From planes to trains, Lufthansa chefs cater to broader audience

Mon Nov 14, 2016 8:33am EST
 
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By Victoria Bryan and Peter Maushagen

NEU-ISENBURG, Germany (Reuters) - Lufthansa's (LHAG.DE: Quote) airline catering business wants to become more like a mainstream retailer in a shift that includes an expansion into new areas such as trains and convenience stores, its chief executive said.

The airline's catering division, known as LSG Group, makes food for other carriers as well as Lufthansa. It has been active in airline catering for more than 70 years and last year made 591 million meals, or roughly one in every three served onboard globally.

But like its rivals in airline catering, such as Do&Co (DOCO.VI: Quote) and GateGroup GATE.S, LSG is grappling with a shift from free airline food to buy-on-board that is forcing these companies to try to reinvent themselves.

"Transforming from a caterer to a retailer is a big challenge," LSG Group CEO Erdmann Rauer told Reuters in an interview at the group's headquarters just outside Frankfurt.

For example, packaging and the way the food looks become more important to entice passengers to spend the extra money, especially given how some love to share photographs of airline food on social media, he said.

Rauer said he expected 10 to 15 percent of the 14-billion-euro ($15 billion) global airline catering market to shift to buy-on-board.

LSG's purchase of Irish in-flight sales specialist Retail inMotion brought in Ryanair (RYA.I: Quote) as a customer and also helped to provide retail and data analysis capabilities, Rauer said.

LSG is still achieving 4 percent growth in the traditional airline food business and is investing in more luxury meals for business and premium economy passengers, for instance for Chinese and Gulf carriers, as well as providing food for Lufthansa lounges in Munich and New York.   Continued...

 
Meals for Lufthansa's first class passengers are prepared by employees of LSG Group, Lufthansa's airline catering division, at the LSG headquarters in Frankfurt, Germany, November 11, 2016. REUTERS/Kai Pfaffenbach