January 22, 2015
Andrea Illy: "The massive consolidation in the global coffee segment doesn't worry us a bean"
Elegant and sophisticated, without palpable vanity; scrupulously polite, yet not stiff and formal; eloquent, but not glib – Andrea Illy has exactly the right blend to be the testimonial of the super-premium coffee brand he represents. The Chairman & CEO of Trieste-based family company illycaffè is a formidable marketer and exudes the quiet confidence of a man who knows his product is on the global up. Germans love their coffee with foamed, creamy milk; Americans like it black and weak; Italians prefer extra-strong espresso and ristretto; but one thing is for sure: the human race is becoming ever more addicted to the "black gold". The aspirational lifestyle trend associated with coffee is percolating through mature western markets to consumers in emerging economies with a growing thirst for a hit of caffeine. Given that only one in five of the world's population drinks coffee, global sales could double within the next generation. Around 2bn coffee capsules were sold in Germany alone last year, and a conservative estimate by the German Coffee Federation points to annual local growth of 10 to 20 per cent. Need one wonder why Andrea Illy is increasingly enjoying his visits to this country?
January 15, 2015
Rating Agencies: Only good corporate boys and girls get a good report
Given the intense criticism the industry underwent in the wake of the global financial crisis, ratings agencies are disappointingly discreet. This may please corporate clients, but it is frustrating for journalists who make a living out of other people's indiscretions. When cornered, ratings analysts will politely refer to "regulatory requirements". Even loaded questions, such as "How can you rate Douglas now that it no longer publishes financial statements?" or "How would you rate Tesco if it sold its operations in Eastern Europe?", are skilfully fielded. The inscrutable answers will vary from "we meet our clients regularly" to "we aren't allowed to tell clients what they should do" or, most fatal of all, "on the one hand…on the other…". So what then are these guys good for? S&P publicly rates 46 retailers and restaurants across Europe, Russia and Africa. This puts them in pole position to review the state of the industry. A recent roadshow in Frankfurt reveals how they view the retail world and their weather forecast for the trade this year.
December 27, 2014
Through the glass, darkly: A guru scans the horizon in search of enlightenment
The delightful 19th century German humourist Wilhelm Busch once said: "First things happen differently and then differently from what one would have thought." The fact that nearly everything turns out otherwise than previously expected makes most people loath to second-guess the future. But on the positive side, the world belongs to those who can anticipate a trend. At least the experts making a prediction on these pages have the courage of their convictions, and we salute their bravery. The opinions of these intrepid sages are given below in alphabetical order of surname. International authorities from a broad range of trade-related fields were asked: "What do you see as the most exciting development in retailing/the fmcg industry and the most important challenge for the future?"
December 22, 2014
Equal opportunities: A level playing field for working girls?
It has taken light years to see the light, but perhaps Germany's macho retail management culture is about to open its testosterone-fuelled bastion to womankind. Seen in isolation, the nomination of Gabriele Wolff to the main Board of German discounter Schwarz Group as from March 1 next year could be interpreted as a well-deserved promotion for a female exec on a steep career path. After all, Wolff (57) has been at the helm of hypermarket subsidiary Kaufland for many years and a key driver behind its formidable success story. But Ms Wolff is the first woman to enter the power centre of what has long been an exclusively male club. It might also be pure coincidence that only a few days ago Gwynn Burr (51), a former executive manager at UK grocer Sainsbury's, succeeded Baroness Lucy Neville-Rolfe on the Supervisory Board of Metro Group. Had both ladies been men, this would have been standard procedure. But former Tesco board member Neville-Rolfe's brief guest appearance as a woman in the top echelon of a major German retailer was about as normal an occurrence as a shooting star.
December 18, 2014
"The global growth prospects for our company are very promising"
As John Kennedy, President Europe of global spirits giant Diageo, starts to pack his bags for a Christmas skiing holiday in St. Anton, he fully intends to celebrate with a glass or two of Cîroc vodka. Any hard-working exec may have a festive drink with family and friends. But, given the sober challenges posed within his specific liquor fief, you might have expected this one to be drowning his sorrows rather than chinking glasses. After all, the man has quite a cocktail to mix. Southern Europe, where the UK distiller's sales have been declining for five years, still suffers from a bad hangover after the financial crisis binge. Even in Western Europe Kennedy faces a conundrum familiar to many other global brand managers: How to rekindle growth on mature markets? And the addition of Uncle Vlad's Russia to his already huge responsibilities this summer might be interpreted as a very mixed blessing. So why does the 49-year-old Irish-American, who shares both a name and a New England accent with the former US president, see his glass as half full and not half empty?
December 11, 2014
The condemned live longer: Facebook execs Choi and Hunter look fit and healthy
It's not every day that you have guests from California, when one works in Frankfurt. They certainly don't come for the sun, the laid-back people or the slow, courteous drivers. And somehow the River Main does not compare with the Big Sur. When these long-haul travellers are from Facebook, one is a little puzzled. What could Erin Hunter and Jin Choi, with the zippy job titles Global Head FMCG & CPG Strategy viz. Industry Leader FMCG & Retail D-A-CH, possibly want from a German B2B newspaper? The purpose of their visit could hardly be to make the social media giant better known. After all, its 1.3bn active users continue to network relentlessly and to inform their online "friends" across the planet about their favourite pop star or sausage. At any rate, the talk with the slick delegation from Silicon Valley got off to a good start. Our sister rag "Horizont" had just interviewed Saatchi & Saatchi CEO Kevin Roberts. His controversial statement, "Facebook won't exist in three years' time", was blazoned for all to see on the big electronic screen in the entrance hall of our publishing company.
December 4, 2014
We are amused: Success at Coles makes for a happy manager
Strewth, blimey cobber! An offer to interview a top exec at an Ozzie retailer in the middle of Germany is about as unlikely as meeting a kangaroo or a dingo on the way to work. But like many surprises from the Lucky Country, this one had a logical reason and a seam of gold. Ian McLeod, Group Commercial Director of Australian conglomerate Wesfarmers Group, was speaking at this year's German Retail Congress in Berlin. Evidently McLeod thought that after a meeting with Angela Merkel etc., he would do well to curry favour with the local gentry and talk with our newspaper. We didn't need to be asked twice. During McLeod's six-year tenure as MD of Wesfarmers supermarket subsidiary Coles until this July, earnings more than doubled. With some help from Boston Consulting Group, he masterminded a major turnaround at the country's second-largest retailer, despite fierce competition from the likes of Woolworths, Aldi and Costco. McLeod spent most of his earlier career with Asda where he was a member of the Management Board and the Executive Board of Wal-Mart Germany. This, then, is a man with a tale to tell.
November 20, 2014
While you were sleeping: RetailUpdate reveals what the global trade has been up to over the last 24 hours
Loyal followers of German Retail Blog can't say we never try to surprise. On Tuesday we mailed you the first edition of RetailUpdate, our new English newsletter, just to see if you are on your toes and wide awake. As the name suggests, this free information product will update subscribers on the latest international retail news, while also covering the consumer goods industry. The service will be provided weekdays between approximately 8 a.m. and 9 a.m. Central European Time. The newsletter is essentially compiled by our international staff in New Zealand while most of Europe is asleep. The result of these efforts Down Under is a global news review for the first coffee in the office or for those sensible people who prefer breakfast in bed.
October 30, 2014
Martin Sorrell: "Even German food retail customers like brands"
We are living in a world awash with products. The global economy is generally sluggish; own label is on the rise in ever more fmcg categories; and the digital revolution continues to fragment the traditional media landscape. What then is the status of the brand? As parents of little children will confirm, the simplest questions are usually the hardest to answer. Put this question to an academic and he will bore the pants off you, ask a consumer goods manufacturer and you will be ladled with PR. Some cultural philosophers regard brands as lodestars providing shoppers adrift on a sea of information with points to steer by. Others even claim that premium brands have replaced religion in our modern consumerist world. But even agnostics might jib at the idea of Coke as a spiritual substitute for Jesus. Who then can one ask?
October 16, 2014
Happy tools specialist: Ian Cheshire (centre) opens Screwfix's first foreign store in Germany
Wake up German home improvement retailers, the Brits have come! Kingfisher Chief Group Executive Sir Ian Cheshire clearly believes that "Screwfix" has a good chance of success in Europe's richest country. Only four of these small 600m² to 1,000m² outlets opened in the Rhine-Main area on September 10, but they could be the thin edge of a very thick wedge. Along with French subsidiary Brico Dépôt, Cheshire clearly wishes the multi-channel concept to spearhead his international plans. Kingfisher, probably better known for its B&Q Big Box outlets, is already active in ten countries, including China, Russia and Turkey. Nearly half of group earnings are, however, achieved in France via the Castorama and Brico Dépôt banners, which Kingfisher hopes to supplement by the acquisition of Mr.Bricolage. With annual revenues last year of around €14bn, net cash in excess of €630m, and a stock market valuation that has more than doubled under Cheshire's tenure as CEO since 2008, the London-based plc is in an excellent position to invest further in western Europe. But why start the internationalisation of Screwfix on one of the world's hardest markets?