REWE Group to Go Increasingly on the Offensive in Contractual Farming

Cologne, 28.08.08

Following the Best Alliance pilot project, now in close co-operation with UNIVEG Group

Considerable price swings for foods over the past several months have shown that, along with competition for quality, there will increasingly be a fight for the availability of products. REWE Group is responding to this challenge in the framework of its sustainable procurement strategy by expanding its vertical procurement chains for fruits and vegetables in the form of contractual farming. These activities were essentially begun in 2006 and further developed with greater emphasis in 2007. In the Best Alliance pilot project, strawberries, peppers and grapes were grown under contract in Spain and Italy. The close strategic co-operation just agreed (27 August) with UNIVEG Group will help REWE Group continue to strengthen its strategic approach of contractual farming. UNIVEG is one of the largest producers and suppliers of fresh fruits and vegetables.

"Best Alliance showed us that contractual farming, on the one hand, results in much better quality for us because it brings us, as a trading company, even closer to agricultural producers. On the other hand, the advantage for us in contractual farming is that it is the only way for us to implement a sustainable procurement system in terms of environmental protection as well as ecological and social responsibility. In Best Alliance, we track, test and inspect products from the farm field all the way to the supermarket. Yet contractual farming also offers us the opportunity to secure the appropriate amounts of products by way of long-term supplier relationships. Our suppliers can grow step-by-step with our standards – quantitatively and qualitatively", said Manfred Esser, Strategic Purchasing Executive on the Management Board, commenting on the just concluded co-operative deal between the two companies. As he, UNIVEG represented a partner that had recognised the opportunities of contractual farming and possessed immense market knowledge. "I am convinced that our customers will not only receive even better fruits and vegetable in terms of quality grown with even less pesticides, they will above all receive a permanently stable source of goods." REWE Group had repeatedly warned that the availability of foods was one of the underappreciated challenges food retailing is facing, and that the industry was in part failing.

UNIVEG Group is a global supplier of fresh products and is active in the fields of fruits and vegetables, flower bulbs and flowers, convenience products, logistics and transport. The Belgian UNIVEG Group employs a workforce of 8,500 worldwide, earns an annual turnover of around three billion euros and operates in 23 countries.

With a record turnover of over 45 billion euros and 290,000 employees in 16 European countries, REWE Group is one of the world's leading trading and travel groups. The company employs some 196,000 workers in Germany who achieve a turnover of more than 31 billion euros at nearly 9,500 stores, ranging from supermarkets (REWE) and discount stores (PENNY) to hypermarkets (toom), specialist stores (toom BauMarkt, B1 Baumarkt Discount, ProMarkt) and travel agencies (Atlas, DER, Derpart). In the B2B segment (REWE-Großverbraucher-Service, Fegro/Selgros, transGourmet), REWE Group earns a turnover in Germany and the rest of Europe of nearly six billion euros. Food trading in Germany is the foundation of economic success for the whole group. Beyond Germany, REWE Group achieves a total external turnover of more than 13 billion euros in 15 other European countries. REWE Group Austria (Billa, Merkur, PENNY, Bipa) is the strongest subsidiary in terms of turnover in Austria alone, at 4.8 billion euros.

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REWE GROUP-Corporate Communications
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E-Mail: presse(at)rewe-group.com

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