Rewe Group, which operates Germany's second-largest food retail chain Rewe as well as a number of other supermarket and hypermarket banners across Europe, has signed a new strategic sourcing partnership with leading fresh produce company Univeg Group aimed at developing contract farming projects in order to secure stable and sustainable volumes of fresh fruit and vegetables for sale through the retailer.
The partnership, which has been named Best Alliance, will seek to expand on pilot projects set up during the past couple of years in Spain and Italy, where Rewe Group and Univeg have already established contract farming of strawberries, peppers and table grapes.
According to Rewe, the Best Alliance partnership agreement has been signed as a direct response to the challenge of increasing competition for supply of agricultural products in the context of growing global demand.
'The Rewe Group is responding to this challenge in the context of its sustainable sourcing strategy by driving the verticalisation of its fruit and vegetable procurement chains through contract farming,' the company said in a statement. 'By establishing this close collaboration with the Univeg Group, Rewe Group is is moving forward in its strategic approach to contract farming.'
Manfred Esser, the retailer's head of strategic buying, said the alliance would enable the company to achieve significantly better quality as well as bringing it closer to the production end of the supply chain. He also added that contract farming would enable Rewe to implement a sourcing programme that paid proper attention to climate change, the environment and social responsibility.
'Contract farming also provides us with the opportunity to secure adequate volumes through long-term supply relationships,' commented Mr Esser. 'Our suppliers can grow step by step with our requirements, both in terms of quantity and quality. I am convinced that our customers will not only have better quality fruit and vegetables containing fewer pesticides, but they will also get long-term, stable supply.'
Speaking at this year's FRESH2008 at the beginning of June in Antwerp, Univeg chief executive officer Hein Deprez said the next few years would see rapid growth in demand for high-quality fresh fruit and vegetables from an expanding and increasingly affluent global population exert greater pressure on farmland and other natural resources, presenting the fresh produce sector with a valuable opportunity to boost productivity through investment and seize greater control of the supply chain.
'Large retail organisations in mature markets will be confronted with a situation where the price demands they make will no longer be met, for the first time in more than 20 years,' said Mr Deprez. 'Producers will have alternative marketing channels that pay a fixed price for the produce. Traditional sales markets in western Europe and North America will be confronted increasingly with product uncertainty.'
