Supermarket chain turns to confectionery for foray into soft discount

By Peter Stiff

- Last updated on GMT

Related tags: Aldi, Marketing, Brand management, Ferrero

Italian confectioner Ferrero has become the first company to
persuade Aldi to abandon its hard discount strategy, signing a deal
to supply the world's biggest discount supermarket chain with seven
of its chocolate brands.

Aldi stores across Germany now stock the Rocher, Giotto, Ferrero Kusschen, Kinder country, Milch-Schnitte, Kinder pingui and Kinder Uberraschung product lines.

This is good news for Ferrero as it will enable it to infiltrate a market with much potential, however this may further bring into doubt the market positioning of brands such as Rocher.

The Rocher brand in particular was originally marketed as a premium brand and was the subject of a €4.8 million comeback advertising campaign in 2003. However, now it has become a permanent fixture throughout many retailers offering discounts.

A spokesperson for Ferrero Germany told ConfectioneryNews.com​: "The co-operation has no effect on [our] basic principles. We use standardised conditions for all trade partners".

Although the deal is at first applicable to Germany, Europe's biggest chocolate market, the arrangement will allow Ferrero to directly tackle issues of price pressure being caused by competition from own brand products produced by chains such as Aldi itself.

Previously Aldi choose to pursue a hard discount retail strategy where it refused to stock branded goods in favour of its own private lines. Other discount chains, such as fellow German retailer Lidl, adopted soft discount strategies selling a mixture of own and branded products.

Reports have suggested that the move is a result of an estimated profit fall for the privately held company, ranked last year as the 12th largest retailer by sales. Sales for 2004 were believed to be in the region of €34 billion, but to have fallen by 0.6 per cent in the first half of fiscal 2005.

This, coupled with and potentially caused by Lidl's successful push into branded products, could well have been a reason behind the 7000 store strong retailer's decision.

Related topics: Ingredients

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