Hans Daurer is over the moon. This year he is expecting the firm that he runs together with Jürgen Menz to exceed the 10 million Euro mark. AL-Naturkost is the only Austrian wholesale business supplying the specialist whole food trade. There are several reasons why the turnover is still rather low. In Austria, with its eight million inhabitants, the number of stores with a high turnover is small. Moreover, the German wholesaler Dennree has cornered a good part of the Austrian market.
Picture: Jürgen Menz and Hans Daurer
What is more, many store owners still order direct from the manufacturer. So the retail trade devotes its energies to ordering and sourcing instead of concentrating on professionalising the outlets. On the first weekend in October 2005, AL’s twelfth trade fair was held in Vienna and attracted 700 specialist visitors. When the thirteenth fair takes place in the autumn of 2006, AL will be celebrating its 20th anniversary. Hans Daurer, who is now 61, launched the wholesale enterprise “Lebenszeichen” in 1986 and just under ten years later fresh food followed, an area of business built up by Jürgen Menz (44).
This Austrian wholesaler supplies a total of 500 customers, of whom around 300 are specialist stores. In conversation with Organic-Market.Info the two directors of the company estimate 200 customers in gastronomy, canteens (including facilities for the disabled, Waldorf schools) market stalls, small farm shops and specialist shops (for example, tea, cosmetics). “But our 100 best customers account for the lion’s share of the turnover (77 %),” explains Herr Daurer. The company that he founded now supplies 6000 items, of which 700 belong to the green, white and red fresh food category.
The two directors (picture) are very pleased with a growth in turnover of 9 % in 2005 (8 % in 2004) and, anticipating a further rise in coming years, they would like to achieve a turnover of 12 million Euros in 2007.
The abbreviation AL stands for the previous name of the fresh food wholesaler “Akzent” in Kottingbrunn 35 km south of Vienna and of the dry goods wholesaler “Lebenszeichen” in Hartberg 140 km south of Vienna. “From the point of view of logistics, three locations would be ideal,” is the reply to the question whether it would be more economic to have a single location. The country, that stretches over 500 km from east to west, is also divided into northern and southern Austria by the Alps. Daurer and Menz are in agreement that a sensible organisation of logistics is the division into the western region round Salzburg and Tirol, the eastern region with the Vienna conurbation, Lower Austria and Upper Austria and the regions Steiermark and Kärnten that includes Graz, a city of 350,000 inhabitants.
“With two existing locations, we can at least cover Vienna (1.6 million inhabitants), the eastern region and the region south of the Alps,” explain Mr. Menz who is responsible for fresh food at the Kottingbrunn site and Mr. Daurer, who is responsible for the dry goods range in Hartberg. Deliveries in the Vienna area are six times a week with one of the five refrigerated lorries; Graz is supplied three times and Linz/Salzburg twice a week. There is 3600 m² of warehousing (1600 m² in Kottingbrunn and 2000 m² in Hartberg) and the total number of employees is around 40.
A new market is currently opening up in Hungary for AL naturkost where, from a low starting point, high growth rates of 20-30 % are being achieved. The sale of whole food products to Hungarian stores accounts for only 2-3 % of AL’s total turnover. Ferenc Kovesi from the firm Kord-int was commissioned to supply the Hungarian market. He draws up the list of products (800 items) for Hungary and is responsible for putting labels in Hungarian over the German labels. Twice a week, 20 to 30 stores in Budapest are supplied. “The biggest demand from whole food stores is for fruit and vegetables,” says Mr. Menz. 60 % of supplies are fresh food and 40 % packaged goods. Other regions that AL naturkost could penetrate in the coming years are Slovenia lying close by, Slovakia and the Czech Republic (Brunn). At the moment, trade with these countries is sporadic.
Various players determine the state of competition in Austria. Whilst AL naturkost is the only Austrian supplier, concentrating on the local produce, the country is supplied by mainly German wholesalers: Dennree, Bodan, Ökoring, Chiemgauer and, in health food, the firm Claus. From the point of view of the wholesalers, the common practice of manufacturers supplying mainly small ranges direct is a problem. “With this system, store owners are dissipating their energies, because they spend far too much time on ordering, organisation and control. Some even drive their own lories to the manufacturers or farmers themselves,” is Jürgen Menz’s critical assessment of this uneconomic approach.
He would like to see more stores like Alois Rosenberger’s Biomarkt that has two organic supermarkets in Vienna, whose priority is selling and customer contact. “I made the conscious decision not to be involved in purchasing here, and I leave it all to the wholesaler,” says Rosenberger in praise of AL naturkost. However, not all store owners are as pleased with the Austrian wholesaler. Some are critical and complain about the company’s supply capacity that is inferior to that of the German wholesalers. Collaboration between AL and Rosenberger has recently led to the wholesaler’s Austrian wine range being extended by 60 wines. Many products that have been supplied mainly direct by the manufacturer to the retailer have not been worthwhile for the wholesaler because of their lack of quality and low volumes.
There is a bigger problem at the moment in marketing. Following the practice of other wholesalers, there are campaign prices for a month at a time for around 20 items (half of which are fresh products and half dry goods), but there has not been any advertising backup. It is left to individual stores whether to produce leaflets and posters or not. And only very few take this opportunity, because the cost is far too high for most of the smaller and medium size stores. AL does not consider it sensible to take part in the marketing campaign “Echt bio” since for the Austrian specialist trade it is increasingly important to advertise Austrian products rather than even more promotion of German products. Moreover, not all products that “Echt bio”, supplies are available in Austrian specialist wholefood stores.
Certainly, AL is working on establishing an own brand - “with transparency and from a regional angle” in the words of the company. The labels bear the name of the manufacturer, so that store owners and consumers alike can see where the product comes from (Photo: AL own brand with about 100 items) In the future, AL will continue to have an important role as the only Austrian wholesaler, with the aim of putting as many Austrian products on the market as possible. However, it is not always easy for AL if you compare the achievement of a small wholesaler (10 million Euros annual turnover) with that of the biggest German wholesaler. Dennree’s turnover is about twenty times that of AL. In future, AL will have to make every effort to stay in the race. Some things will certainly have a positive effect: the growing importance of regional products, a strong specialist trade with high-turnover organic supermarkets and - in the medium term at least - the sales prospects in the new EU neighbouring countries to the east.
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