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Spain-based Mercadona said it grew sales by 6% in 2018, generating €24.305bn in the year. Profits rose by 84% to €593m, which came despite the retailer investing €1.5bn in its network and operations.

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Companies in Spain pledge to making food healthier, DIA makes more leadership changes, and Makro accelerates the digitalisation of the HoReCa industry in Spain.

Reducing sugar, saturated fats and salt

The minister of health, consumption and social welfare, Maria Luisa Carcedo, has signed agreements with 20 associations that represent 398 food and drinks companies to reduce the average amount of sugar, saturated fats, and salt in products by 10% by 2020. The plan covers 13 food groups including: soft drinks, ready meals and breakfast cereals. 

The strategy fits into the government’s strategy of nutrition, physical activity and prevention of obesity. Spain has one of the highest obesity rates in Europe with 37% of adults overweight and 17%. The figures are worse for children with 40% overweight and 18% obese. The agreements are a step towards preventing obesity and countering inequalities in health, with the government keen to use a collaborative approach between the public and private sector.

According to Europa Press, leading retailers and manufacturers like Mercadona, Consum, Kellog’s, Coca Cola, Pepsico and Bimbo are involved. Businesses will need to reformlate their products and make the first move to gain a competitive advantage.

Further changes to personnel at DIA

The group has created a new executive committee of seven members, headed by CEO Borja de la Cierva. With these most recent changes DIA aims to make its offer more appealing to customers, simplify processes and drive efficiencies.

Makro driving digital transformation

InfoRetail reports that Makro has driven the digital transformation of 12,000 bars and restaurants in Spain during 2018. Its initiatives fit into Metro AG’s international plan to digitalise the hospitality industry, and bring it on par with other industries like travel. To support the sector, Makro will launch a digital platform service to aid companies with their digital transformation.

The first electric lorry is tested in Spain

According to International Supermarket News Lidl and Mercadona have been chosen to test Man's heavy duty 26-ton electric truck. Germany-based Man Truck & Bus will run distribution tests in Madrid, the first location chosen outside Austria. The initiative is expected to be rolled out in 2025. The truck currently takes over four hours to charge, and it is hoped by 2025 the time will have reduced. Man Truck and Bus partnered with SPAR Austria last year and has been testing its electric truck there since September 2018. 

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Spain-based Mercadona is to evolve its supplier strategy for its private label products, Expansión reports. It will move from an exclusive contracting model initiated 20 years ago, to a “proveedor total” (total supplier) model.

The current model, and how it will be adapted

Mercadona’s current supplier model is comprised of two parts: integrated suppliers, and specialists. The 120 integrated suppliers are closely linked to the retailer and supply a group of products within a category, or even a category of products. Given the long-term contract, breaking it requires a three-year unhooking period. Whilst it is a secure relationship for the supplier, they often have little opportunity for independent business initiatives, due to exclusivity with Mercadona.

The model was expanded three years ago to incorporate specialist providers, hired for a small number of products, specially developed for Mercadona. Currently there are around 1,300 specialists according to Expansión. With the total provider model, Mercadona will unify all of it suppliers under one label, and contract suppliers on a product-by-product basis. Moving forward, when Mercadona wants to introduce a new product, it will choose the supplier that can offer the best quality and price, rather than choosing a supplier that produces similar products. In addition to reinforcing its low-cost strategy, Mercadona aims to become more agile with this strategic shift.

Hacendado (left), Deliplus, Bosque Verde and Compy (right) are Mercadona’s private label ranges affected. Source: IGD Research, Mercadona

Best quality, lowest cost

Mercadona has always favoured a model which passes on low prices to customers at the highest quality; the total provider model sees it further invest in price. The discount format is performing well in Spain, and investment in prices will help Mercadona to remain competitive and maintain its market share. For other national retailers in the Spanish market, pressure to lower prices and remain competitive may increase.

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Spain-based Mercadona has purchased land to construct a second online warehouse in Barcelona. Mercadona’s first online distribution centre in the Catalonian capital should be operational by 2020, and the second by 2022, Europa Press reports.

Strong commitment to online

Mercadona's construction of new online-only fulfilment centres shows how its channel strategy has changed. Previously against the online channel, Mercadona's president Juan Roig conceded, and Mercadona has been developing online initiatives. 

The new plot purchased in Barcelona covers 25,668 sq m, 14,650 of this will be used to build the centre. Once completed, it will cover the city of Barcelona and surrounding areas.

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Presentations

06/03/2019

An essential summary of trading priorities, latest developments, and other key commercial insights for Mercadona.

16/10/2018
We review Mercadona's outlook for the next five years, including its strategic initiatives and future growth opportunities.
05/07/2018
We visited Madrid to discover latest retailer initiatives, explore new and innovative concepts. See our pick of the best stores that show how retailers in the city – from national chains to local champions – are evolving their stores to meet shoppers’ desire to buy little and often.
View all presentations

We review Mercadona's outlook for the next five years, including its strategic initiatives and future growth opportunities. 

Key presentation

This in-depth guide to Spain explores the key trends in grocery retail and the growth strategies of the leading retailers in the country.

An essential summary of trading priorities, latest developments, and other key commercial insights for Mercadona.

We've developed a single, universal methodology for calculating food and consumer goods retail data, supported by our programme of primary and secondary research. This makes Retail Analysis the most reliable and robust source available for data of this type. 

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