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Opinion
02/08/2016

The responsibility of the distribution segment

Ricardo Migueláñez. @rmiguelanez

In line with the publication of the special report on distribution you have before you, I'd like to reflect on the responsibility of supermarket chains with regard to maintaining product images and defending and enhancing categories.

As you are regular readers of our newsletters, you probably know that two large supermarket chains have recently been in the news for selling two categories at a loss: milk and oil.

Those of us involved in this business—or any business for that matter—know that the main objective of any company is to obtain as much profit as possible. However, I believe that, in the case of food, it's a good idea to establish certain limits, because practices like those mentioned above denigrate these categories, call product quality into question and jeopardize all companies in the sector.

We've said on several occasions that this policy is bad for those who operate in a specific sub-sector and for the food industry in general. It's also bad for consumers. As a result of the series of price cuts, the goal being not to lose market share, the chain that started the battle is able to gain new customers, who get not only this product, but many others, for a price below cost.

The application of the Law to Improve the Functioning of the Food Chain, rolled out by the Ministry of Agriculture, Food and the Environment, must put an end to below-cost sales; however, as no method has been specified for doing so, those responsible for ensuring compliance with the regulation should simply receive the claim and report the situation to those who actually have the power to impose a punishment.

Another issue I'd like to address is the enormous power the distribution segment has when conveying messages to society and the importance of informing consumers.

The chains not only sell products, they also "produce", if you consider private labeling "production", and that makes them responsible for the message that reaches consumers. They're in contact with them and they're the ones who know what they're thinking. In short, they can impact the knowledge consumers have about different products.

For this reason, I believe we're missing out on a unique opportunity to work together to ensure that information reaches consumers. I believe that's how we'll get consumers to better understand production methods and product characteristics, by adding value and notably increasing their trust. It would also be beneficial to provide information on products and their nutritional properties that is serious and scientifically rigorous, underscoring the arguments defended by the industry and distribution.

In short, as Aurelio del Pino, the President of the Association of Spanish Supermarket Chains (ACES), notes in another article in this special report, the distribution sector must "continue to respond to consumers who are increasingly complex and have more specific needs".

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