THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY

Voluntary - Public

Date: 4/24/2015 GAIN Report Number: SP1505

Spain

Post: Madrid Spain Supermarket Chain Profiles Report Categories: Retail Foods Approved By: Rachel Bickford, Agricultural Attaché Prepared By: Carmen Toledo, Agricultural Clerk

Report Highlights: This report is a Market Brief providing information about the leading supermarket chains in Spain. This report gives an overview of the trading styles and their target customers, as well as contact details of their head office.

Table of Contents:

INDEX

SECTION I. INTRODUCTION

SECTION II. TOP GROCERY RETAILERS IN SPAIN  Mercadona  Carrefour  Dia  Eroski Group  Auchan Group o Alcampo o Simply  Lidl  El Corte Ingles  Consum  Ahorramas

SECTION III. POST CONTACT AND FURTHER INFORMATION

I. INTRODUCTION Spain Supermarket Chain Profiles 2 The purpose of this report is to give an overview of the most important food retailers in Spain. We will see how and when they started their business as well as their current position in the market. We will look at their structure and business strategy. The majority of these large retailers also offer products for home and personal care, beauty products and other sort of non-food products, but they do not fall under the scope of this report.

II. TOP GROCERY RETAILERS IN SPAIN

MERCADONA

Mercadona S.A. Calle Valencia, 5 46016 Tavernes Blaques Valencia Tel. No.: +34 96 388 3333 Consumer website: www.mercadona.es

Mercadona is the leading supermarket chain in Spain, a remarkable achievement for a family owned company. Mercadona was founded in 1977 in the Valencia region and had only 8 grocery shops when Juan Roig took over as Chairman in 1981, a position that he has maintained since then. Under his leadership Mercadona became the leading supermarket in the Valencia region through the acquisition of small supermarkets. In 1996 the company launched their own private labels. In 2014, Mercadona expanded their operations to the Basque Country, the only region in Spain where they did not operate before, therefore, completing the presence of this supermarket throughout the country. Their strategy to overcome the growing pressure of competition from international chains that were opening new stores in Spain, was to focus on offering quality products at “Always low prices” (“Siempre precios bajos”), instead of investing in expensive advertising campaigns and promotional offers.

The company’s private label “Hacendado” is perceived as a quality brand, and this was a key factor for their impressive success. Previously, private labels were not perceived by the consumer as a quality product; however Mercadona changed that perception for their private label “Hacendado”. Another important element in their success is that they have established a close relationship with their suppliers, who produce good quality products for Mercadona’s own label. These suppliers offer good prices to Mercadona in return of a long relationship with the supermarket. The success of Mercadona is based in offering good value for money and, as a result of this, the loyalty of their customer base is high. Mercadona’s total sales in 2014 were 20,161 million euros, which is a 2 percent increase over the previous year. Their profits account for 543 million Euros, 5 percent more than in 2013. They employ 74,000 people and have 1,527 local supermarkets. They have opened 60 of them in the last year. We can see the evolution of Mercadona’s sales throughout the years of the economic crisis, which interestingly has not had a negative impact in their results, quite the opposite.

Spain Supermarket Chain Profiles 3

Source: Data gathered from Mercadona’s Press note

Mercadona operates under only one format, a local supermarket of 1,500 m2 average, where they offer a selection of food, pet food, home and beauty care products. Mercadona has become leader in many aspects of the food distribution in Spain, not only has the highest market share (22.1 percent), but it is also the most profitable and the one with most selling space with a total of 1,962,835 m2. Although Mercadona have also a private label for Home care and Beauty products, we will focus on the food labels, which are the following:

Hacendado All sort of food including gluten-free and added value products Compy Pet Food Harrisons Cereals

Mercadona has 120 intersuppliers (companies that produce products for their own private label) and 2,000 additional suppliers. However, the company has been reducing the range of brands they offer in favor of their own private label. In 2009 Mercadona took the decision to reduce quite drastically the amount of manufacturer’s brands offered in their stores, and has become the supermarket that has reduced most the number of brands (30 percent in period 2007-2013), far more than any other supermarket. In 2007 the other brands represented 55 percent of products on offer while in 2013 only represented 42 percent. At the same time, Mercadona has been criticized for pressing its suppliers in order to be able to maintain low prices and sales.

Whatever the reasons, Mercadona is the indisputable leader in the Spanish retail food sector with 22.1 percent of the market share, far ahead of Carrefour that only accounts for 7.7 percent.

Mercadona declares that 4.8 million households shop in their stores. Their customer base can be found in the middle class, upper and lower-middle class. However, their prices are very competitive and they have managed to place their own label “Hacendado” as a quality product, therefore, they appeal to Spain Supermarket Chain Profiles 4 customers with higher income but also those who live on a tight budget. This is also consequence of the economic crisis that has changed many aspects of the way the Spanish consumers do their shopping. One of these changes has been that consumers who would have never bought private labels instead of prestigious brands are more receptive to use them, as this is seen sometimes as an intelligent shopping now. Certain private labels have lost the negative connotations that they had in the past, and certainly one of those is “Hacendado”.

In recent years this supermarket is redesigning the business and their supermarkets to offer fresh products in line with a new consumer trends. They have areas for a fishmonger, a butcher and also offer fresh fruits and vegetables as well as an in-store bakery. They are proud that 85 percent of the products they offer are produced in Spain. Mercadona’s supermarkets are located in areas where their customers live or work, and every new store is celebrated by the consumers nearby. The company has proven to be innovative in many occasions, they gave a different dimension to the private label and they were also one of the first private labels to offer a wide range of gluten-free products.

Mercadona does not spend on campaigns and it has never used promotions of the type “three for the price of two”, their strategy is to compete on price and uses all their resources to have competitive prices to maintain their current position in the market. For the time being, Mercadona operates only in Spain, although an expansion abroad cannot be ruled out in the future.

CARREFOUR

Carrefour España S.A. Calle Campezo 16 Polígono Las Mercedes 28022 Madrid

Tel. No.: +34 91 3018900 Consumer website: www.carrefour.es

Carrefour is the number one hypermarket chain in Spain with 7.7 percent of the market share. Carrefour is part of the French Group Carrefour that was introduced in Spain in 1976 under the name of Pryca. Carrefour operates in 34 countries; however, Spain is their main market after France. Carrefour is well established in the Spanish territory and throughout the years they have consolidated their position in Spain. Although Carrefour is primarily a hypermarket, they have adopted several formats to adapt to the new consumer trends, where proximity has become an important factor.

The company’s philosophy has been based in the offer of a wide range of products and well-known brands at reasonable prices. They offer not only grocery products (69 percent of total products) but

Spain Supermarket Chain Profiles 5 non-food products too, such as consumer electronics, home appliances, IT equipment, home and garden products, audiovisual products, toys, etc. As oppose to Mercadona, they currently offer the widest selection of brands in the food retail sector in Spain, comprising their own private labels and a broad variety of other brands. Although they have increased the products of their own label in order to retain customers who are price sensitive, they are still the food retailer that offers the widest selection of brands. They have about 100,000 product lines in their stores, of which other brands represent 73 percent of the total products in their shelves while the private label was only 27 percent in 2013.

Carrefour, as a typical hypermarket, used to be located out of the city centers where the customer would drive his/her car to do the shopping of the week or month. However, the Spanish economic crisis has changed the way customers purchase their groceries thus, hypermarkets in general, and Carrefour in particular, has been negatively affected by this. Customers now tend to buy just the products they need immediately, making more visits to the shops. Supermarkets have benefited from this new trend as they are generally closer to the customers’ homes or work places. As a consequence of more visits to the groceries, the shopping basket is smaller, and driving to the hypermarket is not practical and expensive under these circumstances. The main factors Spanish consumers use to decide what and where to do the shopping have been price, quality and proximity for some years now in view of the adverse economic situation.

Carrefour has maintained the hypermarket format though combined with other formats, which are as follows:

Carrefour 173 hypermarkets with an average selling space of 3,000 sq/m, where the customer can cover all their needs with an extensive variety of products and brands

Carrefour Market A franchise. At the moment there are 111 of these medium-size stores with a selling space between 800-2,000 m2 which offer more than 7,000 products including food and non-food products like textile, small appliances and houseware.

Carrefour Express They are also a franchise. There are 291 Supermarkets with a selling space between 100-800 m2. These supermarkets respond to the need of the customer to have a supermarket of proximity focused on food although they can also cover houseware.

As a result of an agreement with CEPSA, Carrefour Express in CEPSA Gas Stations which has gas stations throughout Spain, 115 Convenience stores of Carrefour Express have been opened in gas stations. They have approx 1,000 references and they claim that the prices Spain Supermarket Chain Profiles 6 are lower than a standard convenience store. They intend to open up to 500 stores under this agreement

Supeco in 2012 Carrefour launched the Discount /Cash and Carry format – Supeco “The families’ money” they call it, to appeal to consumers to whom price is the main concern, and they already have opened 12 of this low-cost outlets in Spain.

Carrefour is the second retail store in selling space with 1,532.200 m2. and the sales in 2014 accounted for 6,515 million of euros. As mentioned before, Carrefour’s philosophy is different from other supermarkets that focus in offering primarily low prices. Carrefour is situated in the middle of the price range, and one of their main characteristics is that they have consistently maintained a wide variety of products and brands. However, Carrefour also has their own labels, which in respect of food products are the following:

Carrefour A wide selection of products that they declare is 15 to 20 percent cheaper than products of the same category.

Carrefour baby Baby’s food and hygiene

Carrefour kids Children’s food and hygiene

De Nuestra Tierra Spanish products of all types, canned food, processed and semi-processed food, sauces, desserts.

Carrefour con sello Calidad y Origen High quality Fresh products

Carrefour Selection high quality products, modern and innovative, gourmet products

Carrefour Eco-Bio organic products

Carrefour No Gluten Gluten-free products

For the new format Supeco, which is between the concept of a Cash and Carry and a Discount store, Carrefour has launched the brand “Carrefour Discount” – with simpler packages at lower prices (about 10 percent cheaper than the price of their own private label) and products from local producers to reduce costs. Spain Supermarket Chain Profiles 7 Carrefour regularly launches promotional campaigns with special offers and frequently is advertised on television. Common promotions are those that offer three products for the price of two or just discounts in certain products.

Carrefour also uses Fidelity cards: Club Carrefour, available for all their customers that offer discount coupons and specific fidelity cards that offer some VAT-free products for specific groups of the population (young, elderly and families with three or more children).

The last seven years have been very tough for Carrefour, the same years that correspond to the economic crisis and the constraints that it has imposed on the Spanish consumers. Their sales have fallen for five consecutive years, although in 2014 their sales increased by 0.1 percent. Their worst year was 2012 when they even had losses for value 21 million euros. However, since 2013 there are signs of recovery in the Spanish economy and consumer consumption is growing.

The main format of Carrefour as a hypermarket has had a big impact on Carrefour’s results during the crisis. One of the reasons why the crisis has had this impact on Carrefour is because this format has proved to be difficult to adapt to the new shopping habits adopted by consumers. That is why Carrefour adopted other formats more conveniently located in suburban areas or in the center of towns. As the economic situation as a whole improves in Spain, Carrefour’s bottom line will probably improve too, because the consumer will start giving more importance to the variety and the quality of products, which is already happening, and consumers will return to some of their shopping habits like doing fewer trips to the stores.

DIA S.A. (Distribuidora Internacional de Alimentacion S.A.)

Parque Empresarial de Las Rozas, Edificio TRIPACK C/ Jacinto Benavente, 2 A 28232 Las Rozas Madrid – España

E-mail: [email protected] Corporate Website: www.diacorporate.com Consumer Website: www.dia.es

Dia S.A. was the first discount company in Spain and opened their first supermarket in 1979 in Madrid. This Spanish company is also established in Portugal, Argentina, Turkey, France, Brazil and China. Dia was also active in Greece until 2010 when Carrefour bought their stores. The company is continuing their expansion in Spain, this expansion is done in many occasions through the acquisition of other supermarkets. They acquired 251 “Supermercados Plus” in 2007 and in 2014, they acquired a regional supermarket “El Arbol”, that represent a further 400 new supermarkets and 30 Cash and Carry for the company. The total selling space of Dia in Spain is 1,299,900 m2 with an average size of the Spain Supermarket Chain Profiles 8 424 m2. Their sales account for 5,219 million Euros and employ 23,219 people. Dia started operating in the Spanish stock exchange in 2011.

Dia introduced the fidelity card “Club Dia” in 1998 and was innovative in 2001 when they introduced some fresh products into their shops, which was not common in a discount outlet.

Dia offers a full range of formats:

Dia Maxi Introduced in 2007 to cover the needs of a customer who does few purchases of considerable volume but wants highly competitive prices. Usually located out of the city center and with parking.

Dia Market For consumers who wants a local shop for daily shopping , average selling space of 450 m2 with more than 2,000 different products

Dia Fresh Introduced in 2012 as another local shop specialized in fresh food, mainly fresh fruit and vegetables but also meat and fish, basic dairy products and soft drinks. This format wants to compete with the traditional grocery. Average size of 150m2 Fresh by Dia These stores offer specialized assistance when buying bakery products or fresh fruit and vegetables, as well as offering organic and dietary products or nutritional complements. Also has a gourmet section focused on wines and Iberian hams.

El Arbol Dia acquired 400 stores of El Arbol with a strong presence in Castilla, Aragon, Asturias and Galicia regions. A local supermarket that offers assisted sales in fresh products as well as non-food products.

Cada Dia Franchised stores in small rural areas offering DIA products in their own stores.

A German non-food chain store acquired in Schlecker 2013 by Dia, which offer a selection of household and consumer health and beauty/personal care products.

Spain Supermarket Chain Profiles 9 The Schlecker stores will progressively be Clarel transformed into a more modernized store known as Clarel.

Dia has focused in becoming the main local discount Supermarket and has traditionally based their business in offering basic products at low prices. This concept has been benefited by the difficult financial situation families are suffering due to the economic crisis in Spain. It is interesting to note that although Dia base their business strategy in their own private label, their success has allow them to increase the offer of other brands in their shelves. Brands other than their own private labels represented 64 percent in 2013 while in 2007 were only 43 percent, that is an increase of 15 percent more than in 2007. Dia, with Lidl and Ahorramas, are the only supermarkets that have increased this offer whilst most of the other Supermarkets had to reduce the amount of products and the manufacture’s brands in order to maintain their profits and sales. As mentioned before, the trend during the last years has been for grocery retailers to increase the percentage of their own private labels.

Their suppliers are generally based in Spain, which supply about 80% of the products. The price of these products can be sometimes 10 to 20 percent lower than the private label of a competitor. The last few years have been a booming era for discounters, they have seen an increase in sales due to the essence of their business, which is to offer the lowest possible price, which matches with the needs of many deprived consumers, while other supermarkets and in particular hypermarkets are having great difficulties during these years of crisis. The result of this situation is that Dia is expanding operations in Spain. In November 2014 Dia acquired a further 160 outlets that previously belonged to another well-known chain in Spain that is having financial difficulties, the Eroski Group. Among these 160 stores, some are “Caprabo”, “Eroski Center” and “Eroski City” brands, mainly in the Madrid region, but also in Andalucia, Extremadura and Castille. With this new addition Dia S.A. increases their market share to 9.5 percent (7.6 percent before the addition of these stores) which, in fact, put them up into the second place after Mercadona.

Dia not only is expanding their operations by acquiring competitor’s stores, also by offering to operate their brands under a franchise. Dia has 4,781 outlets in Spain in 2014 of which 1,646 are franchises. Dia’s consumer base has been traditionally families with low income that look for basic products to cover their daily shopping at a budged price.

EROSKI GROUP

EROSKI Barrio San Agustin s/n Elorrio 48230 Vizcaya, Spain

Tel No.: +34 94 621 1211

Spain Supermarket Chain Profiles 10 Website: www.eroski.es

Eroski began as a workers and consumers cooperativein the 1960s in the Basque Country, and soon became the food chain leader in the region. In 1992 they reached an agreement with another regional food chain company, Consum, also based in a cooperative model of workers and consumers and well established in the Valencia region. The result was the Eroski-Consum Group, together they increased their presence in the whole of Spain and became the third largest food chain in Spain by the end of the 1990s. The hypermarkets were called Eroski and the Supermarkets were called Consum. The Group reached agreements with other retailers and continued their expansion, including many diverse non- food businesses. However, after so much growth the two parties had different views about the future and at the end of 2003 Consum left the Eroski Group.

Eroski has been badly affected by the dramatic drop in consumption in Spain during the most difficult years of the economic crisis 2008-2013. Only those companies who kept low prices, such as Mercadona, Dia or Lidl, have been able to maintain and even increase their sales during these years. Other big chains like Eroski, such as Carrefour or even El Corte Ingles, which prices can be situated in the middle band of the scale or middle-up, and who have big structures to maintain have been the ones most affected by the crisis. The dramatic drop in consumption hit Eroski at a vulnerable moment when they were expanding and investing heavily. This became such a burden for them that the Eroski group has suffered important losses during all these years, as they have to repay its debt. However, Eroski is managing to reduce their losses in 2013 and 2014.

Eroski has endured difficult times during these years and has undertaken important reforms in their business in order to refloat the business. They have sold their business in France, also some hypermarkets; they have closed supermarkets or keep them under a lease contract or franchise. The new Eroski is focusing in the Supermarket format where they, in line with the current trend, are promoting fresh food and local products under a new format called “Contigo”.

The Eroski Group still offers to their customers a wide range of products, food, textiles, shoes, electrical equipment, cosmetics, etc. Eroski has a range of over 500 gluten-free products. Currently they have more than 1,000 outlets in different formats and specialized in different kind of products. The workforce has been reduced to approximately 38,500 employees (36,432 employees and about 1,700 staff in their franchised stores). This is the structure of the Eroski Group today:

Spain Supermarket Chain Profiles 11

However, the Food section is their main business, about 60 percent of their sales come from their supermarkets sales and the total grocery net sales are 4,792 million Euros. Eroski grocery formats are as follows:

Eroski 90 Hypermarkets all owned by Eroski. However, they are thinking about opening this format to franchise too Eroski Center 179 Supermarkets of medium size

Eroski City 143 Supermarkets of smaller size, between 250 and 450 m2, located in the city centers, therefore, a proximity store that focuses on basic fresh products at good prices. Many of them are franchised Eroski Merca 8 Supermarket

Spain Supermarket Chain Profiles 12 Caprabo Supermercados 206 Supermarkets but during 2014 sold 160 to Dia

Aliprox (Aprop in the Balearics) 339 Franchised stores with average selling space of 250 m2.

19 Cash & Carry

Eroski launched their first private label in 1977, and they currently have the following private labels:

Eroski More than 2,500 food and non-food products situated in the middle band of the price scale. Eroski Basic For those consumers more price oriented Eroski Sannia For consumers who are health oriented and prefer products with less sugar, less salt, less fat or with added value. Eroski Seleqtia Premium products, the gourmet and delicatessen label Eroski Natur Seleccion, Origen y Sabor For Fresh products without preservatives or additives

Although Eroski has their own private label, the percentage of other manufacturer’s brands in their shelves is 72 percent, and this proportion has not changed for the last seven years. Even more, while other grocery chains have reduced the range they offer, Eroski has reduced their range only very slightly.

Eroski ranks four in the market share with 4.9 percent and has a total selling space of 1,220,000 m2. Even though Eroski has a consolidated position with stores in the whole of the Spanish territory, they are stronger in the north, and still maintain a privilege position in the Basque Country with 300 outlets, many more than any other food chain in the region. The company has been forced to rethink their price strategy, even more now with the arrival in the region of the national leader Mercadona. We will have to wait to see the effects on Eroski of a more competitive market in that specific region. Eroski have a fidelity card like many other grocery chains, “Eroski Red Visa”. However, they have launched in November 2014 a new fidelity card, Card “Club Eroski”, that allow consumers to access to more than 2,500 products with special offers. They have issued more than 2 million cards in the first quarter since launch and 73% of their sales are being paid with the card. The company also uses promotions like the second unit at half price, etc.

It seems that the new strategy is offering positive results so far, as the sales have increased. The new strategy sees the expansion through franchised stores with a proximity store format. In addition to that, \Eroski has put in practice the strategy “Contigo” (with you) a new commercial concept where fresh products and local producers get great importance and the customers receive assistance with their shopping. Eroski, is getting in line with the current trend of offering fresh and healthier Spain Supermarket Chain Profiles 13 products in their shelves. This new strategy can open new perspectives to the group. The company is investing to optimize their logistic centers that will make them more competitive too. However Eroski have some big challenges ahead, not only they have to revert the situation to reduce their debt, but also they have to deal with a new competitor in their main market, the Basque country, with the introduction of Mercadona in this region.

AUCHAN GROUP: ALCAMPO and SIMPLY

Alcampo Hypermarket Calle Santiago de Compostela s/n Edificio Oficinas La Vaguada 28029 Madrid Spain

Tel No.: 91 730 6666 Cosumer Web: www.alcampo.es

Simply Supermarket Polígono San Miguel Calle Albert Einstein, 9 50830 Villanueva de Gallego Zaragoza – Spain

Tel No.: 976 186527 Website: www.simply.es

A. ALCAMPO

Alcampo is the second most important hypermarket in Spain after Carrefour. They are in the fifth place of importance in market share with 3.9 percent and approximately 620,000 m2 of selling space. As mentioned above, while Carrefour accounts for 39.3 percent of hypermarkets sales, Alcampo accounts for 28.5 percent. Alcampo is part of the French Group Auchan and opened their first supermarket in Spain in 1981. Alcampo is, after Carrefour, the food retail hypermarket that offer more variety of brands in their shelves. In 2013 the manufacturer’s brands represented 78 percent of the brands offered in Alcampo, the highest percentage in a supermarket/hypermarket. This hypermarket launched their first own private label in 1988, however, the private label does not seem to work as well as in other retail stores.

Alcampo currently has 55 hypermarkets and 33 gas stations. Alcampo opened the first gas station in 1992 as part of other services offered to their customers. As in any hypermarkets they offer a wide selection of food and non-food products, such as small and bigger appliances, homeware, garden furniture, textile, etc. According to a Spanish consumer association, Alcampo is the cheapest food retailer in Spain of the top 10 food stores. The hypermarket format was not the most suitable to Spain Supermarket Chain Profiles 14 manage the economic crisis, however, Alcampo has maintained the position and sales through an aggressive strategy based on offering lower prices than their competitors in the surrounding area. Alcampo has maintained sales by cutting their profits and offering low prices to their customers. Their slogan is clear reflection of this strategy “the saving is in the price” They declare that one of their objectives is to improve the purchasing power of their consumers by offering a wide variety of products at quite affordable prices.

Alcampo, like all the other retail stores, is redesigning their business to attract consumers to their stores. Recently, they have opened an area for bulk products, where customers can buy the quantities they need. These are more than 850 basic products at very low prices. Also, they use their gas stations situated next to their hypermarkets to attract customers by offering better petrol prices than other gas stations to customers.

The average selling space per outlet is approximately 1,500 m2 and they have benefited from a good location of their stores in not very distant places from the city centers. Alcampo employ more than 13,000 people and cover most of the Spanish territory. Their net sales in 2014 were 3,638 million Euros.

The private labels of Alcampo can be recognized because they are under the Auchan brand name and they have the following private: Auchan Wide range of products Auchan Mmm Premium products, from ready to eat meals to marmalades or cookies, etc… Auchan Rick and Rock Products for children between 4 and 10 years old Auchan Babies Products for babies between 0 to 36 months Auchan Vivir Mejor Products gluten-free or with less fat, sugar or salt Auchan Viaje Foreign products to cook foreign meals Auchan Produccion Controlada Fresh products, fruit and vegetables, meat, fish, dairy products and baking products. Auchan Productos Economicos They are recognized by the symbol thumps up and these products, according to them, have much lower prices than the leading brands.

Alcampo also has a fidelity card called “Alcampo Oney”, that gives access to discounts and offers, as well as payment options and better conditions in their gas stations or the possibility to pay in other shops with this card or borrow up to 10,000 Euros.

The reason Alcampo has survived during the crisis years where others have had a decline is probably because they understood the situation of their customer base, families with medium-low income that required an incentive to keep going to a hypermarket. By keeping very competitive prices they have been able to maintain their position in the market.

Spain Supermarket Chain Profiles 15 B. SIMPLY

The Auchan Group also operates the Supermarket format under the name Simply, although it has also few hypermarkets. They also have different formats to cover the needs of different customers; however, they try to have a format that appeal to a younger and more modern consumer. They operate in total 270 stores, of which 127 are their own supermarkets and hypermarkets established in 12 regions of Spain as well as 15 gas stations. The company also operates under franchise and by the end of 2014 they had 143 stores of this kind. The formats are:

Simply Market Supermarket located in town with a selling space of approx. 1,200 m2 where the consumer can find all sort of products, including fishmonger and in-store bakery. They offer also some non-food products Simply City A proximity market located in the city centers with a selling space of approx. 600 m2. where consumers can find the basic products. They focus on fresh food and also bake their bread. HiperSimply With a selling space between 2,000-4,000 m2they offer a wider variety of products that include non-food products too. They frequently use campaigns to promote sales. The outlets are located in the outskirts. Simply Basic Most of them are in franchise.

Simply Store Convenience store with few products like ready to eat meals

They all offer their own private label (Auchan) and manufacturer’s brands. However, during the last few years the percentage of private label has increased, although the manufacturer’s brand still represent 73 percent of the total brands offered in their shelves.

Simply employ 6,500 people of which 1,100 work in franchise stores. The philosophy is to offer low prices always in a more modern environment. In 2014 they had sales for the amount of 1,095 million euros, 0.4% more than in 2013.

Finally, the Auchan Group in Spain has reached an agreement with the leading Central Purchasing company Euromadi Iberica S.A. to reinforce their private label. Euromadi will manage the negotiation of the private label of the Auchan Group from now on.

Spain Supermarket Chain Profiles 16 LIDL

LIDL Supermercados S.A. U. Calle Beat Oriol s/n Poligono Industrial La Granja 08110 Montcada i Reixac Barcelona – Spain

Tel No.: +34 93 576 1500 Website: www.lidl.es

Lidl is the second most important discounter in Spain after Dia and has grown rapidly in the last few years. The formula of discounters to offer not a wide selection of products and brands but just some basic products at very good prices has matched the needs of many Spanish consumers in recent years. The consumer purchasing power has declined greatly during the last few years, and attractive prices, quality and proximity have been the main concerns of the Spanish consumer. This German company arrived in Spain in 1994 with about 700 products focused on dry and canned food. After 20 years in the Spanish market Lidl has consolidated their position in the market and plans to invest heavily with 200 million Euros to open another 40 supermarkets in 2015, modernized the oldest supermarkets and to implement more efficient and innovative processes in their logistic centers. They are building their biggest Logistic Center in Europe in the Madrid region. Lidl operates in 26 countries and has more than 10,000 outlets in the world and more than 335,000 employees. The company has increased their Spanish suppliers and purchased more than 3,000 million Euros in Spanish products, of which half of them were for their supermarkets in other countries.

Lidl is also the supermarket that has increased their references most since 2007, a 62 percent more. However, we need to take into account that Lidl is, compared with the other major Supermarkets/Hypermarkets like Carrefour, Alcampo, Eroski, Dia or Mercadona, the supermarket that offer the lowest range of products in their shelves and this makes it easier to increase the percentage so much. Also, Lidl with Dia and Ahorramas, are the only stores that have increased the manufacturer’s brands in their shelves. In the case of Lidl, by 77 percent since 2007, but again, we need to understand that Lidl focus their business in their own private label. The other brands represented only 24% of the products in 2007 and, therefore, an increase of 2 p.p. to 26 percent in 2013 represents such an important increase. However, Lidl is still the supermarket with the lower range of products and brands by far. You can see in the chart below the percentage of other manufacturer’s brands in some of the most important chains in Spain.

2013 42% 64% 73% 72% 78% 26% 72% 69% Spain Supermarket Chain Profiles 17 Source: Data from Esade report based in KWP Although Dia and Lidl are both discounters, we can see an important difference between Lidl and Dia in the percentage of other brands offered in their shelves with 64 percent in Dia and only 26 percent in Lidl.

The kind of products offered has also changed through the years. Their concept is based in a discount format, however, it has evolved from a hard discount company with basic dry and canned products that were sold in very simple buildings to a more attractive supermarket that offer also frozen and fresh food as well as an international area for foreign products and a bazar. The perception of their products by the consumer has been changing through the years too, to be considered of good quality, good value for money, especially in packaged food and non-food products. Their slogan is “Quality is not expensive”.

They have an extensive range of private labels depending on the products, such as “Rustico” and “Delave” for pork/Beef and chicken/turkey products, “Vitafit” for juices, “Freeway” and “Solevita” for soft drinks or their gourmet brands with “Deluxe”, “Chef Select” and “Oilsone” to mention some:

Following the trend in the market, Lidl has updated their products and has added in the private labels gluten-free products, products with reduced salt, lactose-free, no trans-fat, non-gmo and some organic products. In addition to that, it has reinforced the offer of fresh products in line with the consumer taste in recent times and they have a bakery too.

Lidl has currently 530 supermarkets in the Spanish territory and approximately 10,000 employees. The average selling space is 1,000 m2, the oldest Lidl supermarkets used to have about 800 m2 while the new ones have between 1,200 to 1,400 m2. Unlike other supermarkets Lidl has only one type of format. They had sales of more than 2,500 million euros and profits of 27 million Euros in 2014. Lidl is also with Mercadona the supermarket that grew more in 2014 in terms of percentage, 0.4%. Lidl has 3.1 percent of the market share and this could increase in the future due to the important investments they are making in Spain in order to continue expanding the number of supermarkets.

Spain Supermarket Chain Profiles 18 EL CORTE INGLES

Grupo El Corte Ingles Calle Hermosilla, 112 28009 Madrid Spain

Tel No.: +34 901 122 122 Website: www.elcorteingles.es

El Corte Ingles is one of the most reputable and prestigious companies in Spain and one of the oldest too. The company started as a clothing store in 1890 in the very center of Madrid. In 1935 was acquired by Ramon Areces, who based the new era in two pillars, a wide selection of good quality products guaranteed and excellent customer service. He expanded the business and with him the small shop became a Department Store based in those he had seen in the United States. He also opened new lines of businesses; travel, insurance, computers, electronics, etc.

El Corte Ingles starts in the grocery business in 1979 with a hypermarket format under the “Hipercor” brand. After the death of Ramon Areces in 1989, Isidoro Alvarez continues the expansion of the company within Spain and keeps the same philosophy of his predecessor. In 1998 El Corte Ingles and Repsol, a leading gas company, create a company called Gespevesa to open a small supermarket in gas stations. Two years later, in 2000 El Corte Ingles open their first supermarket, Supercor, and a convenience store called OpenCor, which open 365 days a year 18 hrs a day. By 2014 the Group has 88 Department Stores, most of them have a Supermarket inside where the customer can find a wide selection of quality products and prestigious brands.

They have 43 Hipercor, hypermarkets that obtained sales in 2013 for a total value of 1,716 million euros. As mentioned previously, hypermarkets have been very badly affected by the economic situation suffered by consumers during the last seven years. However, El Corte Ingles has suffered a more important drop in sales than other hypermarkets like Carrefour or Alcampo. El Corte Ingles was well positioned with regards to quality, however, it has always been perceived as expensive. Their customer base is the middle and upper class, consumers that were primarily concerned about quality and variety of products and brands to choose. However, the crisis has changed everything, the middle class has lost part of their expenditure capability and they have turned to more affordable options. Hipercor has been trying since 2012 to regain customers through very active advertising campaigns that have the objective to change the perception about their high prices by reducing the price on many products and by carrying out specific promotions. However, this is a complicated task when they have to maintain also the reputation of the company about offering the best quality products too, so they keep their inner essence as a company that always offer quality and a wide variety of products and brands.

Spain Supermarket Chain Profiles 19 El Corte Ingles has created three private labels for food products, “Hipercor” still mid-priced, “Aliada” for those with a tighter budget and “Special Line” for those health oriented or special products like gluten-free products. Although the majority of the products offered are from other brands, in recent years they have supported their own private labels by adding new products to their private label. El Corte ingles has a total market share of 2.5% in grocery retailing, ranking seventh. It is also the third most important hypermarket in Spain, still their main format in grocery retailing. However, El Corte Ingles has adopted several formats and currently these are the following:

Supermercado El Corte Ingles Most of El Corte Ingles Department Stores are located in the best shopping areas of Spanish cities. They usually have a Supemarket in their basement with a wide selection of the best and more prestigious brands in the market and their own private labels.

El Corte Ingles also offer in most of their Department Stores an area separated from the Supermarket called “Club del Gourmet” where the customer can find Gourmet/Premium And Gourmet Experience products. At the same time, few of them offer a “Gourmet Experience”, an area with restaurants and gourmet products that the customer can buy or taste in the store.

Hipercor A hypermarket that offers food and non-food products like textile, houseware, appliances, HiFi, IT, electronics, garden furniture, etc.

A wide variety of good brands and high quality products is a characteristic of this outlet that also has a vast selection of fresh products. A butchery, a fishmonger, a fresh fruit and vegetables attended by professionals and an excellent charcuterie. They also have an area for healthy food and, also more recently, stands of private companies that offer their products directly to the customers like sushi products or local premium products.

Supercor Supermarket of proximity to cover the needs of the consumer with a wide selection of products and brands (approx. 21,000 references). An important part of the store is the area dedicated to fresh products, meat, fish, fruit and vegetables carefully presented where the consumer is assisted by a professional. Spain Supermarket Chain Profiles 20 OpenCor A convenient store open 18 hrs a day to cover those quick purchases of food and other non- food products like beauty care, press, gifts, etc. The idea is to reform these stores and to become SuperCor Express, a smaller supermarket than SuperCor.

SuperCor Expres A Supermarket between the other two formats, a smaller supermarket than Supercor with a variety of products and brands (about 5,000) that opens long hours, from 9.00 hrs-23.00 hrs

SuperCor Stop & Go A convenient store which is the result of an alliance between El Corte Ingles and the leading gas station Repsol. A store located in the gas stations with a selling space between 150 and 200 m2 that offer around 2,000 products, groceries like fruit or dairy products, soft drinks and bakery and non-food products.

Before the crisis, apart from Hipercor, El Corte Ingles had opened convenience stores called “Opencor”, however, this type of store has experienced a big declined since 2007 for various reasons; they are more expensive, many customers now have time to go to their local supermarket during open hours, and the approved more flexibility with regards to the open hours. This has marked the fate of these style of stores which are clearly in decline. In view of this, El Corte Ingles is currently combining the Supercor and Opencor format into a Supercor Express, a supermarket of smaller selling space than a standard Supercor. In fact, the whole business is being redesigned to adapt to the needs and demands of the consumer and all of their proximity supermarkets, Supercor and Supercor Expres are under constant review.

At the end of 2013 El Corte Ingles had 203 of these supermarkets and their sales were 466 million Euros. Opencor, as we have mentioned, is being redesigned as a Supercor Express, while the new brand of convenience store “Supercor Stop and Go” is being launched in the Repsol Gas stations. El Corte Ingles had 93,222 employees in 2013 of which 11.8% work in the Hypermarkets, 4.2% in Supermarkets and 0.5% in convenience stores. This company is in a process of repositioning their business in the market in order to be able to compete with the major grocery retailers in Spain. So far it has proven to be very difficult to change the perception of the Spanish consumers that view the company as more expensive than other alternatives, though it is also associated to quality and variety. The consumer base is still that of a higher income who want products that cannot find in other retail stores. El Corte Ingles and Eroski are the companies most affected by the changing trends in consumer consumption, although for different reasons.

Spain Supermarket Chain Profiles 21 CONSUM

Avenida Alginet 1 46460 Silla Valencia

Tel No.: +34 96 197 4000 Website: www.consum.es

Consum like Eroski is a consumer-workers cooperative that was created in 1975 in Valencia. The company expanded their operations by acquiring other grocery retailers and in 1992 they founded the Eroski-Consum Group. However, they separated from the group in 2004, due to different ideas about the organizational model for the future. In 2007 it continued with the policy of expansion through acquisitions and, in this way, they reached a relevant position in the Catalonia region were they currently have 165 supermarkets. In the following years the company expanded their operations to other regions in Spain; Murcia (25 stores) and the eastern parts of Castilla-La Mancha (33 stores), Aragon (4 stores) and Andalucia (16 stores). Therefore, the company has a consolidated position in the east coast of Spain with more than 600 supermarkets in total, of which the majority are in the Valencia region where they started with 405 supermarkets.

Consum supermarkets have three different formats:

Supermercados Consum Their biggest supermarket with a selling space between 1,300-2,500 m2. They are focused on fresh products and also have an in-store bakery

Consum Basic A smaller supermarket that offer a variety of fresh products as well as the bakery. The selling space is between 500 to 1,200 m2.

Supermercados Charter This is the franchised format, the smallest stores with a selling space between 250 to 600 m2. The concept is to operate these as a family supermarket in touristic areas and neighborhoods in medium size towns. A proximity supermarket that by the end of 2014 had 220 Charter stores with total selling space of 8,300 m2. and sales for value 163 million euros

Spain Supermarket Chain Profiles 22 As many other grocery retailers in Spain, Consum is using the franchise model to increase operations. They also have more than 2 million clients holders of their Consum fidelity card that can be used in all their supermarkets.

Although they have their own private label, the percentage of the manufacturer’s brands is high with 72 percent of the products they offer. However, they have increased by 62 percent the private label over recent years, as other brands represented 82 percent of their products in 2007 compared to 72 percent in 2013. They have also increased the products they offer, however, the increase has been only with regards to their own private label while the number of products of other manufacturer’s brands has decreased.

Consum has seen an increase in sales of 5% in 2014 with total sales reaching 1,940 million Euros. They have approximately 11,000 employees and it is to be noted that these results are higher than the average in the sector. Consum has consolidated their position in the market with 1.9 percent of market share.

AHORRAMAS

Carretera de Arganda del Rey a Velilla de San Antonio, Km 5 28891 Velilla de San Antonio Madrid - Spain

Tel No.: +34 91 6602107 – 900 113213 Email: [email protected] Website: www.ahorramas.es

AhorraMas is the result of the union in 1979 of a group of small grocery retailers in the Madrid region, who joined efforts to be able to succeed in an increasingly competitive environment due to the arrival of some international grocery retailers into the Spanish market. The idea of this group was to centralize purchases, so they would be able to obtain better deals. Later it developed into the idea of a proximity supermarket under the brand of “Ahoramas”. In fact, their slogan reflects this idea “the super of the neighborhood”.

Ahorramas has been offering low prices and good quality through their own private label and other brands, the latter ones representing approximately 69 percent of the products. According to a study carried out by the Observatory of prices in retailing, Ahorramas was considered to offer the lowest prices in the Madrid region in 2009. Ahorramas has increased the products under their own label since 2007; however the difference with other supermarket chains is that they have also increased the offer of other brands’ products, although it is fair to say that the private label has increased more than other brands’ labels. Ahorramas food private labels are:

Spain Supermarket Chain Profiles 23 Alipende Food products at a budget price Meque Pet food Monte Abadia Cold meats – Charcuterie products Alipende Sin Gluten Gluten-free products

They also offer healthy products with gluten-free or lactose-free products of their own private label. The company has been able to maintain and even obtain profits during the economic crisis, probably because they had the right format to overcome the crisis years and their products are in the budget band. We can see in the chart below that they have been able to maintain and even increase slightly their sales during the last few years. At the same time they have kept investing throughout this years (yellow area of the column)

Source: Ahorramas - Sales and Investment in million Euros

They have increased their supermarkets to total 240 stores, mainly located in Madrid province where they have 191 stores, and the rest of the supermarkets are in the surrounding provinces like Toledo, Cuenca, Ciudad Real or Guadalajara. Ahorramas’ sales were 1,396 million euros in 2013 and although we don’t have the final results, they were expecting sales for value 1,430 million euros in 2014. Although this is only a regional supermarket, it has managed to get 1.5 percent of the market value and is has shops in most of the neighborhoods in Madrid.

Spain Supermarket Chain Profiles 24 III. POST CONTACT AND FURTHER INFORMATION

If you have any questions or comments regarding this report or need assistance exporting to Spain, please contact the Office of Agricultural Affairs in Madrid at the following address:

Foreign Agricultural Service American Embassy, Madrid C/ Serrano, 75 28006 Madrid Spain Tel.: +34-91 587 2555 Fax: +34-91 587 2556 Email: [email protected] Web: http://madrid.usembassy.gov/about-us/fas.html

Please email the Office of Agricultural Affairs in Madrid for more information. Importer listings are available from the Agricultural Affairs Office for use by U.S. exporters of U.S. ingredients. Recent reports of interest to U.S. exporters interested in the Spanish market can be accessed through the FAS website.

Additionally, a list of trade associations and useful government agencies is provided below:

Trade Associations:

FIAB- Federación de Industrias de Alimentación y Bebidas (Spanish Federation of Food and Beverage Industries) www.fiab.es [email protected]

FEHR – Federación Española de Hostelería (Spanish Federation for HRI Sector) www.fehr.es [email protected]

ASEDAS – Asociación Española de Distribuidores, Autoservicios y Supermercados (Spanish Association for Distributors and Supermarkets) www.asedas.org [email protected]

ANGED – Asociación Nacional de Grandes y Medianas Empresas de Distribución (National Association of Midsize and Large Distributors) www.anged.es [email protected]

Spain Supermarket Chain Profiles 25 Spanish Government Agencies:

Subdirección General de Sanidad Exterior Ministerio de Sanidad, Servicios Sociales e Igualdad (Responsible for Imported Foodstuffs, Contaminants and Compound Residues, Health Certification, Port Inspection and EU Alerts) http://www.msc.es/profesionales/saludPublica/sanidadExterior/ho me.htm [email protected]

Agencia Española de Seguridad Alimentaria y Nutrición (AESAN) (Spanish Food Safety and Nutrition Agency) http://www.aesan.msssi.gob.es http://www.aesan.msc.es/SIAC-WEB/contacto.do?reqCode=newSearch

Agencia Española de Consumo, Seguridad Alimentaria y Nutrición (AECOSAN) (Spanish Consumption, Food Safety and Nutrition Agency) Website: www.aecosan.msssi.gob.es Email: http://www.aesan.msssi.gob.es/SIAC-WEB/contacto.do?reqCode=newSearch

Ministerio de Agricultura, Alimentación y Medio Ambiente (Ministry of Agriculture, Food and Environmental Affairs) http://www.magrama.gob.es/es/alimentacion/temas/defa ult.aspx [email protected]

For more information on exporting U.S. agricultural products to other countries, please visit the Foreign Agricultural Service home page at www.fas.usda.gov

Spain Supermarket Chain Profiles 26 Bibliography: Mercadona Carrefour Dia Eroski Alcampo Simply Lidl El Corte Ingles Consum Ahorramas Esade: Report on range of products and brands in Supermarkets in Spain Cinco Dias El Pais The Economist Euromonitor Kantar Worlpanel Revista Aral Gran Distribucion Profesionalretail Revistaaral

Spain Supermarket Chain Profiles 27