Germany:
The next curry corner?
Gerd
Härig, Executive Director, Federation Association of German Retail Grocery
Trade, was in India recently as part of a team to promote Anuga, one
of the largest food fairs in the world. The stakes are high for Mr Härig,
as his organisation is a founder and co-organiser of Anuga.
TFPJ
caught up with him in Mumbai
Where
is the wave of consolidation that swept the European grocery business
in the 1990s, headed?
You
are right, the wave of consolidation started in the late 1980s, early
1990s. Now we have an oligopoly of companies controlling 80 per cent
of sales. The number of outlets has halved, but the area dedicated
to retail space has doubled.
The
consolidation has happened more in some Scandinavian countries like
Finland and Norway. But it is still taking place in Italy, Greece, Portugal
and Spain.
Has
the entry of Wal-Mart in Europe in the 1990s shaken the industry?
Earlier,
Germans were scared. But Wal-Mart didn’t estimate the market conditions
and competition correctly. It is already known that they are booking
losses in Germany.
They
didn’t know the social system… the end user wasn’t assessed correctly.
They offered a wide variety of choices, like packing up at the counter,
but Germans weren’t used to paying for such services.
Their
main philosophy is ‘Every day low prices’. But then, there were always
discount stores in Germany.
Has
the eastward expansion of the EU helped the German retail grocery trade?
When
East Europe opened up, all the Germans were concentrating on the former
East Germany. Thus now nobody except Metro has a stronghold in the Eastern
European states. There are 70 million new consumers in Eastern Europe.
Isn’t
there a great cultural heterogeneity across Europe that affects your
trade?
You
are absolutely right. Consumer mentalities in different states of Europe
are different. Europe cannot yet be considered a single market with
the same consumer preferences because of sharp cultural differences.
For
example, the French spend a lot more than Germans on food. The Germans
keep more aside for consumer goods and automobiles, and spend only about
11 per cent of their income on food. This is also a reason why discount
stores are so strong in Germany.
What
can Indian companies export to Germany?
I
can’t really tell you what Indian companies can do in Germany. They
[Germans] look for spices, but several Eastern delicacies are in the
market already. The trend is also getting stronger because Indian restaurants
are increasing in number.
Indian
businessmen should attend fairs like Anuga. It increases their chances
to get into new markets. Remember, Anuga is not only about Germany –
exhibitors from all over the world get together there.
Would
you say this is the beginning of the ‘curry wave’ in Germany, something
like what has happened in England?
Yes,
there is a clear preference towards curries. England, of course, had
a cultural background for that too.
So
with which export items can Indians succeed in Germany?
Possibly
complex, ethnic food. Spices, tea – whatever makes Germans think of
India. May be fish products and seafood too.
Do
you see German food retailers coming to India anytime soon?
They
are not in a position to come to India, with the possible exception
of Metro. But they are all focusing on the East European market. The
ones that are likely to come in are the Dutch Ahold, French Promodes-Carréfour
and German Cash and Carry. But these are only possibilities.
But
Ahold has posted losses after a long time in some recent quarters...
It’s
a first-time problem and for Ahold only. The German companies are posting
profits.
Retail
groceries form what part of the whole food sales in Germany?
It’s
at about 35 per cent. This is because of different styles of distribution
and living. There is a high incidence of single-person households. Now,
you have outlets at gas stations, canteens. So growth is slow – in some
cases the margin is 1 per cent or lower.
Do
you foresee an emerging trend in European food prices, now that the
EU has decided to reduce subsidies?
Prices
can only go down, because large amounts of excess materials are available
for the retail market. Because of similar product offerings, they have
chances of playing with the prices.
On
subsidies, remember that this was only an intended move – it has not
yet happened. And it would affect the industry more than the end consumer,
and the industry would still be able to play with the prices.
The
European subsidies are nothing to be proud of. Because of them, the
European prices are much higher than those prevailing in many other
parts of the world. Therefore, there is a much larger space to move.
Food
safety is a very important issue. In light of this, what is your advice
for wannabe exporters from India?
Yes,
there are problems for European producers too. Potential exporters should
be well-informed of the rules, processes and standards. The Indo-German
Chamber of Commerce can help in
dissemination of such information.
