Author: Metro Team

Position: METRO's Own Brand Product Development

28 June 2018
A contribution to the discussion on the quality of food in different countries

A number of governments and politicians in CEE countries and in Brussels have recently stated concerns that the food products sold in their markets seem to be of a lower quality than the products in other EU countries. The phenomenon of alleged “dual quality food” is also based on some studies carried on by Slovak, Czech, Hungarian authorities showing certain differences in taste, packaging, content, and color of products sold under the same brand-name in CEE and other EU countries. Following METRO's approach for a transparent and responsible lobbying of our interests and clearly state our arguments and positions in a public debate we wish to explain the elements of our product policy for our own brands. We invite your for dialogue and looking forward to your comments.

Metro – Quality requirements for our own brands

We, at METRO place our customers at the core of our business and do everything transparently in product development, packaging, labeling; so that we offer our customers an educated choice in different product categories. Respect towards customers is for us the number one priority and own -brand products are means of creating customer loyalty and trust. Hence safety and quality of the products can never be omitted.

There are clear requirements in terms of quality for all different own brands. Those requirements are described in METRO´s own brand manuals. This is the base for all stakeholders in the organization. international and local. From this base the assortment has been reviewed and is set up.

Different countries have, based on the competition/ benchmark and customer and price structure, different needs and requirements in products. The requests for different product quality is coming exclusively from countries. Those need to be considered for the common sourcing as well as for the local sourcing.

METRO´s common sourcing is acting on behalf of all METRO countries and respects every country with its special and unique habits and quality requirements. The global Quality Assurance department is in close contact with the local ones to exchange about the specific product attributes and parameter, ingredient wise, physical, microbiological and chemical parameter included as well. For all commonly started own brand products the quality settings of each country are considered. Where ever it is possible, those requirements will be combined to allow a common product setting, to allow one recipe and one quality. This supports METRO´s idea to gain harmonization where ever it is possible, to increase quality levels where ever it is needed and - of course- to increase the economical synergy for better negotiations on a global level.

METRO Own Brand Milk

© METRO AG 2017

If this "One fits all" solutions are not doable, due to different local benchmarks, competitions, habits and acceptability of the customer including price, so called "country cluster" can be implemented. This means concretely, that for some products there are different varieties available, also for one own brand, as long as the commonly shared own brand principles of the own brand manual are not violated. This is also to respect different tastes (for instance South versus North, South likes products sweeter, different incoming relations of the customer (for instance in France customers are willing to pay more for tomata passata then customers in Romania) or different expectations in the product (for instance Italian customers appreciates Italian extra virgin olive oil much more then German customers, therefore the quality level can be selected differently).

Those differences in the quality profile are based on the business need and explainable via the feasibility study of each project. It neutrally focuses only on a logical approach to offer the right solution in terms of own brands to the customers. This is a common business strategy which is fully transparent and does not force countries to go for lower qualities.

In the countries more than 80% of the products are sourced locally and traceability and sustainability of the product sourcing is of vital importance. There are some product categories that are part of common sourcing from different manufacturers, but the differences are rather visual and not in the ingredients. For instance in all fish products in all countries have less than 20% glazing. Supplier certification and qualification requirements are a significant part of the own-brand eco-system.

METRO GROUP_Own Brand Rioba

Pricing of goods plays also a central role in product formulation. Own-brand products have different layers such as mid-tear, upper-tear and premium. Market positioning of these products and providing affordable products requires different product specifications.

All these specifications are of cause done in accordance with the food and health regulation of the countries and since respect towards customers is number one priority of the Company, all necessary indications are given on labels to avoid misleading customers.

Recently METRO is considering to bring all own brands products compliant with GSFI (Global Food Safety Initiative) certification to assure continuous improvement in food safety management systems worldwide.

Own Brand Mozzarella