Spain: Organic supermarket chain wants to double its network

The organic supermarket chain Veritas is determined to grow. “Despite the crisis, we are experiencing above inflation growth of 5-10% with the same number of stores,” explained Managing Director Silvio Elias. The firm’s target is to double both turnover and the number of stores within two years. Reaching the figure of 30 stores in two years will be a challenge. Mr Elias reported to the paper Expansión.com that in 2009 alone five new launches are planned, although only in two or three years time is the group planning to open its first stores in Madrid. To turn the planned growth into reality, a new commercial manager, Emilio Vila, has been appointed. He worked previously for the supermarket chain Eroski.  (Picture: Wide range of cheese and meat)

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Veritas is anticipating a turnover of 14 million euros for 2008. The chain, that has its headquarters in Barcelona, consists of fifteen stores, and in the current year it has opened four. In its shops, Veritas sells 4000 organic lines and has a customer base of 40,000. Veritas has 11 organic supermarkets in Barcelona and one in San Cugat, Granollers (near Andorra), Catelldefels and Manresa. In the future the company would like to offer franchisees the opportunity to open their own organic supermarket with the Veritas concept and name.

On 25 October 2007 Veritas, that was founded five years ago, opened its twelfth organic supermarket in Barcelona, the vibrant capital of Catalonia. Whereas the trendy shops of the 1980s and 90s are struggling to survive, the fresh food concept of Ecoveritas is proving a success.  The company Ecoveritas, that was founded by four families, calls its chain stores simply Veritas, the Latin for truth. The smallest Veritas store has 140 m² of retail space; the largest has 650 m². Both were opened in April 2002.

The Marketing Manager Ignacio Pons de Dalmases is delighted: “We supply about 40,000 families in and around Barcelona.” If we assume every household has three members, that comes to something like 120,000 people. Every day 4000 sales take place in the 11 stores, with an average of 380 customers per store. “Our core activity is providing fresh food, and customers come in particular to buy our fresh bread,” says Mr Pons. Every morning between 6 and 8 o’clock bread, rolls and bakery products, freshly baked overnight, are delivered to the stores all over Barcelona. The company produces around 20 sorts of loaf in various sizes, baguettes, croissants, rolls, cakes and confectionery.

(Picture: attractive bread counter in the 650 m² store in Calle Mandri)

“Five or six years ago you couldn’t buy decent bread, either organic or conventional, and that’s why we installed an organic bakery under our biggest store. And this is where we have our headquarters too,” the Marketing Manager explains. Ecoveritas’s workforce consists of 11 staff in the headquarters and 145 in the stores.

“We have deliberately created an apolitical shopping ambience, because we want to appeal to customers from all social classes and attitudes,” is how Silvio Elias de Gispert, the Managing Director, explains the difference between most other specialist organic stores and Ecoveritas. In Spain, you often find shops being founded that have a vegetarian, macrobiotic or some spiritual or political orientation, with posters, leaflets and the product range indicating where the emphasis lies. “We want our stores to be associated with fresh foods that are in keeping with the buying habits of our customers,” says the Managing Director who is only 34 years old.

(Picture: the generously laid out store in Calle Mandri)

Although the thirteenth store opened its doors on 13 December 2007, in 2008 Ecoveritas launched another four organic supermarkets in order to increase turnover from the current 11 million € per year. In 2008 the company realised a 30 % growth in turnover compared to 2007. The stores have on average 350 m² of retail space, which is in keeping with the target size of 300 - 400 m². The monthly rent in Barcelona is, according to location, between 15 and 30 € per square metre. Some premises have been bought as a longer term investment, but Ignacio Pons explains that they prefer to rent premises so that they can expand more rapidly and not tie up too much capital. As far as location is concerned, the company’s aim is to have stores in pedestrian precincts where lots of people pass by. (picture: Silvio Elias de Gispert, right, and Ignacio Pons, left)

“At the moment, we haven’t got any competitors,” says Mr Elias.  Apart from the Veritas stores, the only other organic supermarket in Barcelona is Bio-Space, and Marketing Manager Mr Pons assumes there is room for another 15 Veritas stores in and around Barcelona, and during 2008 and 2009 Ecoveritas would certainly like to expand there. Currently, it takes no more than one hour to deliver the strategically important bread and bakery products to all the stores. “This makes us different from all other organic stores in Spain,” Mr Pons points out with pride.  In Spain, bread and bakery products are usually sold wrapped in plastic, but in Veritas stores it is the same as in organic supermarkets in Germany - the goods displayed on open shelves at a service counter. However, Mr Elias does see a problem with expansion elsewhere. “Per capita consumption of organics in Barcelona is about three to four times higher than, for example, in Madrid, but I hope the situation in Madrid will have changed in a few years.” In the medium term, this could apply to other cities as well.
(Picture: about 100 different organic wines are available, although most sales are of wines under 8 € a bottle. The Spanish are very price-conscious)

Nevertheless, Mr Pons is assuming that there is likely to be an organic revolution in Spain. “If we have the same experience as when credit cards or mobile phones were introduced, then the big breakthrough is on the way.” The Spanish were very hesitant and held back at the beginning, but now they have embraced the new technology with great enthusiasm. It has to be said, however, that there is not much sign of that happening with organics at the moment. Spain’s share of the organic market in Europe is a mere 2 %, not much compared with, for example, Italy’s share (14 %).

In the early days in 2002/2003, Ecoveritas took over three stores belonging to Comme Bio, a cooperative founded in the mid-1990s. Although the stores with their adjoining restaurants had plenty of customers, the parent company Biocop (a Spanish manufacturer of dry goods) did not regard retailing as its main enterprise. But the particular organic supermarket that opened on the Via Laietana in 1995 was long regarded as a cult store - you could have an excellent meal in the restaurant, stop by for freshly pressed juice or ice cream, or do your shopping, including in the natural goods department in the basement where clothes were also available. To the chagrin of many customers, this is now a thing of the past - the store’s reorganisation by Ecoveritas was low budget and less than satisfactory. Street sales in the bistro were terminated and the cosy, appealing atmosphere has been replaced by harsh fluorescent lighting. The problem for Veritas is that the lease on the Via Laietana property has only a few years to run, and the company has therefore little incentive to invest. Pons comments: "Sales have increased over 40 % since we changed the layout of the shop. It’s also interesting to remark that now that this is a Veritas store, for the first time, everything served in the restaurant (there still are 50 chairs) is 100% organic."

Marketing is a major activitiy of Ecoveritas. Ignacio Pons regards television as all important. “We sponsor the part of the news dealing with sport on the state-run Channel TV3 on Catalonian Television,” he explains. In a regular programme on TV8, that has around 18,000 viewers, 1½ minutes of tips on food and health are broadcast. It is presented by a nutritionist - “brief, to the point and appealing” - and it is followed by what you can buy in Veritas stores. The company also puts adverts in La Vanguardia, which is the leading daily paper in Catalonia, and in free customer magazines like Ecoespai. Every three weeks, Ecoveritas publishes an 8-page customer brochure drawing attention to 60 - 70 special offers, product information and prices. The print run is 10,000.

The latest marketing hit, of which Silvio Elias de Gispert (picture, right side) and Ignacio Pons (picture, left side) are very proud, is a lottery with three electric cars as prizes. The two men are of the opinion that the compact Reva from India, valued at 12,000 €, ought to become a feature of Barcelona in order to reduce the chronic air pollution caused by traffic. All customers who spend at least 5 € on their shopping can fill in a ticket and take part in the lottery that runs until 21.11.2007. The company’s aim is to use the e-mail addresses given by customers to send out a newsletter, also by e-mail. Last year’s lottery was very popular with customers – 150,000 took part, hoping to win one of the 100 shopping trolleys full of products worth 100 € apiece.

Whereas at the outset one of the first stores incorporated a café, the people at the headquarters of Ecoveritas have abandoned the idea of this combination. “Our core competence is retailing, and for this reason we do not want to go any further with gastronomy,” says Mr Pons.

Like Silvio Elias de Gispert, he wants to concentrate on developing domestic product alternatives to imports. They explain that they have already made good progress, because five years ago the share of turnover from domestic sources was only about 20 %, whereas it has now risen to 50 %. An example is the production of nine different fruit yoghurts from the region. They worked closely with the manufacturer and a specialist with an organic dairy, and two years of preparation resulted in local manufacturing (near Girona) and sales getting underway. The price of these products was considerably lower than the price of imported yoghurt.

They have also made good progress in sourcing fresh fruit and vegetables direct from Andalusia. If they order at least one palette of each sort, they get direct deliveries, which make the goods both cheaper and fresher. An absurd fact: for years it proved impossible to persuade the export-driven companies in Andalusia to supply companies within Spain.

Veritas is also in the lead regarding product development:

a range of organic baby food was brought out, and a vegetarian bolognaise sauce and olives stuffed with anchovies were developed - organic versions that were previously unavailable on the Spanish market. Ecoveritas sells about 300 articles under its own brand name Veritas (picture), and thus makes available a good variety of basic foods at favourable prices.