijverheidsstraat 2 Tel: 014/50.82.11
2280 Grobbendonk Fax: 014/50.03.01
www.mccain.com

Products/brands:
- Frozen pizza
Also interesting, but not in the top 10 or not catalogued under food processing
industry:
A. Nutricia (Belgium)
Rijksweg 64 Tel: 03/890.22.11
2880 Bornem Fax: 03/890.22.12
www.nutricia.be

Products/brands:
- Milk products
- Ccmel (chocolate milk)
- Fristi (milk drink)
- Cream for coffee

B. Ijsboerke
Gierlebaan 100 Tel: 014/55.92.11
2460 Tielen Fax: 014/55.92.00
www.ijsboerke.be

Products/brands:
- Major Belgian ice cream producer.
C. Corman
Route de la Gileppe 4 Tel: 087/34.22.11
4834 Goe Fax: 087/76.38.25
www.corman.be

Activity:
- Main supplier to food manufacturers.
- Development of specific and innovative butter solution and functional
ingredients sold under own brand or developed in partnership.
D. Friesland Coberco Dairy Foods

Blankaarstraat 1 Tel: 013/35.02.00
3560 Lummen Fax: 013/31.30.30
www.frieslandmadibic.com

Activity:
- Dairy products and branded fruit drinks.
- Core value added for bakeries, fast food chains, horeca and catering
businesses: cream products, butter specialties, fillings, desserts, ice
creams and milkshake mixes.
13.2.1 UK Dairy Product Exports in Food Processing
All cream used in Belgium is imported, that is why a lot is also imported from
the UK. This is used for ice cream, ready meals, sauces and in the food
processing industry.
Other dairy products are used in ready meals, desserts, toppings (e.g. cheese
on pizza, lasagne) etc.

14.1.1 Cheese
Opportunities exist to develop the sale of British cheeses in Belgian retail under
the following conditions:
Market regional specialities
These cheeses should be supported by marketing campaigns
Target suitable clients (pre-packed to multiple retailers / bulk to
cheese distributors).
Less opportunities for catering or food processing markets as different cheeses

are used for ready meals or catering purposes (Emmental, Gouda, Gruyere,
Mozzarella)
14.1.2 Yoghurts
The yoghurt market is completely dominated by very strong brands in Belgium.

Opportunities therefore only exist for either niche, speciality products under
private label or for new concepts supported by strong brands with massive
marketing investments.
The dairy dessert market in Belgium is still in its infancy and offers tremendous
potential for added value products. Dairy desserts have only started to appear on
the shelves of the supermarkets in the last few years. The concepts should be
either well-known traditional British desserts or mainstream innovations.
14.1.4 Dairy/Milk Drinks
Once again, the dairy/milk drinks market is completely dominated by very strong
brands in Belgium. However, strong opportunities exist for private label
alternatives ranging from basic products to high quality smoothies. Shelf-life may
be an issue though.
14.1.5 UHT Milk
Very little opportunities as UHT milk is the bulk of the market in Belgium (over
95%) and is sourced locally (Belgium, Northern France and The Netherlands) very
cheaply and without the exchange risks. Opportunities however, could exist for
fresh milk.

14.2 The Route to Market
14.2.1 Retail
There are no specificities in the route to market for Dairy products (excl.
cheese), compared to other food products.
Direct supply to the retailer is possible, avoiding agents or distributors.
The exception is for the speciality cheese category, which is mainly sold
through local distributors, but the number of distributors is declining. This
leads to a concentrated market, hence most distributors already deal with UK
cheese exporters.
14.2.2 Catering
The catering market is supplied through a large number of specialist

distributors. However, these are supplied by the major importers.
Contact should be made with targeted catering organizations (Gardner
Merchants, Compass)
14.2.3 Food Processing
Individual direct contacts should be made with the leading food

manufacturers. The list of these companies is enclosed in the report.
More specific targets could be identified based on an individual briefing.
Promoting Britishness
- The rule to follow is: if it does not add any value to your product, than do
not wave the flag.
- For cheese this can be useful, especially for cheeses with AOC. Even better
is to promote the region of the cheese: English, Scottish or Welsh are
perceived and understood better than British.
- For yoghurts, milk and drinks it is not necessary to promote the origin,
unless you have a product with e.g. a typical English recipe.

14.3 Levels of Investment Necessary
To be investigated on a case by case basis.
Level of investment depends on numerous options. It will be based on product

offering, sales and marketing strategy and the budget available.
For yoghurts, desserts and dairy drinks there are two options
- Private label: limited investments but high production flexibility
needed.
- Branded: substantial marketing investments necessary (200,000 to
1 million and more).
14.3.1 Product Category Grouping Potential
Export development should be looked upon from the point of view of market
and marketing opportunities and not on a general trading basis.
It does not matter whether a good product comes from a consortium of

small producers or from one big producer.
For the potential products we refer to the SWOT analysis in 5.2.6.

15 Appendices
15.1 Appendix 1 Dairy Product Sales
SCANTRACK 2003 DAIRY PRODUCTS

(source Nielsen)
Raked on value ( 000) MAT 2000 MAT 2001 Index MAT 2002 Index
Milk 209,284.7 219,000.5 104.6 234,718.4 107.2
Margarines 162,139.2 167,014.5 103.0 166,664.2 99.8
Non drinking yoghurts 157,085.9 161,282.6 102.7 165,939.9 102.9
Weak cheese (fruit) 73,041.2 83,179.3 113.9 100,916.3 121.3
Chilled desserts 91,317.0 92,337.3 101.1 95,814.2 103.8
Butter 88,506.9 88,634.9 100.1 89,545.8 101.0
Processed cheese 63,659.2 68,077.3 106.9 69,676.1 102.3
Whipping cream 52,464.1 56,532.9 107.8 59,027.3 104.4
Weak cheese (natural) 41,488.2 42,279.2 101.9 41,765.6 98.8
Drinking yoghurts 24,124.9 29,931.1 124.1 33,779.1 112.9
Probiotic drinks 23,235.5 25,422.2 109.4 31,614.0 124.4
Chocolate milk 29,301.3 30,203.6 103.1 31,127.2 103.1
Fresh cheese flavoured (excl. Dipping) 18,385.9 20,663.2 112.4 14,338.4 117.8
White skin cheese 19,628.5 20,431.9 104.1 22,482.7 110.0
Fresh cheese unflavoured (excl. Dipping) 16,302.5 17,371.3 106.6 20,305.7 116.9
Evaporated milk 16,365.6 16,225.6 99.1 15,820.0 97.5
Mozzarella 11,602.8 14,048.3 121.1 15,542.6 110.6
Soja drinks 12,084.6 13,512.9 111.8 15,227.3 112.7
Camembert 1,459.4 14,398.5 98.7 14,772.6 102.6
Soja desserts 8,373.3 9,520.7 113.7 10,438.8 109.6
Red skin cheese 7,069.2 8,400.6 118.8 9,030.0 107.5
Goat's cheese 6,761.2 7,289.2 107.8 8,655.0 118.7
Butter milk 7,123.5 7,187.6 100.9 7,618.2 106.0
Blue cheese 5,933.6 6,551.7 110.4 6,624.6 101.1
Brie 5,925.7 6,327.9 106.8 6,534.1 103.3
Feta 4,117.1 4,367.6 106.1 5,796.6 132.7
Mascarpone 4,837.7 5,029.0 104.0 4,961.8 98.7
Coffee cream 3,451.5 3,753.2 108.7 3,420.9 91.1
Soja whipping cream 1,445.1 1,795.7 124.3 2,225.5 123.9
Creamers (powder) 1,050.0 1,404.7 133.8 1,617.8 115.2
Chilled desserts applesauce 1,367.1 1,248.8 91.3 1,059.8 84.9
Ricotta 607.3 686.6 113.1 822.9 119.8
Tzaziki 544.5 606.5 111.4 616.7 101.7
Probiotics non drinks 5.2 7.8 149.9 34.8 447.9

15.2 Appendix 2 Market Shares
WEAK CHEESE
NATURE volume 1000 kg Sales value in 1000 Euro
MAT MAT MAT MAT MAT MAT
2000 2001 Index 2002 Index 2000 2001 Index 2002 Index
Danone 31.1 31.6 101.4 32.4 101.8 41.1 41.2 102.1 40.1 96.1
Nestl 2.0 1.8 91.8 1.5 84.4 3.8 3.5 94.3 3.1 87.7
Stassano 6.0 5.6 93.3 5.6 100.5 9.6 9.0 95.4 9.4 103.4
Yoplait 0.3 0.2 68.4 0.5 244.0 0.3 0.2 74.0 0.5 283.8
Private label 51.5 52.1 101.0 51.0 97.2 36.9 38.2 105.3 38.2 98.8
Others 9.2 8.6 94.0 9.0 103.9 8.3 8.0 97.7 8.7 107.8
Total Sales 15,345.8 15,303.6 99.7 15,217.8 99.4 41,488.2 42,279.2 101.9 41,765.6 98.8
WEAK CHEESE FRUIT volume (1000 kg) Sales value in 1000 Euro
Danone 55.8 60.2 121.9 66.0 130.5 65.2 70.1 122.5 75.0 129.7
Nestl 4.9 3.5 81.7 2.6 87.5 6.2 4.5 83.5 3.2 85.4
Stassano 0.5 0.2 50.1 0.0 2.0 0.7 0.3 53.1 0.0 2.4
yoplait 1.2 0.8 75.6 0.5 80.4 1.4 1.0 82.0 0.7 82.6
Private label 33.3 31.9 108.1 28.1 105.0 23.1 21.5 105.9 18.9 106.4
Others 4.3 3.4 88.0 2.8 99.5 3.4 2.5 84.1 2.3 110.7
Total Sales 19,114.0 21,597.1 113.0 25,729.3 119.1 73,041.2 83,179.3 113.9 100,916.3 121.3

FRESH CHEESE UNFLAVOURED (EXCL. DIPPING)
volume (1000kg) Sales value in 1000 Euro
Philadelphia 63.4 61.8 100.6 53.4 100.5 61.2 59.5 103.7 51.0 100.1
St Moret 8.4 9.6 117.8 11.2 135.9 12.9 15.0 124.0 17.5 136.7
Boursin 3.1 2.4 78.9 1.7 80.1 4.8 3.6 80.3 2.5 80.9
Maredsous 3.4 1.5 46.7 1.0 77.7 3.4 1.6 49.4 1.1 83.0
Effi 0.5 0.6 116.2 8.5 1,729.1 0.5 0.6 115.8 8.8 1,821.1
Private label 15.7 18.0 117.9 18.9 122.4 10.9 12.1 118.0 12.2 117.5
Others 5.5 6.1 115.1 5.4 102.8 6.3 7.6 129.0 7.0 106.6
Total Sales 2,209.1 2,278.3 103.1 2,653.3 116.5 16,302.5 17,371.3 106.6 20,305.7 116.9
FRESH CHEESE FLAVOURED (EXCL.

DIPPING)
Boursin 20.0 19.4 107.8 18.5 112.6 29.9 29.2 109.8 28.5 114.7
Philadelphia 19.0 19.7 115.4 19.3 115.3 18.4 19.5 119.4 19.4 116.9
Maredsous 3.1 2.4 86.2 2.1 104.8 4.1 3.2 89.1 3.0 110.0
Tartare 6.4 5.9 101.8 4.7 95.0 11.2 10.6 105.8 8.4 93.9
Effi 1.6 1.5 108.2 9.2 706.2 1.4 1.3 108.4 8.5 758.2
Private label 36.6 37.7 113.9 31.5 98.9 19.6 20.0 114.7 15.9 93.9
Others 13.4 13.4 110.9 14.7 129.4 15.4 16.1 117.4 16.3 118.9
Total Sales 2,171.1 2,406.8 110.9 2,842.6 118.1 18,385.9 20,663.2 112.4 24,338.4 117.8

PROCESSED CHEESE
Maredsous 19.7 20.0 103.9 22.2 111.7 22.5 22.9 109.0 24.6 110.0
Vache qui rit 14.3 14.9 106.3 15.9 107.8 15.9 16.8 112.6 17.8 108.6
Effi 6.6 7.4 114.9 7.3 99.2 7.3 7.9 115.2 7.5 97.4
Ziz 6.1 5.8 98.8 5.4 93.5 7.3 7.0 103.5 6.6 96.6
Chalet 2.3 2.1 92.0 2.0 94.1 3.6 3.7 108.2 3.4 95.8
Kiri 2.0 2.0 99.6 2.2 110.9 3.3 3.3 108.1 3.7 112.5
Santane 3.1 2.8 93.0 2.3 82.5 3.4 3.0 94.7 2.5 85.1
Franco Suisse 1.5 1.5 101.2 1.2 86.3 1.9 1.9 105.8 1.6 85.1
Private label 28.3 30.4 110.0 26.9 89.1 18.3 18.8 110.2 16.3 88.6
Others 16.1 13.2 84.1 14.7 111.4 16.5 14.7 95.1 16.0 111.5
Total Sales 9,634.1 9,871.0 102.5 9,935.4 100.7 63,659.2 68,077.3 106.9 69,676.1 102.3

WHITE SKIN CHEESE
Coulommiers 8.7 9.4 107.1 8.9 100.4 6.9 7.3 110.3 6.7 100.8
President 3.2 3.7 115.1 4.1 118.0 2.6 2.9 118.3 3.1 117.5
Cur de Lion 2.0 2.8 143.7 2.5 92.7 1.6 2.2 147.8 1.9 93.8
Pl 2.3 1.8 78.6 1.7 99.0 1.8 1.5 85.8 1.3 96.1
Others 1.3 1.1 82.0 0.7 63.9 1.0 0.7 73.7 0.4 62.2
Others 91.3 90.6 98.5 91.1 107.3 93.1 92.7 103.6 93.3 110.8
Caprice des Dieux 17.3 17.4 99.8 16.9 103.4 22.1 22.2 104.7 21.0 104.2
Supreme des Ducs 6.0 7.0 115.1 7.4 113.4 7.2 8.1 117.4 8.6 116.9
Le Pie d'Anglois 4.7 4.8 101.3 5.1 113.2 5.4 5.3 102.4 5.4 111.8
Chavroux 1.5 2.5 165.6 3.2 132.2 2.7 4.2 161.6 5.0 131.5
Bouquet des Moines 5.0 4.0 79.0 3.5 92.6 5.2 4.1 82.1 3.4 90.4
St Aubin 3.0 3.0 100.6 2.1 74.2 3.0 2.9 101.6 1.9 71.2
President 1.2 2.9 229.7 6.0 223.5 1.1 2.9 259.3 5.9 226.4
Private label 19.9 12.2 60.8 8.3 72.3 19.0 12.2 66.7 8.8 79.3
Others 32.6 36.8 112.1 38.7 112.3 27.3 30.7 117.2 33.3 119.2
Total Sales 2,351.1 2,333.2 99.2 2,488.2 106.6 19,628.5 20,431.9 104.1 22,482.7 110.0

CAMEMBERT
President 20.9 23.8 109.8 24.4 104.2 25.8 28.9 110.3 28.8 102.4
Cur de Lion 16.5 16.6 97.1 15.7 95.8 19.7 20.0 100.2 19.0 97.3
Le Rustique 6.1 7.7 122.7 8.8 116.4 8.1 10.3 124.7 11.5 115.0
Isigny 2.4 2.1 82.2 2.3 113.5 5.0 4.4 86.2 4.7 111.5
Bridel 3.0 2.1 65.2 1.9 94.9 4.6 3.0 64.6 2.8 96.7
Preval 7.4 1.2 15.0 0.4 34.8 4.5 0.7 14.5 0.2 35.9
Chevradennes 0.4 0.4 80.9 0.4 109.9 1.0 0.8 80.1 0.9 110.0
Private label 33.9 32.3 92.1 33.4 104.9 23.8 22.6 93.9 23.6 107.0
Others 9.2 14.0 146.4 12.6 91.7 7.5 9.4 123.4 8.4 92.0
Total Sales 2,513.6 2,429.3 96.6 2,464.8 101.5 14,594.4 14,398.5 98.7 14,772.6 102.6
BRIE
President 7.6 8.9 124.6 9.5 109.9 10.5 11.9 120.9 12.2 106.2
St Benoit 11.2 11.7 111.4 11.4 100.9 9.2 9.8 113.0 9.6 101.1
Cur de Lion 4.0 5.1 135.9 7.1 142.9 5.9 7.4 133.8 10.2 141.1
La Fermette Bleue 4.4 3.2 77.3 2.7 87.8 5.9 7.4 133.8 10.2 141.1
Reverend 4.2 4.1 103.8 3.7 92.7 5.6 5.5 104.6 4.9 93.2
Private label 66.6 65.2 104.4 63.5 100.3 59.2 58.1 104.7 56.1 99.8
Others 2.0 1.9 101.1 2.1 111.1 1.9 1.8 99.9 2.1 124.6
Total Sales 1,025.5 1,094.0 106.7 1,125.6 102.9 5,925.7 6,372.9 106.8 6,534.1 103.3

RED SKIN CHEESE
Le Cremier 5.9 16.9 335.3 17.7 111.3 6.1 16.9 328.2 16.7 106.4
Rouy 14.2 10.4 85.9 9.6 97.0 11.2 8.5 89.8 7.6 96.3
Crot. De Chavignol 3.6 3.2 105.3 3.8 125.2 8.5 7.8 108.1 8.9 123.6
Brin d'Affinois 9.9 8.0 94.2 7.9 104.6 9.8 7.7 92.7 7.1 99.6
Le-petit-vieux-pan 6.1 5.9 114.1 6.1 109.2 7.2 6.9 114.2 6.9 107.4
St Morgon 4.8 3.8 93.0 2.8 78.0 4.2 3.3 94.6 2.3 75.3
Private label 9.2 7.0 88.5 7.4 112.8 9.1 6.8 88.7 8.2 130.6
Others 46.1 44.7 113.5 44.6 105.8 43.8 42.2 114.3 42.2 107.5
Total Sales 621.6 728.2 117.2 771.7 106.0 7,069.2 8,400.6 118.8 9,030.0 107.5
BLUE CHEESE
Socit 6.5 7.1 117.9 9.1 121.0 13.7 14.9 120.0 17.7 120.4
Rosenborg 15.8 11.9 81.4 4.8 37.9 11.4 8.3 80.2 2.7 33.1
Galbani 1.2 5.6 493.0 7.6 130.2 1.4 6.2 492.9 7.7 124.8
Le Papillon 2.2 2.2 110.5 4.0 170.3 4.1 4.2 112.1 7.3 176.9
Le blue d'Ardenne 3.0 5.5 198.1 0.8 14.4 2.2 4.0 198.0 0.6 14.3
Cambozola 1.1 3.0 300.0 3.7 117.7 1.3 3.5 299.0 4.0 115.2
MD(Danish Blue) 3.3 5.4 176.3 11.5 200.0 1.9 3.3 191.4 7.4 223.5
Private label 49.5 49.4 108.1 50.2 96.2 43.9 43.8 110.1 43.2 99.7
Others 17.4 9.9 61.5 8.3 79.7 20.0 11.8 65.0 9.4 81.0
Total Sales 546.1 590.8 108.2 559.7 94.7 5,933.6 6,551.7 110.4 6,624.6 101.1

MILK
Stassano 6.9 8.7 123.7 8.2 95.3 10.3 12.5 126.7 11.5 98.5
Stabilac 2.5 0.2 7.2 0.1 71.4 3.6 0.2 7.1 0.2 78.1
Joyvalle 7.6 7.8 100.8 8.3 106.6 10.8 10.8 104.4 10.6 105.5
Gervais 1.1 1.0 88.7 0.8 86.4 1.9 1.7 93.5 1.5 91.3
Gervais nr 1 1.5 1.6 102.4 1.8 111.3 2.4 2.4 106.6 2.7 119.1
Inza 1.6 1.4 89.5 1.1 80.0 2.1 1.9 95.2 1.5 85.6
Inex 0.5 0.4 84.9 0.4 101.6 0.6 0.5 86.7 0.5 109.0
Private label 74.9 75.7 98.6 76.3 101.8 64.6 66.7 108.1 68.5 110.1
Others 3.5 3.1 86.7 2.9 93.4 3.7 3.2 90.2 3.0 100.3
Total Sales 394,686.8 385,024.7 97.6 388,923.6 101.0 209,284.7 219,000.5 104.6 234,718.4 107.2
BUTTER MILK
volume (1000kg) Sales value in 1000 Eu ro
Gervais 55.3 55.7 98.8 53.3 102.2 62.8 62.7 100.8 60.4 102.1
Luxlait 9.0 10.9 118.8 11.1 109.3 8.6 10.2 120.0 10.2 106.6
Stassano 9.1 9.2 99.1 8.0 93.1 10.7 10.1 95.1 8.9 93.6
Inza 10.9 10.8 97.2 3.2 31.3 6.2 6.4 104.9 2.6 42.3
Stabilac 1.7 0.0 0.0 0.0 0.0 1.5 0.0 0.0 0.0
Private label 9.2 8.6 91.9 20.5 255.5 5.9 6.3 107.6 14.2 236.9
Others 4.9 4.8 95.2 3.9 87.7 4.3 4.2 98.7 3.7 92.0
Total Sales 8,134.7 7,972.8 98.0 8,528.3 107.0 7,123.5 7,187.6 100.9 7,618.2 106.0

CHOCOLATE MILK
Cecemel 22.8 25.5 111.0 28.4 108.8 37.8 39.9 108.8 42.9 110.7
Stassano 8.3 11.2 133.6 9.5 83.3 8.9 11.5 133.6 9.5 84.8
Chocovit 3.7 3.7 100.8 4.5 119.0 4.4 4.3 100.0 4.8 114.2
Inza 2.5 2.9 117.1 2.8 94.7 2.4 2.9 124.1 2.8 100.2
Yazoo 1.6 1.4 90.1 1.4 92.9 3.0 2.6 87.9 2.4 94.0
Inex 1.8 1.7 96.6 2.2 125.7 2.0 1.9 101.9 2.5 133.7
Stabilac 4.7 0.2 4.1 0.2 84.2 4.5 0.2 3.8 0.1 84.9
Private label 51.0 50.8 98.8 49.6 95.6 33.2 33.7 104.6 33.5 102.6
Others 3.7 2.5 67.1 1.4 56.5 3.8 3.0 82.4 1.5 53.0
Total Sales 28,556.1 28,310.8 99.1 27,728.9 97.9 29,301.3 30,203.6 103.1 31,127.2 103.1
DRINK YOGHURTS
Danone 15.2 18.2 138.9 20.0 115.3 25.2 31.9 157.2 35.1 124.2
Fristi 16.8 15.1 103.8 15.1 105.2 21.6 17.9 102.8 16.6 104.9
Stassano 15.3 16.2 122.4 16.8 108.3 17.1 16.1 116.4 16.1 112.8
Yazoo 5.4 7.0 148.3 5.9 88.7 6.9 8.0 144.3 6.6 93.1
Inex 6.9 6.5 109.1 7.0 112.9 5.7 5.1 112.1 5.0 110.0
Nestl 0.4 09 263.8 0.9 101.8 0.8 1.8 288.0 1.7 103.5
Yoplait 0.6 0.8 150.3 1.2 155.2 1.0 1.3 162.4 1.8 158.8
Private label 36.2 33.9 108.7 30.4 93.8 19.8 17.0 10..6 14.7 97.7
Others 3.1 1.5 54.2 2.6 188.9 2.0 0.9 56.5 2.4 301.1
Total Sales 16,647.6 19,299.3 115.9 20,194.0 104.6 24,124.9 29,931.1 124.1 33,779.1 112.9

NON DRINKING YOGHURTS
Danone 37.1 37.2 103.0 39.7 108.8 47.6 46.9 101.1 48.1 105.7
Yoplait 6.1 6.7 112.5 6.4 97.3 7.2 8.4 119.2 7.8 96.3
Nestl 2.3 2.4 106.2 2.6 111.8 3.1 3.2 106.9 3.7 117.8
Stassano 3.7 2.0 53.8 1.2 62.3 5.0 2.7 55.9 1.6 61.3
Mik 1.5 1.7 115.4 2.0 115.8 2.3 2.7 117.3 3.0 114.5
Inex 1.1 1.1 104.8 1.1 97.4 1.4 1.5 108.1 1.4 97.1
Private label 36.7 38.1 106.6 36.3 97.1 24.0 25.0 107.0 25.0 102.9
Others 11.5 10.9 97.6 10.7 100.3 9.4 9.7 105.5 9.4 99.5
Total Sales 73,717.3 75,717.5 102.7 77,087.3 101.8 157,085.9 161,282.6 102.7 165,939.9 102.9
PROBIOTICS DRINKS
Danone 64.9 68.3 114.9 61.3 118.5 55.5 60.3 118.9 57.9 119.5
Yakult 35.1 29.7 92.1 23.7 105.2 44.5 38.6 94.9 35.3 113.8
Others 0.0 2.1 15.0 964.2 0.0 1.1 6.8 745.2
Total Sales 5,231.2 5,709.4 109.1 7,533.2 131.9 23,235.5 25,422.2 109.4 316,140.0 124.4
SOJA DRINKS
Alpro 81.9 83.0 110.9 86.3 117.9 84.9 85.9 113.2 89.3 117.2
Vitasoya 15.1 12.9 93.2 9.7 85.2 12.9 11.0 95.9 7.4 75.9
Others 2.9 4.2 155.0 4.1 110.7 2.3 3.1 152.3 3.2 118.2
Total Sales 8,331.6 9,122.6 109.5 10,347.0 113.4 12,084.6 13,512.9 111.8 15,227.3 112.7

CHILLED DESSERTS
Topping Cream 16.0 15.2 96.7 15.5 101.0 11.8 11.1 94.8 11.4 106.6
Nestl 0.6 0.5 97.0 0.5 85.9 1.0 0.9 92.6 0.7 78.0
Danone 3.6 2.5 71.2 2.0 78.7 5.2 3.8 73.9 2.9 77.3
Yoplait 0.1 0.1 142.7 0.4 367.9 0.1 0.2 161.2 0.8 428.9
Private label 2.4 3.1 128.5 3.5 112.7 1.3 2.3 170.4 2.9 134.6
Others 9.3 9.0 97.9 9.1 100.9 4.1 3.9 95.4 4.2 110.5
Mousse 11.7 11.8 102.4 12.0 101.1 19.2 19.2 101.1 18.7 101.0
Nestl 2.8 2.9 103.7 3.3 113.7 5.4 5.5 102.2 5.9 111.7
Danone 2.4 2.3 96.6 1.9 80.5 4.6 4.2 93.0 3.3 80.5
Yoplait 0.3 0.5 192.6 0.6 118.0 0.8 1.4 189.2 1.6 118.3
Private label 5.2 5.1 99.7 5.5 107.4 7.3 6.9 95.9 7.0 105.5
Others 0.9 0.9 101.1 0.6 68.7 1.1 1.1 101.9 0.8 76.7
Riz 20.8 21.7 106.2 21.0 96.2 16.6 16.5 100.2 15.5 97.6
Nestl 6.6 7.5 115.6 7.4 97.4 6.1 6.8 112.3 6.3 96.1
Danone 5.1 4.1 80.8 3.4 81.9 5.2 4.1 80.9 3.5 86.9
Private label 8.3 9.1 112.4 9.0 97.5 4.7 4.8 101.8 4.5 97.0
Others 0.7 1.0 130.4 1.3 134.8 0.6 0.8 131.3 1.3 169.0
Other Milk Specialties 2.8 3.6 127.7 3.1 87.4 7.7 9.3 121.6 8.2 91.3
Private label 1.9 1.8 94.1 1.6 91.6 5.3 4.9 93.8 4.5 95.8
Others 0.9 1.8 196.6 1.5 83.2 2.5 4.4 181.2 3.7 86.2
Flan 5.3 5.0 96.6 4.7 94.3 5.5 5.2 96.5 4.7 93.0
Danone 0.4 0.4 89.5 0.3 85.8 0.5 0.4 91.2 0.4 84.7
Nestl 2.2 2.1 98.7 2.0 93.1 2.8 2.7 97.2 2.4 90.3
Inex 0.4 0.3 86.1 0.3 96.6 0.4 0.3 87.2 0.3 97.8
Yoplait 0.0 0.0 816.7 0.0 84.3 0.0 0.0 337.9 0.0 103.3
Private label 1.2 1.2 99.1 1.3 111.4 0.9 1.0 104.0 1.1 112.7
Others 1.1 1.0 92.2 0.8 78.2 0.8 0.7 89.5 0.5 78.6
1.0 1.1 104.9 1.4 127.8 3.5 3.7 107.8 4.7 130.5

Cakes
Nestl 0.2 0.2 93.7 0.2 115.1 0.6 0.5 98.4 0.6 116.1
Kinder 0.9 0.9 107.3 1.2 130.5 2.9 3.1 109.7 4.0 133.4
Private label 0.0 0.0 0.0 . 0.0 0.0 0.0
Others 0.0 0.0 92.2 0.0 8.7 0.0 0.0 88.1 0.0 40.0
Other Creams 36.9 36.5 100.4 38.0 103.3 31.3 31.0 100.1 33.4 111.8
Danone 13.5 14.6 109.7 16.3 111.0 15.6 16.8 109.0 18.0 111.0
Zott 1.7 1.5 90.4 1.5 96.8 2.8 2.5 92.2 2.2 89.5
Nestl 1.0 0.6 57.7 1.4 233.9 1.9 1.2 63.9 2.5 218.4
Private label 20.1 19.1 96.4 13.0 67.6 10.5 9.6 92.4 6.7 72.7
Others 0.6 0.7 129.4 5.8 806.2 0.7 1.0 146.7 4.1 434.7
Pudding 5.5 5.1 93.6 4.4 85.2 4.4 4.1 93.1 3.5 90.4
Nestl 1.5 1.4 94.6 1.2 84.5 1.8 1.7 98.1 1.5 88.2
Sudmilch 1.4 1.4 98.2 1.1 79.5 1.1 1.1 97.8 0.9 82.8
Inza 1.1 0.8 79.6 0.7 89.6 0.6 0.5 82.0 0.4 92.2
Private label 0.7 1.0 132.4 1.1 112.2 0.4 0.5 101.7 0.6 140.5
Others 0.8 0.5 65.8 0.2 45.0 0.5 0.3 68.5 0.2 53.8
Total Sales 33,081.4 33,577.9 101.5 33,403.1 99.5 91,317.0 92,337.3 101.1 95,814.2 103.8

15.3 Appendix 3 - Case Studies
15.3.1 Case study - Fresh Milk at Delhaize
Ashby Dairies (Northern Foods)
Three products were launched at Delhaize

(1 million liters per year)
USP
- Fresh full fat chocolate milk nothing available in the

market (only UHT)
premium niche
more or less milk shake
Failed because of too short shelf-life, too much waste for the retailer
since there is no fresh milk culture in Belgium.
- Fresh full fat milk non standardized fat level

real milk flavour
- Fresh semi skimmed milk easy bottle (with handle) =

clear differentiation to UHT
proposition (previous bottle was
looking similar to UHT milk
bottle)
launch became possible
because of low value of
Stopped with FMD crisis and not recovered since (also because of
high value of ).
Initially, products were launched by Northern Foods.
After withdrawal of Northern Foods, continued by Woodgate dairies, until it

was taken over by Northern Foods.
Continued via Singletons dairies until withdrawal of the products on the

Belgian market.

15.3.2 Case study - Biamo cheese
Biamo (made by the Passendale Abbey) produced an organic cheese also aimed at
non-organic buyers:
The cheese producing factory at Passendale investigated the success factors in

organic cheese:
Taste
Freshness
Packaging
Pure
Natural
Safe
Traceability
Availability at POS
Marketing at POS
This resulted in the company coming up with a half-hard organic cheese called
Biamo.
Biamo is a cheese aimed at the whole family for different uses: on a sandwich,
cheese plate, as a snack, in a salad or for culinary preparations.
The cheese has a contemporary look and fits into the trends of wellness and
indulgence.
Biamo is clearly positioned as a cheese from Passendale (support brand name).

The cheese is credible for organic buyers but also appeals to non-organic
consumers.
The name sounds Italian, which supports the trend toward Mediterranean food.
Biamo is sold in a sliceable block of 2.8kg for the specialised cheese stores. For the
supermarkets a re-sealable packaging of 170g is used.
This cheese is becoming more and more popular, which proves that with the right
product, positioning and support, there is still a lot of potential on the cheese
market.
Opportunities for UK Dairy Producers

- Belgium - 147
15.3.3 Case study - Stassano: dairy drinks in PET bottles
In June 1999, Campina was the first company to introduce PET bottles into the
Benelux dairy sector by launching Stassano fresh drinking yoghurts in PET bottles
and a fresh butter milk in a litre PET bottle. The PET-bottle replaced carton dairy
packages.
Contemporary consumers have become ever more interested in convenience

products. Consumers also buy more and more ultra-fresh products, creating the
need for more differentiation and variation in the offer. This was the challenge for
the Campina Packaging Center of Expertise.
The new PET bottles provide the up- market look of glass but is easier to handle
and use. The screw cap allows the bottles to close hermetically. As aluminum seals
were often found to be difficult to remove before consumption, this bottle does not
have one. For product safety, a cap with tamperbrand that tears when the bottle
is opened is used. The specially designed bottleneck prevents dripping when
pouring out.
Campina launched three fresh drinking yoghurts (strawberry, peach and five
fruits) and one fresh butter milk that can be cooked and that is prepared according
to the traditional recipe. Thanks to these new introductions, Stassano has become
the market leader in Belgium for drinking yoghurts. Since the introduction, market
share has grown from 40% to 60%. The product volume increased by a factor of
2.5. Amongst consumer there was obviously a need for this kind of ready-to-drink
product the total category of fresh drinking yoghurts was expanded with this
introduction.
During the launch in the summer of 1999, nothing was left to chance: posters on
bus stops in the street, shelf talkers, cool displays and tasting sessions,
redemption coupons etc. were all used.
DAIRY PRODUCTS
- G E R M A N Y-
March 2003

- Belgium - 148
Food from Britain
22 Carlisle Street
London SW1P 1JA
Tel: 020 7233 5111
Fax: 020 7233 9515

- Belgium - 149
Table of Contents
1 THE OVERA LL MARKET.......................ERROR! BOOKMARK NOT DEFINED.

1.1 COUNTRY F ACT SHEET ............................ ERROR! BOOKMARK NOT DEFINED.
1.2 COUNTRY DATA .................................... ERROR! BOOKMARK NOT DEFINED.
1.3 DEMOGRAPHIC PROFILE ........................... ERROR! BOOKMARK NOT DEFINED.
1.3.1 Total Population and Growth .........Error! Bookmark not defined.
1.3.2 Household Composition ................Error! Bookmark not defined.
1.4 ECONOMIC PROFILE ............................... ERROR! BOOKMARK NOT DEFINED.
1.4.1 Economic Overview .....................Error! Bookmark not defined.
1.4.2 Latest Economic Indicators ...........Error! Bookmark not defined.
1.5 CONSUMER & CONSUMPTION TRENDS ........... ERROR! BOOKMARK NOT DEFINED.
1.5.1 Food Consumption.......................Error! Bookmark not defined.
1.5.2 General Consumer Trends.............Error! Bookmark not defined.
1.5.3 Consumer Trends Specific to Dairy Products..Error! Bookmark not
defined.
1.4.4 Consumer Profiles .......................Error! Bookmark not defined.
2 OVERVIEW OF THE RETAIL MARKET ...ERROR! BOOKMARK NOT DEFINED.

2.1 RETAIL STRUCTURE................................ ERROR! BOOKMARK NOT DEFINED.
2.1.1 Background to the Retail Environment .........Error! Bookmark not
defined.
2.1.2 Number of Stores and Shares by Store Format ... Error! Bookmark
not defined.
2.2 RETAIL T RENDS & DEVELOPMENTS............... ERROR! BOOKMARK NOT DEFINED.
2.2.1 Main Trends in Retail ...................Error! Bookmark not defined.
2.3 PRIVATE LABEL..................................... ERROR! BOOKMARK NOT DEFINED.
2.4 LOGISTICS, MARGINS & PAYMENT TERMS ....... ERROR! BOOKMARK NOT DEFINED.
2.5 RETAILER SWOT .................................. ERROR! BOOKMARK NOT DEFINED.
3 RETAILER PROFILES ..........................ERROR! BOOKMARK NOT DEFINED.

3.1 KEY RETAILERS IN THE GERMAN MARKET ........ ERROR! BOOKMARK NOT DEFINED.
3.2 PROMOTIONAL ACTIVITIES ........................ ERROR! BOOKMARK NOT DEFINED.
4 RETAIL STORE CHECKS ......................ERROR! BOOKMARK NOT DEFINED.

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5 THE MARKET .....................................ERROR! BOOKMARK NOT DEFINED.
5.1 MILK PRODUCTION ................................ ERROR! BOOKMARK NOT DEFINED.
5.2 DAIRY PRODUCT MARKET ......................... ERROR! BOOKMARK NOT DEFINED.
5.2.1. Market Overview .........................Error! Bookmark not defined.
5.3 KEY PLAYERS....................................... ERROR! BOOKMARK NOT DEFINED.
5.4 RETAIL MARKET SEGMENTS ....................... ERROR! BOOKMARK NOT DEFINED.
5.4.1 Cheese ......................................Error! Bookmark not defined.
5.5 Y OGHURT ........................................... ERROR! BOOKMARK NOT DEFINED.
5.5.1 Dairy Desserts............................Error! Bookmark not defined.
5.5.2 Yoghurt / Milk Drinks ...................Error! Bookmark not defined.
5.5.3 UHT Milk....................................Error! Bookmark not defined.
5.6 PACKAGING /LABELLING & LEGISLATION/........ ERROR! BOOKMARK NOT DEFINED.
5.7 SWOT ANALYSIS.................................. ERROR! BOOKMARK NOT DEFINED.
6 FOOD PROCESSING MARKET ..............ERROR! BOOKMARK NOT DEFINED.

6.1 SIZE OF THE MARKET .............................. ERROR! BOOKMARK NOT DEFINED.
6.1.1 Key Suppliers .............................Error! Bookmark not defined.
6.1.2 UK Dairy Exports in Food ProcessingError! Bookmark not defined.
7 CONCLUSIONS & RECOMMENDATIONSERROR! BOOKMARK NOT DEFINED.

7.1 CONCLUSIONS ON MARKET POTENTIAL .......... ERROR! BOOKMARK NOT DEFINED.
7.1.2 Yoghurts / Dairy Desserts.............Error! Bookmark not defined.
7.1.3 Dairy / Milk Drinks .......................Error! Bookmark not defined.
7.2 T HE ROUTE TO THE MARKET ...................... ERROR! BOOKMARK NOT DEFINED.
7.3 LEVELS OF INVESTMENT ........................... ERROR! BOOKMARK NOT DEFINED.
7.3.1 Product Category Grouping Approach...........Error! Bookmark not
defined.

- Belgium - 151

Germany
Language German
GDP (2001) 2,071 bn
Unemployment (2001) 4.225 m. (2002) = 10.1%

- Belgium - 152
16.2 Country Data
Map of Germany
WESTERN-POMERANIA
HOLSTEIN
BRANDENBURG
HAMBURG
BREMEN
LOWER BERLIN
SAXONY
SAXONY-
Hanover ANHALT
NORTH RHINE- SAXONY

WESTPHALIA
Erfurt Dresden
Dsseldorf THURINGIA
Cologne
Bonn
HESSE
PALATINATE
Mainz
Nuremberg
SAARLAND
BAVARIA
Stuttgart
BADEN -
WRTTEMBERG
Munich

- Belgium - 153
described as stagnating. Since the mid-60s, the development of the population has
been mainly influenced by immigration and migration movements of foreigners.

1997 1998 1999 2000 2001
Yr-on-yr growth (%) +0.1% +0.02% +0.2% +0.1% +0.2%
densely populated federal state. Berlin, Bremen and Hamburg are city states

Bavaria 15.0% 175
Berlin 4.1% 3.800
Brandenburg 3.1% 88
Bremen 0.8% 1.632
Hamburg 2.1% 2.286
Hesse 7.4% 288
Saarland 1.3% 415
Saxony 5.3% 238
Thuringia 2.9% 149

Turks 26.6%
Yugoslavs 8.6%
Italians 8.4%
Greeks 5.0%
Poles 4.2%
Croats 3.1%
Americans 3.0%
Total 100%

- Belgium - 154
general, the Ge rman population is getting older. It can be estimated that 32% will
be over 60 years old by 2020. Better medical care and the decreasing trend of
having children (longer educational process, professional life of women) can be

under 15 16.2% 14.8%
15-24 11.8% 10.8%
25-49 39.5% 35.9%
50-69 24.2% 23.8%
70+ 8.3% 14.8%
Total 100% 100%

2000


12% 4%
1 person
3 people 36%
15%
2 people
33%

- Belgium - 155
economic activity signals thus do not yet suggest that economic activity is about to
pick up.
The domestic economy is further characterised by continued investment weakness

as a result of companies lower earnings expectations and the persistence of weak
consumer spending propensity.


1997 1998 1999 2000 2001 2002(e)
GDP (in bn) 1,840 1,876 1,915 1,970 1,981 1,984
GDP Growth (in %) +1.4 +2.0 +2.0 +2.9 +0.6 +0.2
GDP per capita () 22,400 22,800 23,300 23,900 24,100 24,100
Inflation (%) 1.5 0.6 0.6 1.9 2.5 1.3
Consumer 1,046 1,075 1,143 1,157 1,191 1,232
Expenditure (in bn)
Consumer +2.5 +2.8 +2.0 +1.9 +3.5 +0.9
Expenditure Growth
(%)
(%)
bn)
GDP Trend
GDP stagnated in the fourth quarter of 2002. Overall GDP growth in 2002 was only
0.2%. Foreign trade contributed the largest share to growth in 2002 (+1.5%
contributions from private consumption (-0.3% points) and gross fixed investment
(-1.3% points) were negative. This can be explained by a decline in gross fixed
assets (-6.4%), of which investment in plant and equipment (-8.4%) and private
consumption (-0.5%), whilst government spending increased (+1.5%). The result
was a 1.3% fall in total domestic expenditure. A rise in exports of 2.9% contrasted
with a decline in imports of 1.3%.

- Belgium - 156
Middle East. Economic activity is assumed to pick up further in 2004 with forecasts
ranging fro m 1% to 2.5%. The number of unemployed will fall in the course of
2003 due to cyclical reasons and on account of labour reforms, but it will keep on
average at about 4.2 million, the unemployment rate will rise to 10% within the
year.
Inflation
since 1999.

amounted to 2,664. The largest share is generally spent on private consumption,
i.e. food, housing, clothes, travel etc. More than 77% of the net income i.e.
2,061 was spent on consumption expenditure and only 603 (22.6%) on savings,
insurance etc. Nearly one third of total consumer expenditure was covered by
expenses for rental fees, energy costs and maintenance and repair of
accommodation.


- Belgium - 157

Chart 1 shows that expenditure of private households on food has been decreasing
over recent years compared with expenditure on consumption in general. In 1991,
for instance, 12.8% of total consumption value was spent on food. By 2000, the
figure had sunk to 10.5%.
According to statistics, in 1998 each private household spent on average 289 per
month on food and luxury foodstuffs (i.e. alcoholic and non-alcoholic beverages
and cigarettes). On average, 14% of the monthly food expenditure was spent on
cereal products, 16% on vegetables and fruit, 22% on meat, fish and eggs and
12% on dairy products.
and more fish.
2. The number of younger people will cont inue to decrease, consequently the


- Belgium - 158
4. The reduction in family size means a decline in the social aspects of eating,
such as the number of occasions a family sits down together for a meal.
Lifestyle changes are leading to increased out-of-home consumption.


between weekday and weekend has become stronger. Frozen and convenience
food will increase. Already 18% of the total population (and 17% of the
females) find convenience products very important.
8. The share of freely disposable income has increased. This makes consumers
more susceptible to impulse purchases and occasional special treats without
worrying about prices. For instance, only 11% of the population claim that
prices for food are too expensive, but 18% claim that declarations of
ingredients are not adequate.
withdraw into their private sphere. This could result in the growth of small
treats in the food area.

considerably (GfK research, 2001), most of which in out of home consumption.
As consumers travel increasingly, especially to long-haul destinations, they are
likely to experience exotic foods which they want to taste back home as well.
important for consumers, while the development of functional food has already
picked up.

- Belgium - 159
Product examples within white line products for this trend are: creamy and high-
fat product variants such as cream yoghurts, desserts and chilled milk snacks.
The consumers demand to live and eat healthily is strongly focused upon due to
the current uncertainty about the possible health consequences of different
types of food.
Due to the improvement in production technologies it is now possible to produce

low fat products which taste good and also have a creamy texture.
market share in total is still very low at 1.5%. However, the market continues to
grow rapidly. For consumers, these products have added values, e.g. they

- Belgium - 160
This trend is also supported by the fact that younger consumers in particular are
strongly orientated towards leisure and enjoyment which has a significant
snacks and chilled snacks. In yellow line, this trend is reflected by the increasing
consumption of ready to eat cheese snacks, pre-packed cheese and cheese
ready meals, such as cheese fondue and baked cheese.



responsibility
This trend reflects an increasing sensitisation of many consumers towards moral

and social aspects. The growing demand of consumers for natural products and
products with specific certificates are an indication for this.




- Belgium - 161
Chart 4 in the appendix shows a positioning of selected dairy products to specific

consumer trends which have been described in this chapter (convenience, health
/ wellbeing, enjoyment / taste, environment, natural).

Consumption behaviour is on the one hand affected by income and on the other by
lifestyle (e.g. household size, possibilities of stocking food and leisure activities).
The preparation and consumption of food is decreasing due to lack of time and
long working days. Instead, out-of-home meals are replacing traditional home-
made meals and convenience food is growing.
1. Convenience
delivery services, e.g. pizza services etc. Very often this type is either a student or
a blue-collar-worker. 60% of this type are below 40 years of age and very often
young singles.
Origin and the freshness of food are very important. Dislikes ethnic food, prepared
or RTE meals and home delivery services. Not health conscious. Approximately
30% of the population belong to this segment. More than 60% are above 50 years
of age. Usually living in two-person-households and mostly retired.
3. Ethnic Food
meal, mostly expensive restaurants. Very brand-conscious when food shopping.
4. Health-conscious

- Belgium - 162
products on offer, but also an extensive choice of distribution channels where food
can be bought. Chart 6 gives an overview of how often the various distribution
channels are used.
The various target groups choose different shopping outlets. Research (GfK, 2002)
found that the higher the income, the more different outlets are shopped at. 78%
of the population shop at least once a week in a small specialist shop such as a
butchery or a bakery. Larger superstores or supermarkets are visited once a week
at the most for bulk buying. More than a third of the German population visits
small supermarkets at least once a week. 90% of the population shop occasionally
in a discounter to purchase special offers.
consumer.

- Belgium - 163
Food retail turnover rose by 1.3% to 101.1 bn (excl. Aldi) in 2001. Including Aldi,
food retail increased by 3.1% to 123.1 bn. Chart 7 gives a detailed overview of
the development both in the number of retail outlets in Germany and in turnover
over recent years.

As Chart 8 and 9 indicate, traditional retail outlets increased in 2001 both in outlet
numbers and turnover. Hypermarkets and discounters continued to grow.



Germany, this means an average of 1,366 shoppers per store. In the UK with
39,400 retail outlets there are 1,490 people per shop.

discounter chain Aldi within the retailer industry reflects this development. In
the UK, quality retailers such as Sainsbury's and Tesco are more successful
than discounters.
3. In Germany, private label food products only account for a market share of
approximately 22% (incl. Aldi) / 19.2% (excl. Aldi) with an increasing trend.
This compares with UK figures of 38%.

- Belgium - 164
ordering products.


products in retail. Both factors will be discussed in detail in chapters 2.2.1 and 2.3.
Another trend influencing the development of retailers and their product range is
the polarisation of growing market share of private label and increasing strength of
manufacturers brands. Weak secondary brands will become even weaker and
finally disappear from the market. This issue will also be discussed extensively in
chapter 2.2.1.

bn 2000 bn 2002 2000 2002
retail (<800sqm)
Hypermarkets (= 51.6 53.1 7,505 7,650
800sqm)
Discounters 20.8 22.9 9,760 10,055
Total 99.8 101.1 61,100 56,200


- Belgium - 165
the number of retail outlets of the Top 5 German retailers. Rewe leads the list with
4,365 food retail outlets, followed by Edeka with 4,063 outlets, Aldi (North and
South) with 3,620 outlets, Lidl & Schwarz with 2,200 outlets and Metro with 771
food retail outlets.
an impact on retailers. But also the economic development, e.g. the introduction of
the Euro, and the current recession are influencing people's buying behaviour.
to a noticeable price increase on the one hand and more price-sensitive consumers
on the other. These factors, again, have led to the increasing success of
discounters. Taking into consideration that white line products are low-interest
2.06 billion / 1.1 million tonnes. 49% of total sales of white line products are sold
in hard or soft discounters, which is 11% more than the first half of 2001.
decreased prices throughout their product portfolio. Other discounters such as Plus
(Tengelmann), Lidl (Lidl & Schwarz) and Penny (Rewe) had to follow in order to be
able to compete.
introduction of the Euro and they are also becoming increasingly important as they
are beginning to replace supermarkets as a result of being able to offer a similar
range of products. Products such as frozen food, fresh products, especially fresh
dairy products, many premium products and trend products such as breakfast
drinks are being offered by discounters.

- Belgium - 166
manufacturers who "boycott" discounters by additional free secondary display, free
special promotions with the manufacturers' brands etc. Retailers expect that this
will force manufacturers to choose between supplying discounters or
line sales (excl. Aldi). Sales of private label cheese products rose by 5% to 42% of
total cheese sales.
In order to survive the polarisation between private label and strong manufacturer
brands, brands and their benefits have to be strongly communicated to the
consumer. To achieve this, new product developments are vital, especially in the
white line range.
be found in deli counters but also in self-service counters. Another main reason for
the increasing number of self-service products is, according to research (AC

- Belgium - 167

meet the consumers needs, retailers are increasingly expanding their convenience
food product range and developing separate convenience food compartments. To
take this further, retailers are also planning to restructure shops by organising
their product range according to consumption habits. This, in turn, means a
reduction in the frozen product range and an expanded offer of chilled convenience
products. Consequently, a larger part of the shop than before will be dedicated to
fresh products.

2.3 Private Label
Chart 13 compares the private label share of non-food products and food products
in various fascia.
category accounts for 29.6% (volume) / 19% (value), for fruit yoghurt it is slightly
below average (volume: 19.7% / 13.5%). Manufacturer brands are more
565m kg.

- Belgium - 168
Further research (VerbraucherAnalyse 2002, Axel Springer /Bauer) has shown that
even consumers shopping in discounters are extremely brand-conscious, just like
supermarket customers. For instance, 45% of Aldi shoppers pay more attention to
brands than to price. More than 50% of Aldi shoppers perceive branded products
to be of better quality than no-name products (with Aldi to be defined as a well-
established brand). This proves that there is still much potential for branded
products.


(Premium segment)
Erlenhof B-Brand
Ja! Discount brand
Butterfly
Marktkauf) products
Rewe (toom, HL, minimal) sell three different categories of private label products:
Fllhorn is a premium price brand for organic products. Erlenhof is their second
brand and includes the basic range of groceries, not only dairy products but also
vegetables, fruit, salads, eggs, tinned food, jams, rice and pasta. "ja!" is Rewes
third private label brand, which is their discount brand. The product range includes
not only dairy products (yoghurt, cream, milk, cheese) but also non-food articles,
frozen food, tinned food and all other basic groceries.

- Belgium - 169
Metro (real) sells its private label products under the "TiP" brand (Toll im Preis=
good value), which is positioned as a discount brand. The brand includes all basic
groceries such as milk, yoghurt, cheese, sugar etc).
Milfina (herbal quark, sour cream, yoghurt, plain quark), Tuffi (semolina desserts),
Zoma (milk desserts) and Biotic (probiotic fruit yoghurt). Aldi Sd offers private
label milk (Milfina) and milk mix drinks (Desira) as well as evaporated milk
(Milfina, Desira).
fruit products, SnackBar for savoury snack products, Gutfleisch for meat and Mibell
for dairy products. They offer an extensive range of dairy products under their
Mibell brand, including milk (fresh and UHT), milk drinks, evaporated milk, cream,
probiotic drinks, desserts, yoghurts and quark as well as a vast range of cheeses.
Various factors are responsible for the increasing success of private label products.
In 2001, one year before the Euro was introduced, retail prices for dairy products
increased dramatically (to their highest level since 1989) as manufacturing prices
for dairy products reached their peak and retailers took the chance to increase
prices before the Euro conversion. Chart 16 shows that the average price for long-
life milk, for instance, rose by one third within a year.
label pro ducts has considerably improved compared to manufacturers brands

Furthermore, the demand for cheaper replacements for manufacturers brands will
increase as the target market for private label products is constantly increasing.
For 42% of consumers aged 50+, price is more important than a strong brand. As
the number of older people will increase due to a decreasing birth rate, this target
group will grow and become more powerful.

- Belgium - 170
Payment


REWE within 30 days
Aldi within 30 days

manufacturers not supplying discounters. The term retailers have created for such
suppliers of manufacturers' brands is "Frderlieferanten" (=supported suppliers).
Three of the biggest retailer chains, Rewe, Metro and Tengelmann, have already
started to support those manufacturers which boycott discounters by offering
additional free secondary display, free special promotions with the manufacturers'
brands etc.
Margins

- Belgium - 171


Logistics
grown, there has been a trend towards improving logistics. This started in ambient
and is now moving into chilled and frozen.

in store.
Most retailers have tended to use regional dairies as suppliers and brokers for their
dairy range. Milk/yoghurt/butter etc. is supplied to retailers at 4-7 C. For
range of drinking milk, yoghurts etc. as well as other brands into all Rewe fascia in
the Rhine-Main area. Suppliers use the dairy as a delivery point.

- Belgium - 172
depots.
to all 297 stores.

- Belgium - 173
17.3 Retailer SWOT
category in German retail and a very profitable business too, retailers tend to treat
dairy products sensibly.

food products)
(toom)
Listing procedure
product categories
products food halls
(superstores) or
discounters
(LIDL) categories
Germany

- Belgium - 174
Edeka / AVA
New-York-Ring 6
D - 22297 Hamburg

AVA-group.
50% to 16.6% in 6/02.
Austria.
Food retail split:


- Belgium - 175
Rewe
Rewe Zentral AG
Domstrae 20
D 50668 Kln

Food retail splits:

Aldi
this concept.
France (end 02: 498 outlets), UK, Ireland, USA (10% of No.2 retailer Albertson
+ discounters in Mid-West), Australia, Spain (12 outlets in late 02).

- Belgium - 176
Metro
Metro AG
Schlterstrae 41
40235 Dsseldorf
Metro is Germany's No. 1 hypermarket operator with 246 "real" stores and No.
1 cash & carry operator with 108 outlets.

Lidl & Schwarz

Rtelstrae 30
D 74172 Neckarsulm

Food retail split:

outlets.
Their central distribution now works very well, covering 60-70% of turnover in
Kaufland and all of Lidl-Discount.

- Belgium - 177
Karstadt
D 45133 Essen


Edeka / AVA:
Rewe
Aldi
Metro
500m annually. For their department store Kaufhof, sport-fascia Sport Arena and
hypermarket fascia real, they offer a customer card called "Payback card", a debit
card that offers discounts on products purchased. The customer card also provides
special offers for card owners in co-operation with Lufthansa.
Lidl
Lidl's promotional activities are very similar to Aldi's. Lidl only advertises twice per
week in the regional press (colour advertisement). They also use in-store posters
and handouts, mainly promoting special offers and non-food products.
Karstadt

- Belgium - 178
Methodology



(real,-) (Toom)
Cheese (Packed) 308 289 7 10 129 139
Yoghurt 273 177 - 4 133 105
Desserts 131 71 - 8 54 64
Dairy Drinks 96 98 - 1 28 36
UHT Milk 12 9 - - 9 9

similar.

- Belgium - 179
products.


within the different dairy categories, but they sell only the key brands and lead
products of each category. Their competence is more on deli-counter cheese
and cheese specialities because they cannot compete on pricing and offer a
qualified service behind the counter instead.

(real,-) (Toom)
Cheese 1.19 1.09 0.99 1.05 1.35 1.39
(Packed)
Kraft,
Philadelphia,
200g
Yoghurt 0.35 0.35 0.34 0.25 0.45 0.39
Ehrmann Fruit
Yoghurt, 150g
Desserts 0.45 0.55 0.29 0.39 n.a. 0.55
Mller Rice
Pudding, 200g
Dairy Drinks 0.55 0.65 n.a. 0.44 0.69 0.75
Mller, Milk
Mix Drink,
500ml
UHT Milk n.a. 0.69 0.59 0.55 0.89 0.79
Schwlbchen,
1l, 3.5% fat

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20 The Market
211m tonnes of buttermilk (+0.5%), 2.7m tonnes of fresh dairy products, of which
1.5 million tonnes were yoghurt (+0.3%). 540,000 tonnes of cream and cream
products were produced in 2002, 5.6% less compared to the previous year, and
1.9m tonnes of cheese (-0.3%). Export accounts for 17% of total turnover (3.52
bn).
Chart 17 gives an overview of the top ten dairies in Germany. The 10 biggest dairy
producers process 53% of the national milk production and account for over half of
the total turnover of dairy products. Key suppliers include Nordmilch group,
Humana Milchunion eG, Campina GmbH, Alois Mller, Hochwald, Zott, BMI,
Bayernland, Omira/Neuburger and Hochland.


Humana GmbH and Euro Cheese Vertriebs GmbH, which are owned by Humana,
sell the key branded products (Ravensberger, Sanobub, Osterland, Humana,
Humana Vital, Sonana, Landhof, Golden Cheese and Mascarpone Casarelli) and
private label products directly to retailers.
billion kg of milk.


(excl. whey products) of Kserei Bayreuth eG (co-operative cheese factory with
a turnover of 145m).


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(+38.8%) of which were imported from EU countries, milk powder with 76,804t, of
which 42,297t were imported from EU countries and cheese with 391,798t, of
which were imported from EU countries (+61.2%). Total yoghurt and buttermilk
powder exports in 2002 grew by 133.8% to 21,555 t, of which 21,541t originated
from other EU countries. Milk mix drinks imports totalled 43,488t (-7.9%), of
which 41,370t were delivered from EU countries. Whey and concentrated whey
imports amounted to 132,807t (-32.4%), of which 117,450t were imported from
EU countries. Chart 18 shows the amount of different dairy products which were
imported in the year 2002.

consumption: exports increased, imports decreased. Germany has become market
leader in cheese production in Europe. 25% of European consumption is produced
in Germany.

1.5m t were yoghurt and yoghurt products, 378,000t cocoa products and milk mix
drinks, 560,000t cream and cream products, 415,000t butter and 1.8m tonnes
cheese.

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countries. Chart 19 shows the export figures of various dairy products for the year
2002 (Jan - Nov).
France and Russia.
farmers with privately owned farmyards and privately owned dairies are organised
into a total of 378 registered co-operatives. Those co-operatives or associations
either provide the facilities for processing the milk into dairy products and selling
them to retailers or for selling the milk on to processing companies. The largest
co-operatives are Nordmilch eG, Humana Milchunion eG and Bayerische
Milchwerke eG, which are among the top ten dairy product suppliers. Total
turnover of all dairy co-operatives amounted to 0.5 billion in 2001.

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British cheese exports declined continuously between 1999 and 2001: 6,5t were
imported in 1999, they went down to 5,6t in 2000 and reached 4.9t in 2001, a
decrease of 12.5% versus previous year. In total, British cheese declined by 21%
(2001 vs. 1998). This development can be seen as a result of BSE and foot and
mouth disease.
and mouth disease.
products.
Cheese
The market for cheese can be divided into two different selling formats: as packed
cheese sold on the shelves in the dairy sections of supermarkets or individually
chosen from a deli-counter with service personnel.

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Packed Cheese
The market for packed cheese reached 377.1m kg between January and November
2002, an increase of 5.3%. In terms of value, packed cheese showed with 5.9%
an even higher growth rate and amounted for this period to 2,306.6m.
Deli-Counter Cheese
volume (35% of total value). The trend towards packed cheese can be clearly seen
by the significant decline in volume and value of deli-counter cheese. Deli-counter
cheese declined by 18.9% to 126.4m kg and sales have decreased by 15.5% to an
amount of 1,219.8 m from January to November 2002.
showed that these products are the most important snacks for German consumers
and also play a major role at breakfast.
growth rates. This applies especially to the segment of yoghurts with 0.1% fat, but
also to other white line segments, e.g. quark. The reason for this development is a
general food consumption trend towards less fat and more health-conscious eating
habits.
2. Creamy products
especially of the white line segment. The creamy products, especially desserts with
more than 3.5% fat content, are growing considerably. This is due to another
important food trend towards pampering oneself and indulgence.
3. Fruit products
Fruitiness has always been a very important topic for dairy product manufacturers.
It is now as important as ever. Not only the amount of fruit of a dairy product
(yoghurt, desserts) is relevant but also the quality and the creativity of the
combination of yoghurt and fruit has become increasingly important.
4. Convenience

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spoon, for instance, are all issues that are currently being discussed and developed
in the white line market.
products.
6. Ingredients
In previous years, vanilla was a very important taste ingredient for dairy products,
e.g. yoghurts, quark etc. This trend has now moved towards chocolate ingredients.
After the successful first introduction of yoghurt with chocolate flakes, this became
a major trend within the white line market in order to add value to products.
(source: MIV) who regula rly consume dairy products. This also applies to the

products are also one of the most popular segments with a per-capita consumption
of 7.8kg.
The dairy industry, however, is rather optimistic and expects a continuous growth
in demand which will be supported by constant new product developments. Chart
20 shows the development of per-capita consumption of various dairy products
over recent years.
that of the 120 independent dairies in Germany (2001), only 30 will have survived
by 2010.

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sold by retailers.
from 2.2% to 3.5% (Dec 2000 Dec 2001), which is the highest growth rate of all
organic products. The peak of organic milk sales was achieved in April 2001 with a
market share of 3.7%. After this period, organic milk sales decreased to 77.1 m
litres per month.
Due to the current market development in the organic dairy market (especially the
nitrofen crisis), prices were dramatically reduced by up to 60%. Chart 22 features
the players in the organic dairy market in Germany, who were all affected by
this particular crisis in Germany. For instance, one of the most important organic
dairies, Andechser Molkerei Scheitz, had to reduce its organic dairy production
from 120m kg (2001) to 80m kg (estimate) in 2002. One of the most important
retail groups, Rewe, expects sales figures to be at the same level as three years
ago, when organic products were not popular in Germany.
than 40% due to high production costs for farmers. Thus, it is thought that organic
milk will continue to be a niche product in the dairy market. Additionally, even
though demand is not increasing, production of organic milk is still growing. In
1991, 60,000t of organic milk were produced. In 2000, production amounted to
250,000t (+416%), which makes this particular niche market even more
competitive.

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20.3 Key Players

They have about 70 employees and turned over 133.6 m in the first half of 2002.
Leerdammer Company is located in Dsseldorf, but was taken over by the
French company Fromagerie Bel S.A. in Paris in the end of 2002.
Frico Cheese Deutschland GmbH, based in Essen, is one of the leading German
suppliers of hard and sliced cheese in both segments packed and deli-counter
cheese. The German subsidiary of the Dutch Frico Cheese is the largest division of
Friesland Coberco Dairy Foods.
toppings, cuisine and snacking instead of different cheese categories. Frico Cheese
aim at developing new products with real added value character.
Cheese also entered the snacks market in 2002. They launched two cheese snacks
such as a cheese cube mix called Frico-Mixitos in 150g re-sealable pouches and
Frico Cheezit, a cheese snack bar containing 2 20g bars in an easy to open flow
pack.
Soft Cheese
which is located in Wiesbaden, near Frankfurt. They are clear market leader of the
soft cheese segment.
Bongrain Deutschland GmbH turned over 320 m. with 150 employees of which
70 are working as sales representatives. 70% of their total cheese volume is
packed cheese, 30% is sold through deli-counters.


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targeted.

Champignon. Kserei Champignon is part of the Hofmeister group and is based in
Lauben, Bavaria. The group process 440m kg milk per year and turned over
Cream Cheese
The market leader of packed cream cheese is Kraft Foods Deutschland GmbH in
Bremen with their brand Philadelphia, followed by Karwendel- Werke GmbH
& Co. KG in Buchloe, near Augsburg (Exquisa, Mire) and Arla Foods GmbH
in Dsseldorf with their brand Buko.

Processed Cheese
manufacturer in Germany. They produced 215,000 t in 2001 and turned over 790
m of which 60% is achieved in the domestic market. They have 3,200 employees
of which 1,500 are working in Germany. 20% is export business. Their product
range consists of 4 umbrella brands: Almette (cream cheese), Patros (Feta),
Valbrie (soft cheese) and Hochland (Processed and sliced cheese).
Feta

been on the market for ten years and the success of Hochlands consequent brand
policy can now be clearly seen.

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to the merger with Tuffi Campina emzett, Campina is now in second place (market
share volume: 8.7%), followed by Ehrmann (7.2%), Danone (7%) and Bauer
(4.1%). Mller is also leading the Top Eight in terms of value, followed by Danone
(11%), Campina (9.2%), Ehrmann (7.9%), Zott (4.3%), Bauer (4%), Nordmilch
and Nestl.
b) Yoghurts
Plain Yoghurts
Weihenstephan. Other main competitors include Mller and Milchwerke Schwaben.
is achieved abroad. Onken proved to be one of the most successful dairy brands in
2002 due to a successful packaging relaunch and increased POS activities.

are one of the market leaders in the plain yoghurt segment, other products in their
range include desserts and butter. Most products are offered in family-size packs
(e.g. 1,000g yoghurt pots). Their brand portfolio includes their umbrella brand
"Weideglck". They also very successfully serve the food service sector.

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Fruit Yoghurts

Fruchtsalat mit Joghurtcreme (fruit salad and yoghurt), Monsterbacke, Knisterspa
(children's desserts), Frchtetraum (quark dessert). All products are sold under
their umbrella brand Ehrmann.

Mller has an extensive product range including buttermilk, set milk, fruit yoghurt,
low-fat yoghurt, kefir, sour cream, rice pudding, fruit drinks etc. Its brand portfolio
includes Dit-Schlemmer-Joghurt, Knusper Joghurt, Mller Joghurt, Schlemmer
Joghurt, Froop, Crema Yogurt (yoghurts), Mller Milchreis, Dit Mller Milchreis
(rice pudding), Mllermilch (milk mix drinks), Buttermilch (buttermilk), Froop
Trinkjoghurt (yoghurt drink), FruchtMolke (whey drink), Peppo (cream cheese
snack), Drink (various wellness drinks), Crema Puddingcreme (dessert) and
Griebrei (semolina dessert). It heavily promotes Mller as the umbrella brand.
In 2002, Mller entered the savoury dairy snack market for the first time with
"Peppo". Mller is the best known brand in the white line market with an aided
awareness of nearly 100% and is known for using celebrities to heavily promote its
products.

in 2001 with 628 employees. In Germany, it has a market share of 4% (value) and
is among the Top Eight market leaders. Its guarantees to work only with regional
dairies in order to be as environmentally friendly as possible and also to be able to
supervise the quality of the milk they are processing.
Mvenpick (license from Nestl / yoghurt and desserts), Jofinesse (cream yoghurt)
and Fru Fru (UHT yoghurt). In the 250g-pot segment, Bauer holds a share of 75%
with its brand "Der groe Bauer".
elderly people, to sell a new product under the Doppelherz brand, a yoghurt called
Doppelherz Omega 3 containing Omega 3 fatty acids and supporting a low-
cholesterol diet.

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Low-Fat Yoghurts
Danone GmbH is based in Munich and turned over 433m in 2001. Danone is the
second strongest player in the white line segment in Germany with a market share
of 11% (value).

Zott GmbH & Co. KG, is based in Mertingen, Southern Germany, and turned over
501m in 2001. It has a market share of 4.3% in Germany in the white line
c) Desserts

The two German subsidiaries of Campina Melkunie (Netherlands) Sdmilch AG /

Stuttgart and Tuffi Campina Emzett / Cologne / Berlin merged into Campina
(desserts).

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(1999: +25%, 2000: 36%).

drinks).
Strothmann product range. Food service business will dramatically decrease as this
segment is not as successful as expected.
Buttermilk
Plain buttermilk is dominated by market leader Mller Milch, whereas Nordmilch
e.G. leads the fruit butter milk segment.
Kefir

cappuccino style, coconut-chocolate in 500ml plastic pots with a clear emphasis on
chilled products. In terms of variety and seasonal flavours, Mller Milch shows
the widest product range within the segment of dairy drinks.

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ambient section for dairy products. Their market share is 14% by volume and 12%
by value.

forest berries and diet-cocoa available in tetra packs with straw. Drink fit is used
as an umbrella brand for their entire product range.
Drinking Yoghurt
The market leader in volume terms is the Campina group. Market leader by value
is still Danone with Fruchtzwerge-drinks.

With the Netherlands, Belgium, the UK and France, Yakult Deutschland GmbH is
one of 5 European subsidiaries. The launch of Yakult in Europe and Germany
Whey Drinks
to the dynamics of this segment, Mller Milch has decided to enter the market as
well.

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e) UHT Milk

2001. The group has 304 employees. The product range comprises 55 products all
sold under their umbrella brand "Schwlbchen". Products include milk (fresh and
UHT), buttermilk, set milk, whey drinks, yoghurt, kefir, cream products and butter.

2.5 m kg on average and more than 950m packaging units in 2001, it is one of the
largest milk processing factories in Europe. Its product range includes 49% UHT
milk, 5% milk mix drinks, 12% cream, 26% evaporated milk, 3% sour cream
products and 5% evaporated milk in small cans. Approx. 17% of production were
exported to EU countries. It sells under its own label (MuH) and also produces
private label brands (90% of production).
Friesland Deutschland GmbH, Kalkar, based in North Rhine-Westphalia, belongs

to the Dutch company Friesland Coberco Lochem. Friesland Germany has 150
employees and turned over 87m in 2001. It specialises in UHT milk and UHT milk
mix drinks under the brand "Domo lang lecker". It introduced the "Walkie-can", a
re-sealable carton can for its milk mix drinks "+milch-kakao" and is expecting
sales to increase from 2m litres to 10m litres within the next few years.

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20.4.1 Cheese
Packed Cheese
improved significantly due to price increases as a result of packaging innovation of
packed sliced cheese.
previous year.
Soft Cheese
largest segment of packed cheese by value. Sales improved by 3.4% to 202.6 m.
and the volume of soft cheese grew by 3.6% to 29,070.8 t.
Cream Cheese
There is a trend towards low fat or fat reduced versions and also towards cream
cheese variations with additional ingredients such as herbs, onions, red

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Processed Cheese

launched in 1999.
Grated Cheese
m. (+ 0.3%).
position.
Mozzarella

increases in the first half of 2002, sales improved by 3.3% and amounted to 64.0
m. versus previous year.

supplier is market leader in value followed by ex-Danone-owned Zott GmbH &
Semi-Hard Cheese
which showed a double digit growth in 2002 (Jan.-Jun.). It grew by 11% (volume)
and 10.2% by value. Sales reached a level of 61 m. Slices account for about 60%
of total volume.
The most important manufacturer of semi-hard cheese is Bel Adler Allgu GmbH
in Taufkirchen, Bavaria, with their brands Bonbel, Mini Babybel and

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Feta
Due to the fact that about 60% of total volume of feta is generated by discounters,
the dominance of discounters in this particular segment is clear.
Blue Cheese
Rotschmier Cheese
cheese.
The most important supplier of this category is the dairy Mang- Ksewerk GmbH
& Co. KG in Kammlach, Bavaria, a part of the Hofmeister-Champignon Group.
Deli-Counter Cheese
The importance of cheese deli-counters in supermarkets can be seen in the variety

of products they offer, the competence of the service personnel behind the counter
and the freshness of the products. All these factors determine the differentiation to
packed cheese.

in a strengthening of their position and an increasing share of private label. On the
other hand the decreasing interest of retailers combined with their self-destroying
and restrictive personnel policy have lead to a continuing decline in cheese deli-
counters in supermarkets, but it has also influenced the sales of packed cheese
positively. Chart 28 shows the decrease of stores with deli-counters.

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counter).
Convenience
sliced cheese.
Convenient packaging of sliced cheese primarily meet the following criteria: cheese
portioning which refers to consumers demand, practical and clever packaging and
ready-to-use for different kinds of usage (as snack, bread topping, ingredient etc.)
Light Products

The trend towards light and low fat versio ns of cheese products can be seen
particular area.
quark.

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Snacking
More and more dairy companies try to concentrate their tight marketing budget by
advertising only a few brands. Building umbrella brands for entire product lines

Soft Cheese 31% 23%
Feta 55% 43%
Total 42% 33%
Source: AC Nielsen
important within the segments of cream cheese because this particular segment is
dominated by major brands (Kraft, Exquisa, Buko and Almette).

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Convenience
Snacking
Light Products
20.5 Yoghurt
Plain Yoghurts
Fruit Yoghurts
Fruit yoghurt sales increased by only 0.1% to 417.6m kg worth 874.2m (+4.9%)
(Jan-Oct 2001). Sales amounted to 29.2% of total white line sales, turnover
accounts for 30.85%.
Low-Fat Yoghurts
Low-fat yoghurts are the latest trend in the yoghurt market in Germany. Producers
now offer a wide range of low fat yoghurts in order to meet consumers'

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Pro-biotic Yoghurts
yoghurt drinks. From January to May 2001, 38% of volume (+13.6%) and 29% of
value (+2%) of probiotic dairy product sales were generated by probiotic fruit
decreasingly important for dairies. Probiotic products are starting to be replaced by
products with other ingredients which are beneficial to health such as whey drinks,
vegetable drinks and added vitamins.

Consequently, the cream yoghurt segment and the dessert segment are starting to
merge into one.
product, private label products are extremely powerful with a market share of 39%
(volume) and 28.3% (value).
and 13.5% (value).

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also new packaging versions etc. Chart 33 gives a detailed overview of the number
of product innovations for each white line segment.

which are known for supporting a low-cholesterol diet. This product was developed
in co-operation with Doppelherz, a well-known brand offering a special tonic for
elderly people, and is also sold under the Doppelherz license.

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Dairy Desserts
Dairy Desserts with

Cream
Buttermilk Desserts
Semolina Desserts
Rice Pudding
Generally, price increases in the dessert market have led to a decrease in demand.
Sales dropped by 5.2% to 215 m kg. However, due to price increases turnover
grew by 2.6% to 496.4 m (excl. Aldi).
16.4%), followed by Dr. Oetker, Nestl (9%), Danone (7.5%), Zott (6.6%), Onken
(5.3%), Ehrmann (5.2%) and Strothmann (3.3%). In the rice pudding sub-
segment, Mller is market leader with a market share of 80% (2001). The rice
pudding segment dropped by 5.1% (volume) and 0.9% (value) to 29.5m kg /
55.3m.
The Chart 35 shows that desserts with cream sell best in the dessert segment, but
they still sold 10% less than in 2000, i.e. 126.7 m kg. Despite price increases,
turnover for this segment dropped by 2.1% to 283.7 m. Desserts without cream
increased in sales by 4.7% to 55 m kg (turnover: +9.3% to 121.1 m). Buttermilk
desserts increased sales by 1.7% to 7.8 m kg (turnover: +6.8% to 12.5 m). This
particular segment is mostly sold by Aldi and other discounters. Semolina dessert
sales accounted only for 38.7 m t (-7.1%) and achieved 6.5% less in turnover (
105 m). Rice pudding decreased by 5.1% in volume to 29.5 m kg and turned over
55.3 m (-0.9%).

(turnover: -1.9% to 69.8 m).

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also develo ping this trend further and are adding toffee splits etc. The use of these
ingredients reflects consumer trends towards indulging in and enjoying food. The
pleasure aspect is one of the most important reasons for consumers to buy
desserts. But added sauces and fruit also deliver additional taste and a feeling of
luxury for consumers enjoying desserts.
Increasingly, manufacturers also copy trends fro m the confectionery market and
transfer them to the dessert segment. The latest trend in the dessert segment is
dark chocolate flavour, e.g. Nestl's dark chocolate mousse. Products with new
recipes like this, for instance, became very successful by way of additional
promotions, e.g. dark chocolate mousse with Bailey's.
dessert market. Desserts such as Lion, M&Ms, Smarties and Bounty - yoghurt with
added chocolate - have been launched very successfully in the market.
New product developments are essential in order to be able to compete with other
brands in the dessert segment. Strothmann, now merged with Campina, is one of
the major dessert manufacturers and known for its product innovations. In 2002,
Strothmann developed a dessert for 2 ("Kiss for 2") with zabaione flavour. The
newly developed product, a sponge ball covered in chocolate and set on flavoured
cream, proved to be very successful (35% growth in value).

(Campina, Weihenstephan, Mller). Added cream, fruits and sauces turn this into a
value-added segment. Chart 36 shows some recently launched products.


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Milk Drinks
Buttermilk
Kefir
Drinking Yoghurt
Whey


the previous year (January June). Chart 37 shows the development (by value) of
the different categories in detail.

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Buttermilk
The sub segment of fruit butter milk showed a higher growth rate (+9% in value).
Plain butter milk stagnated in the first half of 2002. There is a seasonal peak of
butter milk consumption in warmer months when it is used as a refreshing drink or
as a snack or meal replacement.
Kefir

product.

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Whey Drinks
Fruit whey drinks with added vitamins which give added value to the consumer are
a good example.
The importance of private label within the product groups of milk drinks e.g. butter
milk, kefir, flavoured milk mix drinks, drinking yoghurt and whey is not very high
compared to other dairy products.
becoming increasingly important refers to new packaging solutions. With regard to
this, four areas of product innovation can be noticed:
Additional:
Minerals,
Cereals etc.
Low-Fat Products
New Packaging
Solutions

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20.5.3 UHT Milk

labelled H-Milch.


Legislation requires a minimum shelf life for UHT milk of 6-8 weeks (see Chart 34).
milk accounted for 2.17m tonnes (-2.1%). This trend towards full-fat products can
also be observed within the UHT milk segment.
Packaging
UHT milk segment. Premium quality brands are also trying to establish themselves
on the UHT milk market. In order to do so, manufacturers' brands have to
communicate via packaging. Thus, the packaging of branded UHT milk is unique
and consistent in order to ensure that the brand is easily recognised by the
consumer.

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Manufacturers' brands communicate the origin of the product in order to appeal to
the increasing "home-based" feeling of the consumer. The regional origin of the
product is perceived to be a unique selling point, suggesting a superior quality.
have approx. 15% market share within the private label market. As UHT milk is an
extremely low-interest product, private label share is very likely to continue
growing.

low market, Breisgaumilch GmbH, offering a lactose-free milk with 3.5% fat called
Lactofree.
Shelf Life

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Format
1,000 and 1,500 ml bottles. Tetra blocks are used e.g. for juices or milk in various
formats.
1,000 ml with 8.7 % each. 330 ml is in 4th position with 3.5%, 750 ml follows with
2.3% and others with 2.9%.
mix drinks are mainly one-person-household products. They usually are not shared
e.g. amongst families or with friends. The product is bought and drunk straight
away.

dessert, 4x62,5g Frischli Leckermulchen Fruchtpudding and 4x125g Danone &
Frucht yoghurt) are available. Yoghurts are also available in 500g recyclable glass
jars (Landliebe, Ehrmann).
Packaging
consumers. In practical usage the lack of convenience is apparent. For instance, in
the milk mix drinks segment, the market is dominated by 500 ml soft plastic pots
which are not re-sealable and therefore quite hard to handle in certain situations
e.g. whilst driving, walking, etc. Their market share is 42 %.
Following pots there are non-returnable bottles, glass or plastic, with around 17%,
blocks with 13 % and bricks with at least 9.2%. Tetra bricks have a 5.6% market
share, returnable bottles 4.9% and finally all others 8.2%.

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the packaging.
net weight
share of fat (in %)
Green Dot

kj per 100g.
Legislation Issues
Deposit

other milk drinks in PET bottles are the most important export articles to Germany
for the Austrian dairy NM.
many jobs.

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Example:
Heat treatment
Contents
Best before date

Address of producer
Net weight
EU dairy code
Green Dot

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20.7 SWOT Analysis


specialities by using specific campaigns. A similar approach in order to build
brand awareness of British cheese could be considered.



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for food processing in Germany. Dairy products account for 19% of total value and
reached 24.1 bn in 2001. The share of meat products is nearly the same with
19% of total value and alcoholic beverages follow with 11% of total value.
21.1.1 Key Suppliers
appendix. Most of the Top 10 key suppliers (apart from Zott for which data are not
available) will be presented in the following section.
(1) Nordmilch e.G.

and processes 3.967 bn kg of milk i.e. 14.2% of the total milk volume in Germany.
The total turnover of the Nordmilch group amounted to 2.56 bn in 2001.
Nordmilch's national turnover amounted to 2.3 bn in 2001. In the white line
segment, they are on rank 7 of the Top 8 German manufacturers with a market
share of less than 4%.

products for 296,000 t (397m), milk powder amounted to 114,988 t (307m) and
butter to 50,482 t (259m).

Vertriebs GmbH (all three produce and sell brands "Ravensberger", "Sanobub",
"Osterland", Humana", "Humana Vital", "Sonana", "Landhof", "Golden Cheese" and
Mascarpone "Casarelli" as well as private label products), Milchwerke Thringen
GmbH, Milchwerke Oder-Spree GmbH, Kurhessische Molkereizentrale AG,
Kstenland Milchunion Mecklenburg-Vorpommern eG and dairy Borgmann GmbH &
Co.KG. Humana Milchunion eG in Everswinkel have taken over Sanobub
Humana Milchunion have taken over privately owned dairy Borgmann GmbH & Co.
KG, Coesfeld, a specialist in yoghurt and dessert products, which Humana plan to
turn into their dessert production centre.

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The two German subsidiaries of Campina Melkunie (The Netherlands), Sdmilch

AG (Stuttgart) and Tuffi Campina Emzett (Cologne and Berlin) me rged in 2001
into Campina GmbH in Heilbronn. Factory sites are now located in Heilbronn
(yoghurt, desserts), Cologne (fresh milk, soft curd cheese, cream, yoghurt),
Wuppertal (yoghurt, desserts), Elsterwerda (milk, yoghurt, cheese, distribution)
and Prenzlau (soft curd cheese, milk, butter).

With the takeover of Strothmann, Campina is following its strategy to expand their
dessert segment and become market leader in this particular segment in
Germany.
(4) Alois Mller

The Mller group turned over 1.69 bn with 3,900 employees. They processed 1.8
bn litres of milk. With a market share of 13.8% (volume), Mller is still the market
leader in the white line market (Jan- July 02).

drinking milk, UHT milk and evaporated milk by adding yoghurt and sliced cheese.
The tot al group turnover amounted to 625 m with sales of 982 m kg of milk.

near future. Bayernland sells more than 100,000 t of cheese per year and is one of

- Belgium - 216
the biggest German cheese producers. A merger between these two would give
(8) Bayernland e.G.

(9) Omira Group

milk, butter and cheese. Their product range is marketed under the regional brand
Bodensee (= Lake Constance).
(10) Hochland AG

2001. They achieved a turnover of 790 m. Processed cheese is their main domain,
but they also produce soft cheese, hard and sliced cheese, cream cheese and cows
milk feta.
Those 10 dairy producers process 53% of the national milk production and achieve
more than half of the total turnover made with dairy products in Germany.
Britis h cream in bulk is obviously quite competitively priced and what seems to
be also important is the fact that cream from the UK is not subject to
British cream is sold through wholesalers to German dairies. Those dairies
use it for the processing of cream and butter products.
were exported from the UK and turned over 0.26 m in 2001. The UK export of
skimmed milk powder accounts for only 0.3% of total volume or 0.4% of total
value.

- Belgium - 217
22.1.1 Cheese
after main meals and also on open bread rather than crackers. In addition, it is
a regular breakfast component.
speciality. Food from Britain's first recommendation would be with a committed
supplier to examine the opportunities for sliced, pre-packed cheddar.
The areas of consumer and trade communication should also be examined.
Sales of British cheese are now recovering following the effects of BSE/Food
and Mouth disease in recent years. However, unlike other countries, British
products have never benefited from wider consumer or trade advertising.
to grow. British suppliers such as Abergavenny Fine Foods have good ranges of
products in this category.

Consumption of yoghurt in Germany is at a higher per-capita level than the UK.
Similarly, there are a wide range of successful, innovative German dairies who
supply the market. Some imports form France exist, otherwise the market is
exclusively serviced by domestic suppliers.
expenditure.
category.

to be overcome.
22.1.4 UHT Milk

- Belgium - 218
This product category has become a classical discounter commodity product
which retails at 0.45 0.55 per litre in a market with over-capacity.

There are several alternative routes to market which depend on scale of objectives
and type of customer.
a) Acquisition:
This is a route FFB would recommend for a medium-large scale British supplier.
The pre-requisite is a complementary product range and ideally extended shelf-life
products. It is certainly a route to follow once a product has proved itself

d) Direct to Retail

- Belgium - 219

products.

transport much simpler, but the pre-requisite is commitment and one company
/ person as the lead group.

has a regular service to all regional grocery retailer depots and can consolidate
in Dover.
DAIRY PRODUCTS
- G E R M A N Y-
March 2003

- Belgium - 220
Food from Britain
22 Carlisle Street
London SW1P 1JA
Tel: 020 7233 5111
Fax: 020 7233 9515

- Belgium - 221
Table of Contents
1 THE OVERALL MARKET.......................ERROR! BOOKMARK NOT DEFINED.

defined.
2 OVERVIEW OF THE RE TAIL MARKET ...ERROR! BOOKMARK NOT DEFINED.

defined.
not defined.


- Belgium - 222


defined.

- Belgium - 223

Germany
Language German
GDP (2001) 2,071 bn
Unemployment (2001) 4.225 m. (2002) = 10.1%

- Belgium - 224
23.2 Country Data
Map of Germany
WESTERN-POMERANIA
HOLSTEIN
BRANDENBURG
HAMBURG
BREMEN
LOWER BERLIN
SAXONY
SAXONY-
Hanover ANHALT
NORTH RHINE- SAXONY

WESTPHALIA
Erfurt Dresden
Dsseldorf THURINGIA
Cologne
Bonn
HESSE
PALATINATE
Mainz
Nuremberg
SAARLAND
BAVARIA
Stuttgart
BADEN -
WRTTEMBERG
Munich

- Belgium - 225

1997 1998 1999 2000 2001
Yr-on-yr growth (%) +0.1% +0.02% +0.2% +0.1% +0.2%

Bavaria 15.0% 175
Berlin 4.1% 3.800
Brandenburg 3.1% 88
Bremen 0.8% 1.632
Hamburg 2.1% 2.286
Hesse 7.4% 288
Saarland 1.3% 415
Saxony 5.3% 238
Thuringia 2.9% 149

Turks 26.6%
Yugoslavs 8.6%
Italians 8.4%
Greeks 5.0%
Poles 4.2%
Croats 3.1%
Americans 3.0%
Total 100%

- Belgium - 226
general, the German population is getting older. It can be estimated that 32% will

under 15 16.2% 14.8%
15-24 11.8% 10.8%
25-49 39.5% 35.9%
50-69 24.2% 23.8%
70+ 8.3% 14.8%
Total 100% 100%

2000


12% 4%
1 person
3 people 36%
15%
2 people
33%

- Belgium - 227
pick up.



1997 1998 1999 2000 2001 2002(e)
GDP (in bn) 1,840 1,876 1,915 1,970 1,981 1,984
GDP Growth (in %) +1.4 +2.0 +2.0 +2.9 +0.6 +0.2
GDP per capita () 22,400 22,800 23,300 23,900 24,100 24,100
Inflation (%) 1.5 0.6 0.6 1.9 2.5 1.3
Consumer 1,046 1,075 1,143 1,157 1,191 1,232
Expenditure (in bn)
Consumer +2.5 +2.8 +2.0 +1.9 +3.5 +0.9
Expenditure Growth
(%)
(%)
bn)
GDP Trend

- Belgium - 228
year.
Inflation
since 1999.

accommodation.


- Belgium - 229

and more fish.


- Belgium - 230



picked up.

- Belgium - 231
types of food.


- Belgium - 232



responsibility





- Belgium - 233


1. Convenience
young singles.
3. Ethnic Food
4. Health-conscious

- Belgium - 234
channels are used.
consumer.

- Belgium - 235
over recent years.





than discounters.

- Belgium - 236
ordering products.


chapter 2.2.1.

bn 2000 bn 2002 2000 2002
retail (<800sqm)
Hypermarkets (= 51.6 53.1 7,505 7,650
800sqm)
Discounters 20.8 22.9 9,760 10,055
Total 99.8 101.1 61,100 56,200


- Belgium - 237
able to compete.

- Belgium - 238
total cheese sales.
white line range.

- Belgium - 239

fresh products.

2.3 Private Label
in various fascia.
565m kg.

- Belgium - 240
products.


(Premium segment)
Erlenhof B-Brand
Ja! Discount brand
Butterfly
Marktkauf) products

- Belgium - 241
(Milfina, Desira).


- Belgium - 242
Payment


REWE within 30 days
Aldi within 30 days

brands etc.
Margins

- Belgium - 243


Logistics

in store.

- Belgium - 244
depots.
to all 297 stores.

- Belgium - 245
24.3 Retailer SWOT

food products)
(toom)
Listing procedure
product categories
products food halls
(superstores) or
discounters
(LIDL) categories
Germany

- Belgium - 246
Edeka / AVA
New-York-Ring 6
D - 22297 Hamburg

AVA-group.
50% to 16.6% in 6/02.
Austria.
Food retail split:


- Belgium - 247
Rewe
Rewe Zentral AG
Domstrae 20
D 50668 Kln

Food retail splits:

Aldi
this concept.

- Belgium - 248
Metro
Metro AG
Schlterstrae 41
40235 Dsseldorf

Lidl & Schwarz

Rtelstrae 30
D 74172 Neckarsulm

Food retail split:

outlets.

- Belgium - 249
Karstadt
D 45133 Essen


Edeka / AVA:
Rewe
Aldi
Metro
Lidl
Karstadt

- Belgium - 250
Methodology



(real,-) (Toom)
Cheese (Packed) 308 289 7 10 129 139
Yoghurt 273 177 - 4 133 105
Desserts 131 71 - 8 54 64
Dairy Drinks 96 98 - 1 28 36
UHT Milk 12 9 - - 9 9

similar.

- Belgium - 251
products.



(real,-) (Toom)
Cheese 1.19 1.09 0.99 1.05 1.35 1.39
(Packed)
Kraft,
Philadelphia,
200g
Yoghurt 0.35 0.35 0.34 0.25 0.45 0.39
Ehrmann Fruit
Yoghurt, 150g
Desserts 0.45 0.55 0.29 0.39 n.a. 0.55
Mller Rice
Pudding, 200g
Dairy Drinks 0.55 0.65 n.a. 0.44 0.69 0.75
Mller, Milk
Mix Drink,
500ml
UHT Milk n.a. 0.69 0.59 0.55 0.89 0.79
Schwlbchen,
1l, 3.5% fat

- Belgium - 252
27 The Market
bn).


billion kg of milk.




- Belgium - 253


in Germany.

cheese.

- Belgium - 254
2002 (Jan - Nov).
France and Russia.

- Belgium - 255

mouth disease.
and mouth disease.
products.
Cheese

- Belgium - 256
Packed Cheese
Deli-Counter Cheese
habits.
2. Creamy products
3. Fruit products
4. Convenience

- Belgium - 257
products.
6. Ingredients

of 7.8kg.
over recent years.
by 2010.

- Belgium - 258
sold by retailers.
litres per month.
competitive.

- Belgium - 259
27.3 Key Players

pack.
Soft Cheese


- Belgium - 260
targeted.

Cream Cheese

Processed Cheese
Feta


- Belgium - 261
and Nestl.
b) Yoghurts
Plain Yoghurts


- Belgium - 262
Fruit Yoghurts


products.

cholesterol diet.

- Belgium - 263
Low-Fat Yoghurts
of 11% (value).

c) Desserts


(desserts).

- Belgium - 264



(1999: +25%, 2000: 36%).

drinks).
Buttermilk
Kefir


- Belgium - 265
by value.

Drinking Yoghurt

Whey Drinks
well.

- Belgium - 266
e) UHT Milk




- Belgium - 267
27.4.1 Cheese
Packed Cheese
previous year.
Soft Cheese
Cream Cheese

- Belgium - 268
Processed Cheese

launched in 1999.
Grated Cheese
m. (+ 0.3%).
position.
Mozzarella


Semi-Hard Cheese
of total volume.

- Belgium - 269
Feta
Blue Cheese
Rotschmier Cheese
cheese.
Deli-Counter Cheese

packed cheese.


- Belgium - 270
counter).
Convenience
sliced cheese.
Light Products

particular area.
quark.

- Belgium - 271
Snacking

Soft Cheese 31% 23%
Feta 55% 43%
Total 42% 33%
Source: AC Nielsen

- Belgium - 272
Convenience
Snacking
Light Products
27.5 Yoghurt
Plain Yoghurts
Fruit Yoghurts
Low-Fat Yoghurts

- Belgium - 273
Pro-biotic Yoghurts

merge into one.
and 13.5% (value).

- Belgium - 274


- Belgium - 275
Dairy Desserts
Dairy Desserts with

Cream
Buttermilk Desserts
Semolina Desserts
Rice Pudding
55.3m.
55.3 m (-0.9%).

(turnover: -1.9% to 69.8 m).

- Belgium - 276



- Belgium - 277
Milk Drinks
Buttermilk
Kefir
Drinking Yoghurt
Whey



- Belgium - 278

Buttermilk
Kefir

product.

- Belgium - 279
Whey Drinks
a good example.
Additional:
Minerals,
Cereals etc.
Low-Fat Products
New Packaging
Solutions

- Belgium - 280
27.5.3 UHT Milk

labelled H-Milch.


Packaging
consumer.

- Belgium - 281
growing.

Lactofree.
Shelf Life

- Belgium - 282
Format
formats.
away.

Packaging

- Belgium - 283
the packaging.
net weight
share of fat (in %)
Green Dot

kj per 100g.
Legislation Issues
Deposit

many jobs.

- Belgium - 284
Example:
Heat treatment
Contents
Best before date

Address of producer
Net weight
EU dairy code
Green Dot

- Belgium - 285
27.7 SWOT Analysis





- Belgium - 286


(1) Nordmilch e.G.


butter to 50,482 t (259m).


- Belgium - 287


Germany.
(4) Alois Mller




- Belgium - 288
(8) Bayernland e.G.

(9) Omira Group

(10) Hochland AG

milk feta.
value.

- Belgium - 289
29.1.1 Cheese

expenditure.
category.

to be overcome.
29.1.4 UHT Milk

- Belgium - 290

a) Acquisition:

d) Direct to Retail

- Belgium - 291

products.


in Dover.
DAIRY PRODUCTS
- G E R M A N Y-
March 2003

- Belgium - 292
Food from Britain
22 Carlisle Street
London SW1P 1JA
Tel: 020 7233 5111
Fax: 020 7233 9515

- Belgium - 293
Table of Contents

defined.

defined.
not defined.


- Belgium - 294


defined.

- Belgium - 295

Germany
Language German
GDP (2001) 2,071 bn
Unemployment (2001) 4.225 m. (2002) = 10.1%

- Belgium - 296
30.2 Country Data
Map of Germany
WESTERN-POMERANIA
HOLSTEIN
BRANDENBURG
HAMBURG
BREMEN
LOWER BERLIN
SAXONY
SAXONY-
Hanover ANHALT
NORTH RHINE- SAXONY

WESTPHALIA
Erfurt Dresden
Dsseldorf THURINGIA
Cologne
Bonn
HESSE
PALATINATE
Mainz
Nuremberg
SAARLAND
BAVARIA
Stuttgart
BADEN -
WRTTEMBERG
Munich

- Belgium - 297

1997 1998 1999 2000 2001
Yr-on-yr growth (%) +0.1% +0.02% +0.2% +0.1% +0.2%

Bavaria 15.0% 175
Berlin 4.1% 3.800
Brandenburg 3.1% 88
Bremen 0.8% 1.632
Hamburg 2.1% 2.286
Hesse 7.4% 288
Saarland 1.3% 415
Saxony 5.3% 238
Thuringia 2.9% 149

Turks 26.6%
Yugoslavs 8.6%
Italians 8.4%
Greeks 5.0%
Poles 4.2%
Croats 3.1%
Americans 3.0%
Total 100%

- Belgium - 298

under 15 16.2% 14.8%
15-24 11.8% 10.8%
25-49 39.5% 35.9%
50-69 24.2% 23.8%
70+ 8.3% 14.8%
Total 100% 100%

2000


12% 4%
1 person
3 people 36%
15%
2 people
33%

- Belgium - 299
pick up.



1997 1998 1999 2000 2001 2002(e)
GDP (in bn) 1,840 1,876 1,915 1,970 1,981 1,984
GDP Growth (in %) +1.4 +2.0 +2.0 +2.9 +0.6 +0.2
GDP per capita () 22,400 22,800 23,300 23,900 24,100 24,100
Inflation (%) 1.5 0.6 0.6 1.9 2.5 1.3
Consumer 1,046 1,075 1,143 1,157 1,191 1,232
Expenditure (in bn)
Consumer +2.5 +2.8 +2.0 +1.9 +3.5 +0.9
Expenditure Growth
(%)
(%)
bn)
GDP Trend

- Belgium - 300
year.
Inflation
since 1999.

accommodation.


- Belgium - 301

and more fish.


- Belgium - 302



picked up.

- Belgium - 303
types of food.


- Belgium - 304



responsibility





- Belgium - 305


1. Convenience
young singles.
3. Ethnic Food
4. Health-conscious

- Belgium - 306
channels are used.
consumer.

- Belgium - 307
over recent years.





than discounters.

- Belgium - 308
ordering products.


chapter 2.2.1.

bn 2000 bn 2002 2000 2002
retail (<800sqm)
Hypermarkets (= 51.6 53.1 7,505 7,650
800sqm)
Discounters 20.8 22.9 9,760 10,055
Total 99.8 101.1 61,100 56,200


- Belgium - 309
able to compete.

- Belgium - 310
total cheese sales.
white line range.

- Belgium - 311

fresh products.

2.3 Private Label
in various fascia.
565m kg.

- Belgium - 312
products.


(Premium segment)
Erlenhof B-Brand
Ja! Discount brand
Butterfly
Marktkauf) products

- Belgium - 313
(Milfina, Desira).


- Belgium - 314
Payment


REWE within 30 days
Aldi within 30 days

brands etc.
Margins

- Belgium - 315


Logistics

in store.

- Belgium - 316
depots.
to all 297 stores.

- Belgium - 317
31.3 Retailer SWOT

food products)
(toom)
Listing procedure
product categories
products food halls
(superstores) or
discounters
(LIDL) categories
Germany

- Belgium - 318
Edeka / AVA
New-York-Ring 6
D - 22297 Hamburg

AVA-group.
50% to 16.6% in 6/02.
Austria.
Food retail split:


- Belgium - 319
Rewe
Rewe Zentral AG
Domstrae 20
D 50668 Kln

Food retail splits:

Aldi
this concept.

- Belgium - 320
Metro
Metro AG
Schlterstrae 41
40235 Dsseldorf

Lidl & Schwarz

Rtelstrae 30
D 74172 Neckarsulm

Food retail split:

outlets.

- Belgium - 321
Karstadt
D 45133 Essen


Edeka / AVA:
Rewe
Aldi
Metro
Lidl
Karstadt

- Belgium - 322
Methodology



(real,-) (Toom)
Cheese (Packed) 308 289 7 10 129 139
Yoghurt 273 177 - 4 133 105
Desserts 131 71 - 8 54 64
Dairy Drinks 96 98 - 1 28 36
UHT Milk 12 9 - - 9 9

similar.

- Belgium - 323
products.



(real,-) (Toom)
Cheese 1.19 1.09 0.99 1.05 1.35 1.39
(Packed)
Kraft,
Philadelphia,
200g
Yoghurt 0.35 0.35 0.34 0.25 0.45 0.39
Ehrmann Fruit
Yoghurt, 150g
Desserts 0.45 0.55 0.29 0.39 n.a. 0.55
Mller Rice
Pudding, 200g
Dairy Drinks 0.55 0.65 n.a. 0.44 0.69 0.75
Mller, Milk
Mix Drink,
500ml
UHT Milk n.a. 0.69 0.59 0.55 0.89 0.79
Schwlbchen,
1l, 3.5% fat

- Belgium - 324
34 The Market
bn).


billion kg of milk.




- Belgium - 325


in Germany.

cheese.

- Belgium - 326
2002 (Jan - Nov).
France and Russia.

- Belgium - 327

mouth disease.
and mouth disease.
products.
Cheese

- Belgium - 328
Packed Cheese
Deli-Counter Cheese
habits.
2. Creamy products
3. Fruit products
4. Convenience

- Belgium - 329
products.
6. Ingredients

of 7.8kg.
over recent years.
by 2010.

- Belgium - 330
sold by retailers.
litres per month.
competitive.

- Belgium - 331
34.3 Key Players

pack.
Soft Cheese


- Belgium - 332
targeted.

Cream Cheese

Processed Cheese
Feta


- Belgium - 333
and Nestl.
b) Yoghurts
Plain Yoghurts


- Belgium - 334
Fruit Yoghurts


products.

cholesterol diet.

- Belgium - 335
Low-Fat Yoghurts
of 11% (value).

c) Desserts


(desserts).

- Belgium - 336



(1999: +25%, 2000: 36%).

drinks).
Buttermilk
Kefir


- Belgium - 337
by value.

Drinking Yoghurt

Whey Drinks
well.

- Belgium - 338
e) UHT Milk




- Belgium - 339
34.4.1 Cheese
Packed Cheese
previous year.
Soft Cheese
Cream Cheese

- Belgium - 340
Processed Cheese

launched in 1999.
Grated Cheese
m. (+ 0.3%).
position.
Mozzarella


Semi-Hard Cheese
of total volume.

- Belgium - 341
Feta
Blue Cheese
Rotschmier Cheese
cheese.
Deli-Counter Cheese

packed cheese.


- Belgium - 342
counter).
Convenience
sliced cheese.
Light Products

particular area.
quark.

- Belgium - 343
Snacking

Soft Cheese 31% 23%
Feta 55% 43%
Total 42% 33%
Source: AC Nielsen

- Belgium - 344
Convenience
Snacking
Light Products
34.5 Yoghurt
Plain Yoghurts
Fruit Yoghurts
Low-Fat Yoghurts

- Belgium - 345
Pro-biotic Yoghurts

merge into one.
and 13.5% (value).

- Belgium - 346


- Belgium - 347
Dairy Desserts
Dairy Desserts with

Cream
Buttermilk Desserts
Semolina Desserts
Rice Pudding
55.3m.
55.3 m (-0.9%).

(turnover: -1.9% to 69.8 m).

- Belgium - 348



- Belgium - 349
Milk Drinks
Buttermilk
Kefir
Drinking Yoghurt
Whey



- Belgium - 350

Buttermilk
Kefir

product.

- Belgium - 351
Whey Drinks
a good example.
Additional:
Minerals,
Cereals etc.
Low-Fat Products
New Packaging
Solutions

- Belgium - 352
34.5.3 UHT Milk

labelled H-Milch.


Packaging
consumer.

- Belgium - 353
growing.

Lactofree.
Shelf Life

- Belgium - 354
Format
formats.
away.

Packaging

- Belgium - 355
the packaging.
net weight
share of fat (in %)
Green Dot

kj per 100g.
Legislation Issues
Deposit

many jobs.

- Belgium - 356
Example:
Heat treatment
Contents
Best before date

Address of producer
Net weight
EU dairy code
Green Dot

- Belgium - 357
34.7 SWOT Analysis





- Belgium - 358


(1) Nordmilch e.G.


butter to 50,482 t (259m).


- Belgium - 359


Germany.
(4) Alois Mller




- Belgium - 360
(8) Bayernland e.G.

(9) Omira Group

(10) Hochland AG

milk feta.
value.

- Belgium - 361
36.1.1 Cheese

expenditure.
category.

to be overcome.
36.1.4 UHT Milk

- Belgium - 362

a) Acquisition:

d) Direct to Retail

- Belgium - 363

products.


in Dover.
DAIRY PRODUCTS
- G E R M A N Y-
March 2003

- Belgium - 364
Food from Britain
22 Carlisle Street
London SW1P 1JA
Tel: 020 7233 5111
Fax: 020 7233 9515

- Belgium - 365
Table of Contents

defined.

defined.
not defined.


- Belgium - 366


defined.

- Belgium - 367

Germany
Language German
GDP (2001) 2,071 bn
Unemployment (2001) 4.225 m. (2002) = 10.1%

- Belgium - 368
37.2 Country Data
Map of Germany
WESTERN-POMERANIA
HOLSTEIN
BRANDENBURG
HAMBURG
BREMEN
LOWER BERLIN
SAXONY
SAXONY-
Hanover ANHALT
NORTH RHINE- SAXONY

WESTPHALIA
Erfurt Dresden
Dsseldorf THURINGIA
Cologne
Bonn
HESSE
PALATINATE
Mainz
Nuremberg
SAARLAND
BAVARIA
Stuttgart
BADEN -
WRTTEMBERG
Munich

- Belgium - 369

1997 1998 1999 2000 2001
Yr-on-yr growth (%) +0.1% +0.02% +0.2% +0.1% +0.2%

Bavaria 15.0% 175
Berlin 4.1% 3.800
Brandenburg 3.1% 88
Bremen 0.8% 1.632
Hamburg 2.1% 2.286
Hesse 7.4% 288
Saarland 1.3% 415
Saxony 5.3% 238
Thuringia 2.9% 149

Turks 26.6%
Yugoslavs 8.6%
Italians 8.4%
Greeks 5.0%
Poles 4.2%
Croats 3.1%
Americans 3.0%
Total 100%

- Belgium - 370

under 15 16.2% 14.8%
15-24 11.8% 10.8%
25-49 39.5% 35.9%
50-69 24.2% 23.8%
70+ 8.3% 14.8%
Total 100% 100%

2000


12% 4%
1 person
3 people 36%
15%
2 people
33%

- Belgium - 371
pick up.



1997 1998 1999 2000 2001 2002(e)
GDP (in bn) 1,840 1,876 1,915 1,970 1,981 1,984
GDP Growth (in %) +1.4 +2.0 +2.0 +2.9 +0.6 +0.2
GDP per capita () 22,400 22,800 23,300 23,900 24,100 24,100
Inflation (%) 1.5 0.6 0.6 1.9 2.5 1.3
Consumer 1,046 1,075 1,143 1,157 1,191 1,232
Expenditure (in bn)
Consumer +2.5 +2.8 +2.0 +1.9 +3.5 +0.9
Expenditure Growth
(%)
(%)
bn)
GDP Trend

- Belgium - 372
year.
Inflation
since 1999.

accommodation.


- Belgium - 373

and more fish.


- Belgium - 374



picked up.

- Belgium - 375
types of food.


- Belgium - 376



responsibility





- Belgium - 377


1. Convenience
young singles.
3. Ethnic Food
4. Health-conscious

- Belgium - 378
channels are used.
consumer.

- Belgium - 379
over recent years.





than discounters.

- Belgium - 380
ordering products.


chapter 2.2.1.

bn 2000 bn 2002 2000 2002
retail (<800sqm)
Hypermarkets (= 51.6 53.1 7,505 7,650
800sqm)
Discounters 20.8 22.9 9,760 10,055
Total 99.8 101.1 61,100 56,200


- Belgium - 381
able to compete.

- Belgium - 382
total cheese sales.
white line range.

- Belgium - 383

fresh products.

2.3 Private Label
in various fascia.
565m kg.

- Belgium - 384
products.


(Premium segment)
Erlenhof B-Brand
Ja! Discount brand
Butterfly
Marktkauf) products

- Belgium - 385
(Milfina, Desira).


- Belgium - 386
Payment


REWE within 30 days
Aldi within 30 days

brands etc.
Margins

- Belgium - 387


Logistics

in store.

- Belgium - 388
depots.
to all 297 stores.

- Belgium - 389
38.3 Retailer SWOT

food products)
(toom)
Listing procedure
product categories
products food halls
(superstores) or
discounters
(LIDL) categories
Germany

- Belgium - 390
Edeka / AVA
New-York-Ring 6
D - 22297 Hamburg

AVA-group.
50% to 16.6% in 6/02.
Austria.
Food retail split:


- Belgium - 391
Rewe
Rewe Zentral AG
Domstrae 20
D 50668 Kln

Food retail splits:

Aldi
this concept.

- Belgium - 392
Metro
Metro AG
Schlterstrae 41
40235 Dsseldorf

Lidl & Schwarz

Rtelstrae 30
D 74172 Neckarsulm

Food retail split:

outlets.

- Belgium - 393
Karstadt
D 45133 Essen


Edeka / AVA:
Rewe
Aldi
Metro
Lidl
Karstadt

- Belgium - 394
Methodology



(real,-) (Toom)
Cheese (Packed) 308 289 7 10 129 139
Yoghurt 273 177 - 4 133 105
Desserts 131 71 - 8 54 64
Dairy Drinks 96 98 - 1 28 36
UHT Milk 12 9 - - 9 9

similar.

- Belgium - 395
products.



(real,-) (Toom)
Cheese 1.19 1.09 0.99 1.05 1.35 1.39
(Packed)
Kraft,
Philadelphia,
200g
Yoghurt 0.35 0.35 0.34 0.25 0.45 0.39
Ehrmann Fruit
Yoghurt, 150g
Desserts 0.45 0.55 0.29 0.39 n.a. 0.55
Mller Rice
Pudding, 200g
Dairy Drinks 0.55 0.65 n.a. 0.44 0.69 0.75
Mller, Milk
Mix Drink,
500ml
UHT Milk n.a. 0.69 0.59 0.55 0.89 0.79
Schwlbchen,
1l, 3.5% fat

- Belgium - 396
41 The Market
bn).


billion kg of milk.




- Belgium - 397


in Germany.

cheese.

- Belgium - 398
2002 (Jan - Nov).
France and Russia.

- Belgium - 399

mouth disease.
and mouth disease.
products.
Cheese

- Belgium - 400
Packed Cheese
Deli-Counter Cheese
habits.
2. Creamy products
3. Fruit products
4. Convenience

- Belgium - 401
products.
6. Ingredients

of 7.8kg.
over recent years.
by 2010.

- Belgium - 402
sold by retailers.
litres per month.
competitive.

- Belgium - 403
41.3 Key Players

pack.
Soft Cheese


- Belgium - 404
targeted.

Cream Cheese

Processed Cheese
Feta


- Belgium - 405
and Nestl.
b) Yoghurts
Plain Yoghurts


- Belgium - 406
Fruit Yoghurts


products.

cholesterol diet.

- Belgium - 407
Low-Fat Yoghurts
of 11% (value).

c) Desserts


(desserts).

- Belgium - 408



(1999: +25%, 2000: 36%).

drinks).
Buttermilk
Kefir


- Belgium - 409
by value.

Drinking Yoghurt

Whey Drinks
well.

- Belgium - 410
e) UHT Milk




- Belgium - 411
41.4.1 Cheese
Packed Cheese
previous year.
Soft Cheese
Cream Cheese

- Belgium - 412
Processed Cheese

launched in 1999.
Grated Cheese
m. (+ 0.3%).
position.
Mozzarella


Semi-Hard Cheese
of total volume.

- Belgium - 413
Feta
Blue Cheese
Rotschmier Cheese
cheese.
Deli-Counter Cheese

packed cheese.


- Belgium - 414
counter).
Convenience
sliced cheese.
Light Products

particular area.
quark.

- Belgium - 415
Snacking

Soft Cheese 31% 23%
Feta 55% 43%
Total 42% 33%
Source: AC Nielsen

- Belgium - 416
Convenience
Snacking
Light Products
41.5 Yoghurt
Plain Yoghurts
Fruit Yoghurts
Low-Fat Yoghurts

- Belgium - 417
Pro-biotic Yoghurts

merge into one.
and 13.5% (value).

- Belgium - 418


- Belgium - 419
Dairy Desserts
Dairy Desserts with

Cream
Buttermilk Desserts
Semolina Desserts
Rice Pudding
55.3m.
55.3 m (-0.9%).

(turnover: -1.9% to 69.8 m).

- Belgium - 420



- Belgium - 421
Milk Drinks
Buttermilk
Kefir
Drinking Yoghurt
Whey



- Belgium - 422

Buttermilk
Kefir

product.

- Belgium - 423
Whey Drinks
a good example.
Additional:
Minerals,
Cereals etc.
Low-Fat Products
New Packaging
Solutions

- Belgium - 424
41.5.3 UHT Milk

labelled H-Milch.


Packaging
consumer.

- Belgium - 425
growing.

Lactofree.
Shelf Life

- Belgium - 426
Format
formats.
away.

Packaging

- Belgium - 427
the packaging.
net weight
share of fat (in %)
Green Dot

kj per 100g.
Legislation Issues
Deposit

many jobs.

- Belgium - 428
Example:
Heat treatment
Contents
Best before date

Address of producer
Net weight
EU dairy code
Green Dot

- Belgium - 429
41.7 SWOT Analysis





- Belgium - 430


(1) Nordmilch e.G.


butter to 50,482 t (259m).


- Belgium - 431


Germany.
(4) Alois Mller




- Belgium - 432
(8) Bayernland e.G.

(9) Omira Group

(10) Hochland AG

milk feta.
value.

- Belgium - 433
43.1.1 Cheese

expenditure.
category.

to be overcome.
43.1.4 UHT Milk

- Belgium - 434

a) Acquisition:

d) Direct to Retail

- Belgium - 435

products.


in Dover.
DAIRY PRODUCTS
- G E R M A N Y-
March 2003

- Belgium - 436
Food from Britain
22 Carlisle Street
London SW1P 1JA
Tel: 020 7233 5111
Fax: 020 7233 9515

- Belgium - 437
Table of Contents

defined.

defined.
not defined.


- Belgium - 438


defined.

- Belgium - 439

Germany
Language German
GDP (2001) 2,071 bn
Unemployment (2001) 4.225 m. (2002) = 10.1%

- Belgium - 440
44.2 Country Data
Map of Germany
WESTERN-POMERANIA
HOLSTEIN
BRANDENBURG
HAMBURG
BREMEN
LOWER BERLIN
SAXONY
SAXONY-
Hanover ANHALT
NORTH RHINE- SAXONY

WESTPHALIA
Erfurt Dresden
Dsseldorf THURINGIA
Cologne
Bonn
HESSE
PALATINATE
Mainz
Nuremberg
SAARLAND
BAVARIA
Stuttgart
BADEN -
WRTTEMBERG
Munich

- Belgium - 441

1997 1998 1999 2000 2001
Yr-on-yr growth (%) +0.1% +0.02% +0.2% +0.1% +0.2%

Bavaria 15.0% 175
Berlin 4.1% 3.800
Brandenburg 3.1% 88
Bremen 0.8% 1.632
Hamburg 2.1% 2.286
Hesse 7.4% 288
Saarland 1.3% 415
Saxony 5.3% 238
Thuringia 2.9% 149

Turks 26.6%
Yugoslavs 8.6%
Italians 8.4%
Greeks 5.0%
Poles 4.2%
Croats 3.1%
Americans 3.0%
Total 100%

- Belgium - 442

under 15 16.2% 14.8%
15-24 11.8% 10.8%
25-49 39.5% 35.9%
50-69 24.2% 23.8%
70+ 8.3% 14.8%
Total 100% 100%

2000


12% 4%
1 person
3 people 36%
15%
2 people
33%

- Belgium - 443
pick up.



1997 1998 1999 2000 2001 2002(e)
GDP (in bn) 1,840 1,876 1,915 1,970 1,981 1,984
GDP Growth (in %) +1.4 +2.0 +2.0 +2.9 +0.6 +0.2
GDP per capita () 22,400 22,800 23,300 23,900 24,100 24,100
Inflation (%) 1.5 0.6 0.6 1.9 2.5 1.3
Consumer 1,046 1,075 1,143 1,157 1,191 1,232
Expenditure (in bn)
Consumer +2.5 +2.8 +2.0 +1.9 +3.5 +0.9
Expenditure Growth
(%)
(%)
bn)
GDP Trend

- Belgium - 444
year.
Inflation
since 1999.

accommodation.


- Belgium - 445

and more fish.


- Belgium - 446



picked up.

- Belgium - 447
types of food.


- Belgium - 448



responsibility





- Belgium - 449


1. Convenience
young singles.
3. Ethnic Food
4. Health-conscious

- Belgium - 450
channels are used.
consumer.

- Belgium - 451
over recent years.





than discounters.

- Belgium - 452
ordering products.


chapter 2.2.1.

bn 2000 bn 2002 2000 2002
retail (<800sqm)
Hypermarkets (= 51.6 53.1 7,505 7,650
800sqm)
Discounters 20.8 22.9 9,760 10,055
Total 99.8 101.1 61,100 56,200


- Belgium - 453
able to compete.

- Belgium - 454
total cheese sales.
white line range.

- Belgium - 455

fresh products.

2.3 Private Label
in various fascia.
565m kg.

- Belgium - 456
products.


(Premium segment)
Erlenhof B-Brand
Ja! Discount brand
Butterfly
Marktkauf) products

- Belgium - 457
(Milfina, Desira).


- Belgium - 458
Payment


REWE within 30 days
Aldi within 30 days

brands etc.
Margins

- Belgium - 459


Logistics

in store.

- Belgium - 460
depots.
to all 297 stores.

- Belgium - 461
45.3 Retailer SWOT

food products)
(toom)
Listing procedure
product categories
products food halls
(superstores) or
discounters
(LIDL) categories
Germany

- Belgium - 462
Edeka / AVA
New-York-Ring 6
D - 22297 Hamburg

AVA-group.
50% to 16.6% in 6/02.
Austria.
Food retail split:


- Belgium - 463
Rewe
Rewe Zentral AG
Domstrae 20
D 50668 Kln

Food retail splits:

Aldi
this concept.

- Belgium - 464
Metro
Metro AG
Schlterstrae 41
40235 Dsseldorf

Lidl & Schwarz

Rtelstrae 30
D 74172 Neckarsulm

Food retail split:

outlets.

- Belgium - 465
Karstadt
D 45133 Essen


Edeka / AVA:
Rewe
Aldi
Metro
Lidl
Karstadt

- Belgium - 466
Methodology



(real,-) (Toom)
Cheese (Packed) 308 289 7 10 129 139
Yoghurt 273 177 - 4 133 105
Desserts 131 71 - 8 54 64
Dairy Drinks 96 98 - 1 28 36
UHT Milk 12 9 - - 9 9

similar.

- Belgium - 467
products.



(real,-) (Toom)
Cheese 1.19 1.09 0.99 1.05 1.35 1.39
(Packed)
Kraft,
Philadelphia,
200g
Yoghurt 0.35 0.35 0.34 0.25 0.45 0.39
Ehrmann Fruit
Yoghurt, 150g
Desserts 0.45 0.55 0.29 0.39 n.a. 0.55
Mller Rice
Pudding, 200g
Dairy Drinks 0.55 0.65 n.a. 0.44 0.69 0.75
Mller, Milk
Mix Drink,
500ml
UHT Milk n.a. 0.69 0.59 0.55 0.89 0.79
Schwlbchen,
1l, 3.5% fat

- Belgium - 468
48 The Market
bn).


billion kg of milk.




- Belgium - 469


in Germany.

cheese.

- Belgium - 470
2002 (Jan - Nov).
France and Russia.

- Belgium - 471

mouth disease.
and mouth disease.
products.
Cheese

- Belgium - 472
Packed Cheese
Deli-Counter Cheese
habits.
2. Creamy products
3. Fruit products
4. Convenience

- Belgium - 473
products.
6. Ingredients

of 7.8kg.
over recent years.
by 2010.

- Belgium - 474
sold by retailers.
litres per month.
competitive.

- Belgium - 475
48.3 Key Players

pack.
Soft Cheese


- Belgium - 476
targeted.

Cream Cheese

Processed Cheese
Feta


- Belgium - 477
and Nestl.
b) Yoghurts
Plain Yoghurts


- Belgium - 478
Fruit Yoghurts


products.

cholesterol diet.

- Belgium - 479
Low-Fat Yoghurts
of 11% (value).

c) Desserts


(desserts).

- Belgium - 480



(1999: +25%, 2000: 36%).

drinks).
Buttermilk
Kefir


- Belgium - 481
by value.

Drinking Yoghurt

Whey Drinks
well.

- Belgium - 482
e) UHT Milk




- Belgium - 483
48.4.1 Cheese
Packed Cheese
previous year.
Soft Cheese
Cream Cheese

- Belgium - 484
Processed Cheese

launched in 1999.
Grated Cheese
m. (+ 0.3%).
position.
Mozzarella


Semi-Hard Cheese
of total volume.

- Belgium - 485
Feta
Blue Cheese
Rotschmier Cheese
cheese.
Deli-Counter Cheese

packed cheese.


- Belgium - 486
counter).
Convenience
sliced cheese.
Light Products

particular area.
quark.

- Belgium - 487
Snacking

Soft Cheese 31% 23%
Feta 55% 43%
Total 42% 33%
Source: AC Nielsen

- Belgium - 488
Convenience
Snacking
Light Products
48.5 Yoghurt
Plain Yoghurts
Fruit Yoghurts
Low-Fat Yoghurts

- Belgium - 489
Pro-biotic Yoghurts

merge into one.
and 13.5% (value).

- Belgium - 490


- Belgium - 491
Dairy Desserts
Dairy Desserts with

Cream
Buttermilk Desserts
Semolina Desserts
Rice Pudding
55.3m.
55.3 m (-0.9%).

(turnover: -1.9% to 69.8 m).

- Belgium - 492



- Belgium - 493
Milk Drinks
Buttermilk
Kefir
Drinking Yoghurt
Whey



- Belgium - 494

Buttermilk
Kefir

product.

- Belgium - 495
Whey Drinks
a good example.
Additional:
Minerals,
Cereals etc.
Low-Fat Products
New Packaging
Solutions

- Belgium - 496
48.5.3 UHT Milk

labelled H-Milch.


Packaging
consumer.

- Belgium - 497
growing.

Lactofree.
Shelf Life

- Belgium - 498
Format
formats.
away.

Packaging

- Belgium - 499
the packaging.
net weight
share of fat (in %)
Green Dot

kj per 100g.
Legislation Issues
Deposit

many jobs.

- Belgium - 500
Example:
Heat treatment
Contents
Best before date

Address of producer
Net weight
EU dairy code
Green Dot

- Belgium - 501
48.7 SWOT Analysis





- Belgium - 502


(1) Nordmilch e.G.


butter to 50,482 t (259m).


- Belgium - 503


Germany.
(4) Alois Mller




- Belgium - 504
(8) Bayernland e.G.

(9) Omira Group

(10) Hochland AG

milk feta.
value.

- Belgium - 505
50.1.1 Cheese

expenditure.
category.

to be overcome.
50.1.4 UHT Milk

- Belgium - 506

a) Acquisition:

d) Direct to Retail

- Belgium - 507

products.


in Dover.

- Belgium - 508

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OPPORTUNITIES FOR UK

Food from Britain

Opportunities for UK Dairy Producers Food from Britain

1 THE OVERALL MARKET .................................................................. 76

2 OVERVIEW OF THE RETAIL MARKET............................................... 83

3 RETAILER PROFILES ..................................................................... 92

4 RETAIL STORE CHECKS ................................................................. 97

Opportunities for UK Dairy Producers Food from Britain

Food from Britain

Opportunities for UK Dairy Producers Food from Britain

Note: all Charts are in the Appendix

1 THE OVERALL MARKET .................................................................. 14

Opportunities for UK Dairy Producers Food from Britain

HORECA (HOTEL, RESTAURANT AND CAF) HOLD A SHARE OF 4.9%,

9 OVERVIEW OF THE RETAIL MARKET............................................... 91

Opportunities for UK Dairy Producers Food from Britain

Opportunities for UK Dairy Producers Food from Britain

20 THE MARKET............................................................................ 181

Opportunities for UK Dairy Producers Food from Britain

27 THE MARKET............................................................................ 253

Opportunities for UK Dairy Producers Food from Britain

34 THE MARKET............................................................................ 325

Opportunities for UK Dairy Producers Food from Britain

Opportunities for UK Dairy Producers Food from Britain

41 THE MARKET............................................................................ 397

Opportunities for UK Dairy Producers Food from Britain

48 THE MARKET............................................................................ 469

Opportunities for UK Dairy Producers Food from Britain

Opportunities for UK Dairy Producers Food from Britain

1.1 Country Fact Sheet

Land area 357,028 km2

Population (2001) 82.44 m / increase of 0.2% vs. 2000

Inhabitants per km 231 per km2

Capital Berlin (3.4 m inhabitants)

Currency Euro (since 01/01/2002)

Exchange Rate (2002 annual average) 1 = 1.5840, 1 = US$1.0534

VAT on food products 7% VAT

GDP (2001) 2,071 bn

GDP growth rate (2001) + 0.6%

Unemployment (2001) 4.225 m. (2002) = 10.1%

International status The worlds third largest economy

Total food and drink turnover (2001) 153.8 bn

No. of grocery stores (2001) 56,200

UK food and drink exports (2001) 534 m.

Opportunities for UK Dairy Producers Food from Britain

NORTH RHINE- SAXONY

Opportunities for UK Dairy Producers Food from Britain

1.3.1 Total Population and Growth

Germany: Population Growth, 1997-2001

Germany: Population by Region, 2001

Germany: Population by Ethnic Group, 2001

Opportunities for UK Dairy Producers Food from Britain

Germany: Population per Age Group, 2000

1.3.2 Household Composition

Germany: Households Development, 2000

In 1900, 44% of households consisted of 5 or more people. In 2000, only 4.4% of

Germany: Distribution of Household Size, 2000

4 people 5 or more people

Source: Statistisches Bundesamt

Opportunities for UK Dairy Producers Food from Britain

1.4.1 Economic Overview

The domestic economy is further characterised by continued investment

Germany continues to adhere to the goal of attaining a balanced public budget by