The European Commission has unveiled the results of a comprehensive study about the evolution of choice and innovation in food products in Europe during the last decade. The results show that the entry of new competitors always increases choice and innovation.
In many Member States, retail markets are not overly concentrated, and the retailers' bargaining power does not seem to have a negative impact on choice and innovation. Finally, while choice for European citizens has continuously increased in shops since 2004, the number of innovations reaching the consumer each year has decreased since 2008 largely due to the economic crisis. The Commission is inviting stakeholders to submit their comments on the study results.
Commission Vice-President in charge of competition policy Joaquín Almunia said:"European citizens should enjoy good food at affordable prices. In the past five years, stakeholders have raised lots of questions on the functioning of our food supply chain. We need hard facts to assess the concerns expressed, in particular regarding the impact of the bargaining power and private labels of large retail chains. This study provides important insights and paves the way for future work in these areas."
Following repeated concerns raised by various stakeholders, the Commission has carried out a comprehensive study on the food supply chain in Europe. The main results are:
Evolution of concentration, choice and innovation
At local level, consumer choice has been continuously increasing over the last decade in terms of number of shops, products, brand manufacturers and product package sizes displayed in shops. However, the number of innovations reaching the consumer each year has decreased since 2008 by 6.5%. In 2004 innovation essentially consisted of new-to-the-world products and range extensions (e.g. new flavour), whereas in 2012, roughly a third of all innovations merely concerned the packaging of a product.
Concentration of brand manufacturers at national level has increased in most product categories investigated. Concentration of retail overall (i.e. modern retail and traditional shops) has increased in virtually all Member States, essentially because of the increased penetration of modern retailers (supermarket chains, hypermarkets and discounters with a centralised distribution system involving modern logistics). Concentration of modernretailers alone increased in certain Member States and decreased in others. In local areas, modern retailer concentration seems to have slightly decreased on average because the main chains have entered each other's local markets.
Drivers of choice and innovation
The main drivers for both choice and innovation have been the size and types of shops and the economic environment (GDP/capita and unemployment in the local area). Also, the larger the turnover in a product category, the more choice (and innovation, to a lesser extent) there is in that category. The opening of a new shop leads the competing shops to offer more choice and innovation on their shelves. This supports the Commission's efforts to cease unnecessary restrictions on the creation of retail shops (seeIP-13-78).
In moderately concentrated retail markets, retailers' stronger bargaining power vis-à-vis suppliers does not seem to lead to less choice and innovation in food products. The lack of data prevented the study from analysing situations of high concentration of modern retail (such as those in Nordic and Baltic countries). Moreover, the share of private labels in the assortment does not have a significant impact until it reaches a high level (depending on the category) at which it may become detrimental for choice and innovatio
n.