REWE Group Sustainability Report 2018

Organic

The REWE Group works continuously to expand its assortment of organic foods. Organic products are good for people, animals and the environment, because they have no artificial colours or flavourings, for example, are free of chemical pesticide residues and grown with mineral fertiliser that easily dissolves. The animals farmed have ample stall space and are free-ranging, enabling them to live in accordance with their natural behaviour. For these reasons, organic products have become an important consumer segment and are a key element in the REWE strategy to steadily expand the Group’s range of more sustainable products.

Percentage of purchased volume which is verified as being in accordance with credible, internationally recognised responsible production standards, broken down by standard

Management Approach

REWE Group continuously works to expand the organic product ranges in its sales lines. In the Guideline for Ecological Products adopted in 2014, REWE Group formulated requirements for suppliers and companies that, in many cases, exceed organic standards like the EU organic farming label. More than 200 organic products sold by the REWE sales line are already subject to the significantly stricter criteria of the organic agricultural association Naturland (2017: more than 180 organic products bear the Naturland logo).

A Strong Partner: Naturland

The REWE sales line has had a close partnership with Naturland, one of the largest international organic farming alliances, since 2009. Some 65,000 farmers, beekeepers and fish producers in 58 countries around the world uphold responsibility together for humans, animals and the environment. Their common goal is to make sustainability in farming and the food industry a reality as producers of genuine organic products of quality. Naturland rules go beyond the legal requirements under EU organic food regulations, promoting resource conservation.

The performance of the various organic product ranges offered by the REWE Group sales lines was slightly negative in the reporting period. A positive trend is evident for organic farming across Germany, with organic food revenue in Germany growing from 9.8 billion euros in 2016 to 10.9 billion euros in 2018.

Organic Brands at REWE Group

REWE Group distributes organic store brands in its individual sales lines in placing organic products, and is steadily expanding the product assortment.

REWE Organic Store Brands
The quality standards for many REWE Bio organic products, the REWE store brand, are more stringent than the EU statutory requirements. The product assortment has been continuously expanded since 2013. More than 520 REWE organic products were offered during the reporting period (average for the full year). REWE Bio products thus comprised about four per cent of the assortment’s sales value in 2018. The total rises to 5.7 per cent including the organic products of brand producers. REWE redesigned the packaging of REWE organic products in the financial year and launched an accompanying campaign to further increase sales value and raise customer awareness of organic products. This included print ads in popular magazines, a Galileo TV sponsorship, digital activities and the communications via fliers and PAYBACK.

Naturgut: Organic Products at PENNY
The Naturgut brand replaced the organic store brand B!O at PENNY stores in 2014. With Naturgut, PENNY united regional, vegetarian and organic products under one brand name. During the 2018 financial year, PENNY introduced some 100 Naturgut products in its regular assortment. From January 2019, the Naturgut brand will be focusing on organic products, including vegetarian and vegan products. The share of Naturgut products of sales value has slightly declined to 2.1 per cent.

In April 2016, PENNY introduced Naturgut Bio-Helden in a move to promote organic farming. The brand comprises organic fruit and vegetables that have minor flaws in their shape or skin. Such problems are more common with organic products but they do not reduce the quality of the products in any way. In the past, farmers have been unable to sell this part of their harvest via food retailers. Instead, they market the products to industry at comparatively lower prices. The Naturgut Bio-Helden are not packed in any special way or sold at a lower price. They are simply a fixed part of the organic product range offered by PENNY stores. By selling these products, PENNY plays an active role in the fight against food waste in upstream production. Organic farmers can sell a greater amount of the crops that they produced with so much hard work through retailers and strengthen their economic base in the process. At the same time, consumers are being successfully shown that products with outer blemishes can still be perfect in terms of taste and quality.

Incentives for Organic Farming

Naturgut “Junior-Helden” (Junior Heroes) appeared in PENNY stores in April 2018. These are “in-conversion products” from producers transitioning over to organic farming. This new brand at PENNY represents a marketing opportunity for organic producers who do not yet have official organic certification due to legal hurdles, such as the one-year or three-year statutory transition period for fruit and vegetable growing, even though they are already producing organically with the attendant greater costs. The producers receive more revenue than for conventional products, but slightly less than the organic price. This discount is passed on fully to the customers, and is communicated on the label. This gives farmers a greater incentive to switch to organic farming. In this way, PENNY is securing organic fruit and vegetables from Germany and Europe over the long term, because the goods receive the organic farming label after the conversion period.

toom Baumarkt DIY Stores: Organic Products for the Kitchen Garden
toom Baumarkt DIY stores have been selling organic-certified store-brand products for kitchen gardens since 2014. These products include peat-free soils certified by the Bio-Grünstempel® (Organic Green Seal), organic fertiliser, organic herbs and organic vegetables. toom also started offering fruit shrubs and fruit trees exclusively in organic quality in 2018. The assortment comprised over 340 products in 2018.

Ja! Natürlich in Austria
The creation of Ja! Natürlich in 1994 was a pioneering move by REWE International AG in Austria. Today, the organic brand generates more than 90 per cent of its revenue with organic products. PENNY Austria sells organic products under the store brand Echt B!O.

Organic Product Performance (in Per Cent)

2016 2017 2018 ✓
Organic products
(store brands and industry brands in % of gross sales value1, REWE Markt GmbH)
5.7 % 5.8 % 5.7 %
REWE Bio
(% of gross sales value1, REWE Markt GmbH)
4.2 % 4.2 % 4.0 %
REWE Bio fruit & vegetables
(% of gross sales value of fruit and vegetables, REWE Markt GmbH)
10.9 % 11.6 % 12.4 %
PENNY Naturgut
(% of gross sales value1, PENNY)
2.3 % 2.3 % 2.1 %
PENNY Naturgut fruit & vegetables
(% of gross fruit & vegetable sales value, PENNY)
7.3 % 7.3 % 6.6 %
Ja! Natürlich
(% of gross sales value, full-range stores in Austria)
6.8 % 6.7 % 6.7 %
Ja! Natürlich fruit & vegetables
(% of gross sales value of fruit and vegetables, REWE Markt GmbH)
17.3 % 17.5 % 17.7 %
Echt B!O
(% of gross sales value, PENNY Austria)
1.6 % 1.6 % 1.7 %
Echt B!O fruit & vegetables
(% of gross fruit & vegetable sales value, PENNY Austria)
5.6 % 4.6 % 5.5 %
1
Excluding near-food and non-food, tobacco and alcoholic beverages

Further topics in this area:

Product-related Risk Analyses

GRI 102-11

Regional Products

GRI 204-1

Raw Materials in Focus – Food

GRI FP1

Raw Materials in Focus – Non-food

GRI FP1

PRO PLANET

GRI FP2

Packaging

GRI 301

Biodiversity

GRI 304

Ecological Impacts
Within the Supply Chain

GRI 308

Social Issues
in the Supply Chain

GRI 412, 414

Customer Health
and Product Safety

GRI 416

Promoting Sustainable Consumption

GRI 417

Animal Welfare

FP10

Child Labour
and Forced Labour

GRI 408, 409

Livestock Farming Conditions

FP10

Nutrition

FP10