Over the past years, however, some of the large players on the FMCG market have tried to boost their revenue by developing own brands. Thus, distribution firms chose to diversify their business in a move to shelter from potential changes in client portfolios.
Last year, frozen products distributor Macromex, with sales of over EUR100 million, set off production at frozen bakery products factory La Lorraine Romania in Campia Turzii. Macromex owner, businessman Dan Minulescu, has officially launched the Edenia brand for frozen products – vegetables, fish, half-baked products – and even bread, which are sold both in Romania and abroad. Minulescu has also developed the concept of La Strada ice cream parlors.
Distributors’ businesses are strongly impacted by the evolution of consumption, but after a period of three years (from 2009 until 2011) in which consumption saw a cumulated decline of around 20%, the slight growth over the past year does not have a significant impact. Is the development of own brands the key to business growth for consumer goods distributors?
Catalin Calota, consultant at management consulting firm A.T. Kearney, said the businesses of consumer goods distributors usually target large sales volumes which translate into small profits and high turnover. Thus, any new item included in their portfolio should generate sales volumes large enough to turn it profitable.
Calota thinks that 2013 will bring solid consolidation for distributors- not necessarily because large distributors will acquire smaller distribution firms, but because players on the profile market will attempt regional expansion. This move is only natural because volumes are the most important factor for a positive outcome in the distribution business.
“The pressure on cash and flat sales volumes will force small distributors to exit the traditional distribution business and they will try to gain ground in the wholesale sector. These players will not exit the market as long as they will play a key role between producers and traditional commerce,” said Calota.
(English version by Ecaterina Craciun)