Recent developments in (European) food distribution

The European food market is saturated, competitive and experiences only little growth. On this highly developed market, the fight for market shares revolves significantly around monitoring shifts in consumer behaviour. Two trends in consumer behaviour are likely to determine future developments: growing individualism and the desire for convenience. Continuous price competition on the unified European market forces European retail into further concentration. This process is strongly related to the emergence of the discount format and thus price competition. Since national borders are of little concern to the large discounters, this development has also given rise to increasing internationalization in retail in general in order to profit from scale advantages. This proved to be not only a European phenomenon: witnessing the entrance of Wal-Mart on the European stage. As a consequence, the top 10 European retailers changes quickly every year. The top 10 European dairy processors appears to be less volatile, the only change last year being the rise of Friesland Coberco Dairy Foods to third place, as a result of their merger. Because of their ability to generate traffic in the stores, fresh products are increasingly becoming the centre of attention in the relationship between dairy manufacturers and retailers. More and more fresh products are sold under private label and even discounters realize that fresh products are essential for their assortment and image. However, there are more opportunities for the dairy industry to take advantage of the expected reshuffle of the distribution landscape. Important trends in this respect are: traditional distribution at the end of the day will be dominated by outlets such as hypermarkets and convenience stores; most supermarket formats will develop into "grocerants" with longer opening hours and offering ready-to-eat meals; a significant increase in the number of outlets is on its way in order to offer products at places where crowds tend to be, such as gas stations, train stations and airports, to facilitate 'grazing'; home shopping as the ultimate convenience will develop in accordance with the penetration of the personal computer.