Tegut: every fourth product is organic

After a restructuring phase that involved a number of closures in 2012, the takeover by the Migros cooperative in Zurich on 1.1.2013 and the disposal of its own manufacturing facilities, the consolidation of the Tegut retail business is now over. The first new store openings are on the horizon, with planning well underway. Whereas  it took a whole 17 years from 1982 to 1999 to achieve an annual turnover of organics worth €50m, development has since then been much more rapid, with Tegut taking only five years to reach the 100 million euros threshold. Since that point in time, the growth of organics has accelerated significantly: in just three years from 2004 to 2007 organic turnover doubled to €200m.

(Picture: Modern Tegut store in Wiesbaden) Although the rate of growth has decreased, organic turnover as a percentage of total turnover is continuing to rise, and this momentum continued last year: in 2012 organics constituted 23.5 % of the product range that came from controlled organic agriculture or was classified in the non-food category as ecological. In 2013, this percentage rose to 24 %. In the big supermarkets with up to 20,000 articles the number of articles in the organic segment is around 3,000  - in other words about as many as in a well stocked wholefood store with 150 m² of retail space, and we have to bear in mind that Tegut is a full-range stockist. (Picture: An employee in a Tegut store)

There was a fall in sales in absolute figures, because in 2012 consolidation was in the offing: 38 Tegut stores and 56 in-store cafes were closed because they were no longer profitable. From 2013, the former subsidiaries (such as Kff and Herzberger) have no longer belonged to Tegut and are not included in the calculation of turnover, which has been switched from a gross to a net figure. This shift has consequences for the turnover statistics. The total turnover of the company fell from €1.17bn (including VAT) in 2011 to the net figure of €977m in 2013. Because of the changed basis of calculation, these figures can’t be directly compared, and we will only be able to do this from 2014. The takeover by the cooperative Migros Zurich on 1.1.2013 (see our earlier report) led to a gross calculation becoming a net figure. With around 280 food stores, the Tegut chain is represented in the federal states Hesse, Thuringia, Bavaria (north) and the cities Göttingen and Mainz. More than 5,200 people work in the stores, the logistics centres and the central services that are located in Fulda. (Picture on right: Trainees in Gießen)

Last year, Tegut’s turnover of organic products amounted to €263m. With the restructuring of the company in 2012 and the sale to Migros, 2013 saw a re-launch with double digit investment in improving its customer orientation. In its retail business, productivity per unit of area rose by 2.46%. “We cleared the investment block in our trading in 2013,” says Thomas Gutberlet (44), the son of  Wolfgang Gutberlet and now the managing director of Tegut. In the meantime 19 Tegut stores, in which €15m have been invested (by Migros plus Tegut’s own resources), have been “revitalised”, as they are saying at Tegut. This revitalising phase will continue in 2014 with another 29 supermarkets. They are now once again thinking about new investment – in the autumn of this year, they would like to open a 460 m² store in Frankfurt  and, at the turn of the year 2014/15, a store called Milaneo (1,400 m²) will open in Stuttgart in an ECE shopping centre not far from the city centre. Whilst Tegut has been well represented in the Rhine-Main region for a good decade, in the capital of Baden-Württemberg they are entering new territory.

After a trial phase in 2013, from January 2014 Tegut has stocked ‘Regional Window’ products (opening a window on provenance and transparency). From the very start, regionality has played an important role for Tegut, and this was why the company built up its own processing facilities, such as  Herzberger Bäckerei and Kff-Fleischwaren. In the meantime, in the sale of Tegut to Migros these arms of the business, together with other operations like the quality assurance company Quant and the caterer Tegut Bankett, have been transferred to WEG-Stiftung & Co. KG under the management of Wolfgang Gutberlet. (Picture: Trainees responsible for trial-running a store in Gotha for a week)

For the International Green Week at the end of January 2014, Tegut, as the founding member of the regional window concept, presented initial successes using the new labelling possibilities, and it is itself providing its own brands with the regional window logo. In the trial phase in 2013, the regional window was used for the following products: Original Thüringer Klöße (Thuringian dumplings), Bio-Topfkräuter (organic cooking herbs) from Franconia, potatoes, champignons and cherry nectar, onions and pork products in the LandPrimus brand. In 2014, there will be 21 products in the categories eggs, pork and onions. 

 

Tegut operates four sales lines:  tegut... gute Lebensmittel (good food): supermarkets with a retail area of more than 1,200 m² and a product range of around 20,000 articles tegut... nah & gut (local and good): supermarkets with a retail area between 600 and 1,200 m² and a product range of around 7,000 articles  tegut... City: supermarkets with a retail area up to 600 m² and a product range of around 5,000 articles tegut... Lädchen für alles (small shops with everything): small food shops with a retail area of 100 to 300 m²

Measures to manage the consumption of electricity, gas and water by Tegut supermarkets were introduced in 2013, and implementation began in around half (135) of its stores and will be continued in 2014. Chilled shelves are being given glass doors and LED lighting and low energy fans for dairy products are being built in. Last year, the company made savings of about 5 million kWh.

“Creating values and value creation today and tomorrow” – was the title of the first “tegut… Zukunftswerkstatt“  (future workshop) at the end of January 2013 (see our report). At the invitation of Tegut, in lectures and discussions producers, growers, retailers, scientists and publishers addressed themes like sustainability, the common good and value added. Representing customers, members of the Tegut customer council and winners of a Facebook lottery took part.
 Tegut was honoured in 2013 for its commitment to numerous causes, and in a customer survey in “Kundenmonitor” it came first. In the view of customers, Germany’s best sausage counter can be found in the recently opened Tegut store (called Emaillierwerk) in Fulda. For the third year in succession, a Tegut store (Bad Hersfeld) was awarded the Green Shopping Basket of NABU (Nature and Biodiversity Conservation Union). The Verbraucherinitiative e.V. (consumer initiative) honoured the customer orientation of Tegut’s CSR communication with the award of a gold medal. The accolades “Trainer of the Year” and the “Kreativ Cup 2013” also went to Tegut. (Picture on left: Tegut store Mühlheim am Main )

(Pictures: Tegut store in Lauterbach/Hesse, eggs and onions with regional window, organic vegetable offer)

The start of Tegut’s commitment to organic lies in the distant past and has to do with the friendship between three men: Wolfgang Gutberlet, now 69 years old, Götz Rehn and Götz Werner wanted to make the world a better place. Their conversations gave rise to anthroposophic ideas and from these developed the notion of devising a way of creating better and healthy food. This resulted in three retailing concepts of, all of which were heavily reliant on organic. Whereas Rehn with Alnatura built up a purely organic business, Gutberlet and Werner, the owner of the successful drugstore chain dm, opted for a combination of products. The way forward they chose: start with a conventional product range and step-by-step offer customers new organic products. In 1982, the first limited organic range was introduced. The first few years were difficult, one reason being the fact that Tegut’s original location – East Hesse – bordered the GDR and, with a weak economy, people were not exactly keen on organics.