The fresh fruit industry is still largely shaped by short-term, transactional procurement. Annual tenders are common, which can mean retailers source from different suppliers and farms from one year to the next. This creates a visibility problem, making it harder to understand what is happening at farm level and harder still to address sustainability risks consistently over time.
Certification can help manage some of those risks, but it also has its limits. For suppliers, the commercial reality is just as important. When procurement is focused on delivering a functional product at the lowest possible price, with little certainty about future demand, there is limited incentive to make long-term sustainability investments.
ALDI SÜD Group recognised these limitations and adopted a different approach to procurement, designed to support long-term shared responsibility and create a more conducive environment for suppliers to invest in sustainability. This approach positions suppliers as long-term strategic partners that are integral to delivering the company’s sustainability commitments.
For pineapples, this has included three procurement levers:
Long-term agreements that give suppliers more security to make the necessary investments, knowing they will be able to sell to ALDI SÜD Group in subsequent years.
Joint Business Plans that allow ALDI SÜD Group and individual suppliers to agree on the sustainability risks to address and establish time-bound action plans.
Cost of Sustainable Production, or COSP, as the basis for negotiations, with NewForesight supporting ALDI SÜD Group as an independent third party in establishing the approach for pineapples.
The project has been positively received by participating stakeholders and recognised by partners as creating an environment that enables the necessary investments. Several suppliers have already made concrete changes and investments within the first two and a half years of the new approach.
A key learning from the project is that this kind of procurement shift requires trust. COSP involves open-book costing, which means suppliers share commercially sensitive information. In a sector where procurement has traditionally been highly transactional, that is not a small ask.
To help overcome concerns around trust and build credibility around the initiative, ALDI SÜD Group commissioned NewForesight to establish the sustainable production model and work with suppliers to analyse and anonymise the data.
The project started with the sustainability team as an innovative pilot before being transferred to the buying team. This integration reflects senior leadership’s commitment to embedding sustainability across the organisation and reinforces the role of the buying team in considering sustainability in procurement decisions.
NewForesight also supported the setup of the cost model for pineapples and helped make the tool sufficiently user-friendly for ALDI SÜD Group to apply independently.
For a discount supermarket chain, cost competitiveness is fundamental. The ALDI SÜD Group example shows that cost competitiveness and sustainability do not have to sit on opposite sides of the table. With the right procurement model, they can go hand in hand.