1969-1964

An interview with the METRO witness to history Friedrich Neukirch, CEO of the Klosterfrau Healthcare Group.

SEEING AND SEIZING OPPORTUNITIES


Initial reservations that existed between wholesalers and the healthcare industry decades ago have turned into a new and special working relationship between Klosterfrau and METRO Cash & Carry. Friedrich Neukirch, CEO of the Klosterfrau Healthcare Group, on his partner METRO Cash & Carry.

In the conference room of the Klosterfrau Healthcare Group located on Gereonsmühlengasse in Cologne, Friedrich Neukirch has set up a vast number of brands that come in various dosage forms - prescription medications like neo-angin, Soledum, nasic and Bronchicum and over-the-counter drugs like the umbrella brand Klosterfrau (Nun), nutrition supplements (taxofit) and the partnership product Ricola (the top seller in the cough-sweet market): a cross-section of the products sold by a company that is the number one provider of self-medication products in Germany. At the centre of the presentation is the product that started it all more than 180 years ago: the medication Klosterfrau Melissengeist (spirit of melissa). Neukirch, a trained chemist shop employee, joined Klosterfrau in 1968 as a management trainee. He became CEO of the group in January 2000. He still has clear memories about the initial reservations that existed between food retailers and his industry. METRO Cash & Carry was one of the first wholesale retailers to see the business opportunities hidden in health care products, Neukirch says. An interview about curiosity and a new type of working relationship. 

Portrait of Friedrich Neukirch Friedrich Neukirch joined Klosterfrau in 1968 as a management trainee and became CEO of the group in January 2000.

Mr Neukirch, in comparison with a long-established company like Klosterfrau, METRO is still a spring chicken at 50. How did the companies' working relationship begin?

Up until the beginning of the 1970s, both companies had hardly any business contact. METRO listed the sweetener Assugrin – and that was it. Our most important sales partners at the time were chemist shops. But not retailers who primarily sold food. The situation changed in 1974 when retail price maintenance was abolished.

As a result, retailers could use prices to profit from the sale of health care products.

The legal change suddenly made over-the-counter medications interesting to food retailers. As a cash & carry business, METRO was one of the first to have a real interest in advancing this business and intensively sought to set up a partnership with us. But, in the beginning, we had a few problems with this new sales channel.

Why?

Because health care products are sold differently from fresh products like food. We were used to working with pharmacies and chemist shops. In addition, we were unable to foresee the changes that the end of retail price maintenance would bring about. Changes like the rapid rise of drugstores and the fall of chemist shops.

A bottle of Klosterfrau Melissengeist Klosterfrau Melissengeist has been sold by METRO for 40 years: in the beginning, METRO was one of the first retail companies to recognise the potential of health care products. 

But METRO kept hitting away at Klosterfrau and put an end to your doubts?

Yes. At a very early stage, METRO had a good understanding of the opportunities that would arise from the new law and then took advantage of them. You felt that  METRO employees were curious, knew their stuff and were really interested in the business. Back then, I was working in sales, and I can clearly remember the first meetings.

At the time, business was based on the principle "a man's word is his bond" - does this still apply today?

Business has become more complicated. You have more competition, more products and more selling space. Boards hold long discussions before a decision is taken. And there is one other change I'd like to mention as well: Business partners change more rapidly. It is rare that you will work with the same METRO procurer for many years as I did. This makes it harder to create a trusting relationship.

A portrait of Maria Clementine Martin The Klosterfrau company was established in 1826 by the nun Maria Clementine Martin - by contrast, METRO is a real spring chicken. 

How big was Klosterfrau in the mid-1970s?

Back then, our sales totalled between €80 million and €90 million. The product range consisted of nearly 12 items, above all Klosterfrau Melissengeist. Today, we have more than 200 products, and sales total about €500 million.

What role have new sales partners like METRO GROUP played in this growth?

Such growth would never have been possible without them. A large share of the self-medication business, which has a volume of about €8 billion in Germany, is done by food retailers. At METRO GROUP, most of our products are listed at Real's hypermarkets and less at METRO Cash & Carry. There is one other consideration as well: outside Germany, many of our products may be sold only by pharmacies.

The experience you gained in your work with the German Brands Association and the German Centre for Protection Against Unfair Competition has shown you the type of problems that can occur in the relationship between industry and retail. You have been working with METRO representatives there for many years. In May, you became President of the German Centre for Protection Against Unfair Competition - and succeeded Professor Erich Greipl, the late member of the Supervisory Board at METRO AG, in July 2013. What is the working relationship like?

We stand side by side. We know that we have a common interest: the customers' well-being. There have not been any critical reservations up to now. But, generally speaking, the relationship between industry and retail is experiencing different stresses today in light of increased competition. In recent times, retailers have become quite creative in developing own brands. Producers typically keep a close eye on events in such cases.

The historic headquarters of Klosterfrau Melissengeist This is where it all began in 1826: in the historic headquarters of Klosterfrau Melissengeist not far from the Cologne Cathedral. 

What would you like to see happen in your future dealings with METRO?

A broader working relationship would be nice. Not only with procurement, but also with sales and marketing. Perhaps, we could meet once or twice a year and spend a whole day talking only about the market and future concepts. As far as I am concerned, we could also talk about terms - but only as the last topic of the day!

A historic bottle of Klosterfrau Melissengeist A bottle as it appeared around 1926 - today, the Klosterfrau product range, along with the brands Ricola and neo-angin, has about 200 items. 

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