Market Visit Report Vienna, Austria - Sales is Not Simple

Market Visit Report
Vienna, Austria
April 2010

Summary
overview:
the goal of this report to is share with the Canadian CPG / Retail industry some
innovations and observations found during our recent market visit to Vienna, Austria.
we hope that you find these insights useful in your day-to-day work and that you
can draw inspiration from them.
if you would like any more information on what you see in this report please feel free
to reach us at jdoucette@salesisnotsimple.com

Austrian CPG Market
overview:
The Austrian CPG market, has many similarities with the German market given its
proximity and shared language.
Many CPG companies are in the process of merging the operational back-end (IT,
Finance, Customer Service, Logistics) of Germany, Switzerland and Austria under
one umbrella.
Austria also acts as a regional headquarters for Central and Eastern Europe (CEE),
which includes as many as 32 countries from Hungary to Romania to Turkey, so
there is a substantial supplier community based here.
From a retail perspective, the roughly 3 million population in urban Vienna is served
by a combination of supermarkets (Billa, Spar), hard discounters (Hofer and
Zielpunkt) as well as drugstores (DM, Bipa).
Vienna also hosts a couple of unique retail concepts that we have highlighted here
such as a Nespresso flagship and Tchibo - a German cafe / retail concept.

Summary
observations:
1. Cool Messages From Billa Supermarkets
2. Chiquita Goes Beyond Bananas
3. Pringles Scores with the World Cup 2010
4. Hofer - A Hard Discounter
5. Zielpunkt - A Soft Discounter
6. Added Freshness at Spar Gourmet
7. BIPA Drugstores - Standing Out In a Crowd
8. DM Drogerie Markt - A Leading European Drugstore
9. Tchibo - Cafe or Retailer?
10. Nespresso Flagship Store - a CPG Brand Like No Other

Cool Messages at Billa
Communicating with shoppers in the frozen
section can be like trying to strike up a
conversation at a Winnipeg bus stop in mid-
January.
Billa has managed to create attractive
shopper communication by using bright colors
that stand out from the typical packaging
colors found behind the glass door.
Top: Price Discount Tags with clear discount
communication and fresh connotation from
the use of strawberry image.
Middle: Private Label price guarantee
communication on the Clever brand.
Bottom: Health information for consumers
talking about the benefits of eating Fish.

Billa Supermarkets
Billa Supermarkets are ubiquitous in Vienna and have over 1000 locations across Austria.
The chain is now owned by Germany’s REWE Group.

Chiquita Goes Beyond Bananas
In our Paris Market Visit Report we told you about Innocent - the smoothie brand from the UK that was taking the drinks
market by storm and had recently seen Coca Cola take a controlling stake in the brand.
At Billa, a supermarket chain, we found a natural competitor in the fruit smoothie business - Chiquita.
It makes a lot of sense doesn’t it? If I asked you to name a fruit “brand” Chiquita would likely be a top choice.
What a better way to extend the brand beyond one category (although bananas are an important category appearing in
more baskets than any other item - hence its use in No Frills’ brand imagery.
It is definitely a value added product at €1.69 ($2.23 CDN) for a 200ml bottle, much better than bulk bananas at $0.79 per
pound!
Also, from reading the package, Chiquita is not licensing the brand in this effort. Watch this space.

Pringles Scores With the World Cup 2010
Can you imagine if the Stanley Cup or the Super Bowl was awarded only once every four years? That would mean a huge
hit to many retailers and suppliers top and bottom line - especially in February, April and May.
The FIFA World Cup 2010 will start in June and CPG companies in Austria (and across Europe) are cashing in already with
promotional efforts to leverage this huge consumer event.
One supplier, P&G has launched a promotional package changing the brand name to Pringoooals with a nod to the
enthusiastic play-by-play of fanatic football commentators.
What is your company doing to support this event? Some of you may wonder who in Canada actually cares about the
“beautiful game”.
There are millions of Canadians that claim heritage from World Cup countries.
That’s a big opportunity to boost summer sales by ramping up the excitement at store level and targeting nationalistic fans.

Hofer - A Hard Discounter
Hofer is a hard discounter owned by Germany’s Aldi
Sud. They have 410 stores in Austria.
Aldi is also at our border with over 1000 stores in the US.
A hard discounter squeezes out costs through high use
of shelf ready packaging and low staff levels. Only two
cashiers were available on a busy Friday evening and
lines were long (above).
The assortment is nearly 100% Private Label with even
the biggest brands being excluded. No Coca Cola,
Pampers, or Kellogg’s Corn Flakes are to be found as the
cereal section at left reveals.

Zielpunkt - A Soft Discounter
Zielpunkt is a soft discounter owned by Germany’s
Tenglemann Group (the former owners of A&P
Canada) and affiliated with the Plus chain in other
European countries. They have 300 stores in Austria.
A soft discounter uses many of the cost saving
tactics of a hard discounter but will have a larger
assortment and a selection of national brands.
Aggressive PL strategies (Nutella €2.39, PL €0.99)
and heavy use of shelf ready packaging are used.
Notice the position of Heinz ketchup at left. Only one
large size SKU in the bottom left of the plan-o-gram.

Added Freshness at SPAR Gourmet
Breakfast starts off right at SPAR Gourmet! Shoppers can squeeze and bottle their own orange juice with this
machine that is right in the produce section.
Austrian shoppers often bag their groceries on tables located after the check out (right). SPAR Gourmet also allows its
customers to grind their coffee beans before they leave the store. Perfect for the Austrian cafe culture.

SPAR Gourmet Supermarkets
Great merchandising of “bio”
products in the refrigerated section.
Shopping for wine feels like
browsing in a private cellar.

SPAR Gourmet Supermarkets
Extensive displays for an Austrian favorite - Mozart Chocolates. These displays were all in one
supermarket of 700 square meters - however it was within walking distance of Vienna’s famous opera
house. Kudos to the Mirabell brand owner - Kraft Foods.
Mirabell produces 90 million units per year. Not bad for a country of 8.3 million!

SPAR Gourmet Supermarkets
SPAR is a buying co-operative similar to IGA in North America. It bills itself as the “world’s
largest supermarket chain” with over 20,000 stores in 31 countries on four continents. The
chain has more than 1500 stores in Austria.

BIPA Drugstores - Standing Out In a Crowd
BIPA is a chain of 560 drugstores that really standout. More of a beauty store (think SDM less the pharmacy and food)
these stores catch your eye even on the busiest city streets. Consistent use of the white and pink colors inside and
outside the store is an excellent example of strong retailer branding.
BIPA is owned by REWE Group and is closely tied to BILLA supermarkets.

BIPA Drugstores - Standing Out In a Crowd
BIPA is more of a perfumery than a traditional drugstore as we
know it in North America. Cosmetics, Health & Beauty and
Toiletries make up the bulk of the offer.
Branding is very consistent with the hot pink extending to BIPA’s
private label cosmetics brand “b.pretty”.

DM Drogerie Markt
DM is one of Europe’s biggest
drugstore chains. Based in
Germany, the company has more
than 2,200 stores in Germany,
Austria and CEE. It’s 354
drugstores in Austria make it the
country’s second largest chain.
An innovative leader in the format
with a strong private label program
called Balea.
DM has experienced explosive
growth in the past five years driven
by geographic expansion.

Making Gift Giving Easy
The DM store that I visited in Vienna
had this little kiosk near the exit with
free gift wrap and ribbon.
I thought it was a great way to
encourage gifting especially those last
minute gifts when you are “on your
way to Grandma’s house”.
Placing the kiosk near the door firmly
plants the idea in the shoppers mind
so that when they need a gift they
know where they can get one in a
hurry.

Balea - A Brand of Its Own
Balea is a significant private label brand that competes in many health and beauty categories across the store. The
product range is very wide as demonstrated by the skin care range above.
Well respected, the Balea brand is featured prominently in DM promotions including it’s weekly flyer.

Babylove - Coming Soon to SDM?
Shopper’s Drug Mart
launched over 300 SKUs of
Balea product in Canada in
2009 across personal care
and hygiene categories.
The latest SDM Annual
Report mentions an
expansion of its private label
brands in baby care.
Will babylove be the brand
they use to expand their PL
reach?

Tchibo - Cafe or Retailer?
Tchibo is a unique retailer in that it is principally a cafe just like Starbucks. You can have a coffee or have
beans roasted to take home.
However, step inside and you instantly recognize that it is much more than a cafe. Its a retailer that leverages
its high traffic to sell quality seasonal merchandise with a “treasure hunt” philosophy.
It’s like Starbucks meets Costco.

Tchibo - Cafe or Retailer?
View from the entrance
Fresh Roasted Beans
Coffee Accessories

Tchibo - Cafe or Retailer?
Camping Gear and Active Wear Men’s V-neck Sweater

Nespresso Flagship Store
Nestle has significantly changed the coffee market in Europe with the launch of Nespresso - an ultra
premium coffee experience driven by its exclusive capsules and coffee machines.
Most consumers buy capsules through mail order but in several cities across Europe they have built flagship
stores to enhance the brand experience with its upmarket consumers.
Step inside the store and you are in a virtual brand world - for a CPG product.

Nespresso Flagship Store
Interact with the Nespresso capsules. Perfectly controlled brand executions.
Even recycling the
capsules creates a
trip to the flagship
store to make another
purchase!
Everything you need for the Nespresso experience.

4804 16 Street SW