Nestle banks on Buitoni

Eurofood, Feb 3, 2000 by A.C. Nielsen

Swiss conglomerate Nestle's Buitoni has become the best selling pasta brand on the German market for the first time. Since Nestle CEO Peter Brabeck defined Buitoni as one of the group's six international `power brands,' German subsidiary Maggi has been selling a range of products under the name, including sauces and olive oil as well as pasta. If the whole pasta range is examined, Birkel remains ahead with 14.5% of the market, followed by 3 Glocken with 12.2%, but the strongest individual brand is Buitoni, with 9.6% of the market in value terms and 10.4% by volume, report industry analysts A.C. Nielsen.

Maggi sales & marketing director Rolf Idecke attributes the brand's success in part to a strong distribution network. Buitoni has now achieved a listing with every retail group in Germany with the exception of Lidl Discount. Idecke claims that Buitoni did not heavily cannibalise sales of other pasta brands, but has tapped the potential of the soaring popularity of Italian pasta in Germany. A.C. Nielsen claims that volume sales in the segment have grown from 41 000 tonnes in 1993 to 67 000t today. At the same time, Buitoni and Barilla, Italy's premier pasta group, have grown their combined market share from around 40% to more than 70%. Other Italian brands have not been so fortunate -- Mama Luccia and Kattus have both lost ground.

HIGH PROFIT MARGINS

Profit margins on sales of Italian pasta can be rewarding: factory sale prices hover around DM0.95 to DM 1.10, and shelf prices lie between DM1.60 and DM1.70 per kilogram. On the other hand, Idecke admits that Italian pasta sales often feature promotional discounts which detract from the theoretical profit margin. He said that his goal for 2000 is to determine in which product categories to launch the Buitoni brand. Maggi is currently piloting Buitoni pasta sauces and olive oil at Wal-Mart stores, and has also earmarked DMSm (??4.1m) for conventional advertising.

Nielsen figures for January - November 1999 reveal that the German pasta market grew by 2.6% in value and 3.6% in volume terms in that period, lifting sales to 240 000t or DM890m. However, this only includes sales at the main retail outlets which Nielsen examined. The German Pasta Association said that 1999 saw per capita consumption of pasta reach 5.3kg for a national total of 430 000t. Its 27 member producers reported combined output of 275 000t.