German discounters go for direct banana sourcing

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8 August 2011

Lidl has joined Aldi in announcing that they will be sourcing their bananas directly, rather than buying from wholesalers. The German retailers seem to be following the model developed by British and French retailers like Morrison, Tesco and Casino, using a dedicated in-house fruit sourcing company to buy directly from producers.

Between them Aldi and Lidl account for over one third of the German banana market, so the move by the two retail giants could have a significant impact on the industry, especially if the direct sourcing model is extended to the large networks of shops that both companies own in the rest of Europe.

What is not clear of course is whether the move to direct sourcing will mean that Lidl or Aldi take a more proactive approach to the ethics of their supply chains than they have done until now. Their approach so far has been entirely focused on price.

Interestingly, Aldi has also announced last month that it will abandon the practice of publishing a weekly banana price, a figure which had become a de facto reference price for the entire European banana trade. Analysts are divided over whether this is a good thing or not, but the fact is that the Aldi price formed the basis for many other banana contracts in Europe.

Reefertrends.com concluded that: "The European banana market has certainly become a little less transparent as a result of the withdrawal of the Aldi price from the public domain. But far from being a disadvantage to the multi-nationals, the move should allow the non-Aldi account holders more freedom and confidence to price independently. And by restricting itself to five key importers, Aldi has in effect removed itself from the market – the weekly price it pays will therefore also be less representative of market behaviour."

Sources: Lebensmittel Zeitung 5th August, reefertrends.com Week 28 and fruitnet.com, 8th August.