Switzerland: Wholesale in transition

At the beginning of the 90s in Switzerland (7.4 million inhabitants) there were approximately a dozen organic food wholesalers. In the meantime the number has almost halved. Too small supply areas and too low turnover  resulted in mergers and closures. Three wholesalers with a turnover of over 20 million Swiss Francs (13 million Euros) dominate the market. The dry goods supplier Vanadis and the fresh produce supplier Eichberg have been working together successfully for five years at their location in Seon. Via Verde, that has been restructured several times, is located 35 km further west.

Horai is another wholesaler who regularly supplies 50-100 customers in the Bern region, including catering kitchens and restaurants and in the case of clients with low turnover takes from them unsold goods ordered from the three big distributors. In French speaking Switzerland the organic outlets are supplied by Bioservice. Bioservice has an annual turnover of approximately eight million CHF and is somewhat bigger than Horai that has a 6.5 million turnover. Whereas about 70 % of the population live in German speaking Switzerland, 25 % live in French speaking western Switzerland and 5 % in the Italian speaking south of the country.

 

Via Verde AG, located in Pfaffnau near Zofingen, is the third largest organic wholesaler with a turnover of 20 million Franks each year. The firm was founded at the end of the 1980s to organise the purchase of fresh produce abroad (imports from the south) for the regional large-scale wholesalers. After reorganisation in 2004 the new managing director has  indicated that this wholesaler is again recording profits. The experienced company Vanadis had 'lent' a manager to Via Verde AG for about one and a half years. The reorganisation that was carried out which included internal restructuring, directed Via Verde AG back to its core business namely organic specialist trade. Stefan Möckli (picture) has been trying since the beginning of September to keep the ship with its crew of 45 on course. Via Verde AG supplies 300 customers in German speaking Switzerland and stocks 2.500 dry and fresh products in its 3.500 m²-warehouse. To ensure a regular supply to all its customers, seven lorries cover a dozen routes. “We want to be the number one supplier of fresh produce” is how Möckli describes the target for the coming months. In addition to the specialist organic trade, supplying the catering trade and large-scale customers like hospitals, restaurants and canteens accounts for about 10% of the turnover.

 

In contrast to Germany, many organic enterprises are organised as (small) limited liability companies. By virtue of the participation of individuals and the ecological pension fund CoOpera there are more and more interconnections in the wholesale business. CoOpera, founded in 1984 to administer and invest the private pension premiums of over 2.400 people, is a co-owner of Vanadis, Via Verde and Horai. Through the co-determination process the companies can control the membership of the board of directors (management board of the limited liability company). Matthias Wiesmann (picture), a director who knows the industry well, estimates that the capital of CoOpera amounts to about 170 million Swiss Franks. About  10 % of this capital is invested in half a dozen organic enterprises or their real estates. Either directly or via the companies CoOpera realty AG and CoOpera Properties AG.

 

Biopartner: The Swiss Cooperation Model Proves its Worth

 

'Cooperation has shown itself to be to the advantage of all sides', explains Markus Schamberger (picture) referring to the cooperation between the Swiss wholesaler Vanadis with its organic dry produce range and the wholesaler Eichberg with its supplies of fresh food. Schamberger is the manager of Vanadis which is second largest wholesaler in Switzerland with 25 million Swiss Francs (17 million Euros) annual turnover. Taken together with Eichberg (31 million SF) the figure is 56 million SF (36 million Euros).

 

Both partners moved to the industrial estate at Seon (between Zurich and Bern) six years ago and there as a joint venture they have created a new location. An ecologically friendly office building with a big green roof, a modern interior using a lot of wood creates a pleasant environment that is conducive to a feeling of wellbeing. The employees enjoy a hot, tasty midday meal in the company's own canteen (picture below), in which naturally only organic products are used. This year Vanadis (founded in 1975) celebrated its 30th anniversary. Whereas Vanadis origin is anthroposophical (Demeter), Eichberg with its manager Markus Mahler comes from the tradition of vegetable marketing from organic farmers. Dynamic further development of these economically sound enterprises seems preassigned; more companies are being acquired and are contributing to the growth in turnover. A short time ago the wine store/shop Küferweg (turnover 5.5 million SF and seven employees) was taken over by Vanadis.

 

As well as the two wholesalers with their warehouses the marketing company Bio Plus belongs to the Biopartner and operates for both companies. It is this company that realises the marketing campaign [ECHT BIO.] in Switzerland. The firm Bio Steinmann - a confectionary producer - was originally a partner but has in the meantime been taken over although the brand has been continued. The term Biopartner has no legal foundation but is the usual way of referring to the cooperation between the companies located in Seon.

 

The firms' logos on the fairfaced concrete cladding of the office building are evidence of various companies under one roof. Inside the building dominates uniformity. On the first floor you come to the offices of Eichberg, on the second floor those of Vanadis and Bio Plus. In the entrance to Vanadis AG the employees are greeted by a column displaying the current turnover targets in the overall production plan. They are expecting an increase of at least 8 % in 2005. The manager, Mr. Schamberger, is pleased to point out that this is twice as high as the overall growth of the market. Over the last five years Vanadis has achieved a growth rate of 1-2 million SF each year.

 

The ordering process is as follows: next to the administration building is the warehouse (picture) belonging to the two wholesalers. A total of 5.500 articles (4.000 dry, 1.500 fresh) are in stock. Normally, shops submit two orders one for fresh produce to Eichberg and the other to Vanadis for dry goods. The trolleys are loaded first by Vanadis and then pushed through big doors to Eichberg where the order is completed. They are then stored in a refrigerated room until delivered by one of Eichberg's ten lorries.

 

The companies supply 500-600 shops mainly in German speaking Switzerland; a few enclaves in Tessin and Wallis are supplied by means of haulage contractors. The supply radius is approximately 100-150 km. Thus, the Biopartner claim to cover 80 % of the market. Depending on frequency of orders, deliveries are made three to six times a week. As well as to organic food shops and health-food shops supplies are also delivered to drugstores and some farm shops. Health-food shops in Switzerland have an average sales area of 95 m² which is smaller than in France and Germany.

 

Cooperation by Vanadis and Eichberg applies not only to shared transport and location but also to having joint information systems and representatives in the field. Whilst publicity is handled independently by each firm, they work together in marketing. This is why Bio Plus AG was established in 2000. Bio Plus, with 4.5 employees and managed by Heinz Bossert, is an independent company that also provides a service for other companies. An example is in the area of [ECHT BIO.] where it provides services to Via Verde and Horai.

 

Since the summer of 2004 48 shops are taking part in the regular marketing measures of the German wholesaler-association "Die Regionalen"and the number is expected to grow by ten a year. The potential number of shops that fulfil the conditions and could participate (full range, specialist trade, over 90 % of stock organic) is about 100. However, not all advertising material by far from Berlin is accepted. Less than half of the poster motifs and only some of the products, such as the printed eco-textiles, are suitable. Many other poster motifs are designed by in-house graphic artists. Similarly, they are printed at the Seon location. “We have different customers who prefer different motifs”, says Bio Plus manager Bossert to explain the limited cooperation. Since only half the range is the same as in Germany and the prices have to be given in Franks, there can hardly be any coordination of sales campaign prices and products. “Too German” is the explanation for altering the campaign in which the Swiss elements are added by Bio Plus. 'The Swiss don't feel any affinity with things that are too German.” “We profit a great deal from the suggestions, ideas and draft images”, states nevertheless Bio Plus employee Susan van Osch in praise of the cooperation which however also means Bio Plus has to pay licence fees. However, industry expert Matthias Wiesmann is critical: “On account of the relatively small number of participants and the high proportion of in-house production the marketing campaign costs the participating wholesalers 10.000 Francs per shop per year - including the loss of margins on campaign articles.” Up to now, leafleting houses, that has proved to be a successful strategy, has not been used in Switzerland even though there could well be a need for it on the part of shopkeepers.

 

Last August the partner companies opened their own shop with 160 m² floor space on the firms' premises and to the left of the main entrance. According to Mr. Schamberger, the turnover of half a million Euros was clearly above expectations. The customer frequency of 80-90 per day with an average spend of 35 Euros is very satisfactory for a rural region like Seon that has no big towns. The specialist shop also functions as a demonstration organic food shop for participants in seminars that are provided at regular intervals in the companies' own seminar room. The subjects covered are sales training, nutrition information, sensors, merchandise management and cooking courses.

 

The Biopartner would like to see more organic supermarkets opened so that the presence of organic products on the market in Switzerland could be improved. However, there is still no clear idea of how to achieve this goal.