2023-08-04 03:00:00
Recently, the Bank of Spain has identified the convergence of Spanish per capita income with that of the Economic and Monetary Union (EMU) as one of the great challenges of the Spanish economy. Specific, our per capita income is 17% lower than that of the EMU and while it has improved by four points since 1978, it has worsened by eight points since 2005.
Low productivity is one of the main causes of this negative gap, and the reduced weight of innovation is a key factor in the low level of productivity. In the average of the period 2000-2021, the ratio of spending on R+D+i to GDP stood at 1.2%, 0.8 percentage points below the euro area average. Hence the importance of promoting innovation as a lever for generating income and well-being for society.
“It is a real shame to see that the innovation monitored in the study has dropped by 45% between 2010-2022”
In the specific field of food and other consumer products in the home, the latest annual study Innovation radar in mass consumption, from the consultancy Kantar, recently presented, has also highlighted the importance of innovation. The study indicates that innovation increases the value of markets by an additional 15%. Nobody is going to discover now the importance of innovation, but it is convenient to remember this fact over and over once more, because memory is sometimes very short. That being the case, it is a real shame to observe that the innovation monitored in the study has dropped by 45% between 2010-2022. In other words, we have been destroying value and well-being in a leading industrial sector in our country for at least 12 years.
The fundamental reason is that some leading supermarket chains, such as Mercadona and Lidl, do not support innovation, referencing less than 10% of the innovative products launched on the market by manufacturer brands. Thus, innovation only reaches 29% distribution. This reduced level of presence in stores does not allow the manufacturer to recover the high investment required by the innovative effort. Therefore, this effort is discouraged.
It’s low referencing of the innovations by some distribution chains is not understandable, because innovation means additional sales —between 9% and 36%— for all chains. Could it be that you prefer to protect the distributor’s own brand, even at the cost of selling less?
“The reform of the Food Chain Law carried out in 2021 makes a commendable first attempt to protect innovation”
Is this the business competition that interests the country? The commented study is abundantly clear on this point. He points out that the innovation of manufacturer brands generate 18% additional valuewhile those of the distribution companies do not generate additional value for the markets.
From Promarca, we ask the authorities to take action on this matter to promote fair competition. The consumer goods sector is key to the progress of our economy. When markets do not work in an element as important as innovation, you have to act. The reform of the Food Chain Law carried out in 2021 makes a commendable first attempt to protect it. The application of the law and, if necessary, its reinforcement, should not be delayed any longer.
I’m a package of tax incentives For distributors that support innovation, these would be two key steps to correct these harmful behaviors and achieve growth in innovation, productivity, GDP and per capita income, that is, the well-being of Spanish society. Spain needs it.
*Ignacio Larracoechea He is president of Promarca.
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