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Private label coffee shares in Spain's boom.

Spain's ebullient retail coffee market has performed, during the past decade, as the world's fastest growing market for home consumption of ground vacuum packed coffee. Market liberalization, economic growth, the rise of super and hypermarket shopping, the nation's entry into the European Community - there have been various factors contributing to the strong growth in sector sales. Although not sharing in the expansion, soluble sales, already very high in Spain, have remained quite stable.

Although the expansion is frequently seen in terms of market shares for the major international coffee companies active in Spain - Nestle, Douwe Egberts and General Foods - the Spanish scene has also been marked by a strong increase in sale of store brands. The boom has inspired a bull market for private label coffees, roast and soluble.

As indication of this, the private label share of total retail market roasted coffee sales (whole bean and ground) in Spain stood at 9.9% in the October-November report period of 1991. In the same period, the volume of private label roasted coffee sales had increased by 7.6% over its level in the same period of 1990.

Private label soluble coffees have particular presence in Spain, and in the time period quoted above, accounted for 19% of all retail sales of soluble coffee products (which in turn represented about 19% of all coffee aisle sales in Spain). Although the soluble retail sector was off overall by about 1% in volume for the period, private label soluble coffee sales gave an outstanding performance by increasing by 9.2% over the previous period.

Nationally, private label foodstore products in sum saw a lackluster year of flat results in 1991 - although this clearly was not shared by the coffee sector entries. For 1992 however, the private label area is seen to be expanding vigorously again and it is assumed that private label coffee can surely benefit accordingly.

One organization with special interest in private label products is UDA, which is based in Madrid. UDA is Spain's Union of Food Retailers. The organization is formed by 35 store cooperatives that control more than 8,000 points of sale throughout Spain and the Canary Islands. The Acosa group of stores is also affiliated with UDA, adding another set of about 200 medium-sized foodstores. This large network of food retail outlets includes the spectrum of sizes, from small to supermarket (but no hypermarkets). The small units are under the UDACO banner, small to medium size stores bear the GAMA name, the supermarkets are called MAXCOOP. The Acosa stores are under the PLUSMARKET name. In sum, UDA represents what is presumably Spain's most numerous foodstore grouping.

Within the UDA organization, the Delhogar subsidiary has been formed to create and market the gambit of private label products offered by the national network. Distribution is actually handled directly by the 35 cooperative members.

Delhogar has been operational only since 1983, yet has grown to manage a portfolio of 24 private label brands that now extends to some 300 product references sales in 1991 reached 45 million dollars, and are expected to pass the 50 million mark this year. Needless to say, coffee products have an important share in this lively enterprise. There are about a dozen coffee-related entries in the Delhogar catalogue, with a complete line of 100% coffees, coffee mixtures, decaffeinated and soluble coffees, products in vacuum packs, jars and sachets, and in the range of packaging sizes, from single-service to family formats.

Delhogar coffee products - roasted and soluble - are positioned under the Flecha de Oro brand name. Although the soluble line was introduced only about two years ago, it has been a considerable success and Delhogar finds itself well placed nationally in the private label soluble coffee rankings. The soluble product, regular and decaffeinated versions, is made in Spain for Delhogar by SEDA. The line includes single service sachets. The importance of the soluble products are such that Delhogar has given them television marketing support. Having established the soluble program, the company is now turning more emphasis to promoting its roasted coffee products, which are manufactured by Union Tostadora in Logrono.

The combined coffee segment (roast and soluble) ranks in the top 10 lineup of sales earners on UDA-store shelves. For their part of this, Delhogar private label coffee entries, particularly the soluble, have earned a respectable position. Within the UDA organization, key Delhogar management includes president Antonio Robles, general director Raul Antequera, department manager Jose Maria Romero and marketing manager Carlos Tradacete.
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Title Annotation:Union of Food Retailers and subsidiary, Delhogar, promoting products offered by cooperative members
Author:Bell, Jonathan
Publication:Tea & Coffee Trade Journal
Date:Aug 1, 1992
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