Launches of ‘economy’ foods and drinks growing globally
The number of ‘economy’ food and drinks products launched in the UK has outstripped the number of ‘premium’ launches for the first time in 2012, according to new findings from market research organisation Mintel.
With the continued economic uncertainty, consumers in the UK have continued to be cautious in their spending, which has seen an increase in economy lines and products featuring value-related claims, according to Mintel.
New product launches featuring economy claims accounted for 9 per cent of total new food and drink launches in 2012 in the UK, compared to 7 per cent of launches featuring premium claims. In contrast, in 2008, premium accounted for 9 per cent of total food and drink launches, compared to 2 per cent of economy.
Mintel said this surge in economy lines makes the UK the leading country in terms of food and drink new product launches with economy claims globally, accounting for 21 per cent of global food and drink economy introductions in 2012. The UK even exceeded the US, which accounted for 20 per cent of global economy launches in 2012.
Japan ranked third, with a 15 per cent share of global economy new product launches, followed by France, Australia, Spain and Italy, each at 4 per cent.
“The UK economy has struggled to see market recovery and consumer disposable income has remained under pressure,” said David Jago, Director of Innovation and Insight at Mintel. “This has given buoyancy to the trend for food and drink brands and grocers to push their value credentials to the foreground,” he said.
“Investment in NPD across economy lines has reflected this, increasing steadily since 2010, outstripping the number of new product launches featuring premium claims. Much of the activity in the economy segment in 2012 was fuelled by UK supermarkets improving their value-for-money ranges in response to consumer challenges dictated by the ongoing economic turmoil,” Mr Jago said.
Private label drives ‘economy’ claims
Mintel said the largest share of products with economy claims was driven primarily by significant private label investment in essential economy product ranges.
By comparison, branded manufacturers in the US and Europe had used ‘bulk value’ positioning, increasing pack sizes to deliver lower average pricing per unit or pound, but higher overall package costs. But Mintel said this ‘value pack’ strategy “ignores some basic economics of poorer consumers”, suggesting that alternative strategies may be more successful.
“As budgets grow ever tighter, consumers are recalibrating their lifestyles and making new product choices, but they carry their middle and upper-class tastes and experiences with them,” said Mr Jago. “Economy product innovation, packaging and marketing needs to remain mindful that downsliding consumers don’t want to be made to feel poorer,” he said.
“Bargain hunting” popular in UK
Indeed, Mintel said economic challenges are continuing to reshape consumer lifestyles and expectations within and outside the UK. Research showed that bargain hunting has become ingrained amongst Britain’s consumers, with more than seven in ten (72 per cent) of consumers saying they like the ‘thrill’ of getting a bargain.
This figure peaks among women ( 77 per cent of female consumers vs 66 per cent of male consumers). It is also strong amongst the highest earners, with 75 per cent of those earning £50,000 or over, vs 70 per cent of those earning under £9,500 and 78 per cent of those earning between £9,500 and £15,499.
Promotional activity was essential to more than half (55 per cent) of UK consumers in 2012, who only bought certain products or brands when on promotion. And some four in ten (39 per cent) said that promotions allowed them to buy foods that they would not be able to afford otherwise.
US shoppers like a sale
Meanwhile, in the US, 62 per cent of consumers said they looked at sale items first when shopping in grocery stores and supermarkets. About half (49 per cent) used coupons, and almost a third (28 per cent) said they always looked for the cheapest products.
Europeans switched from branded to private labels
In continental Europe, Mintel said a significant portion of European consumers reported switching from branded to cheaper private labels (34 per cent in Spain and Italy, 21 per cent in France and 25 per cent in Germany). Consumers in Europe also reported cutting down on the number of premium products they bought (21 per cent in France, 19 per cent in Italy, 18 per cent in Germany and 17 per cent in Spain).
Improvements in budget range packaging quality
Mintel said many retailers had improved the quality of packaging for their economy ranges to appeal to middle class consumers who were tightening their budgets.
“Witness Tesco’s move away from those stark blue stripes as they recognise that this has been a barrier to purchase for the nouveau poor, ie. Those middle class consumers who increasingly find themselves on an ever tighter budget,” said Benjamin Punchard, Senior Global Packaging Analyst at Mintel. “With the UK being so well serviced by private label products the actions of retailers can have a far greater impact on the packaging landscape than you might see elsewhere,” he said.
Alongside clear economy statements on packs, which could be off putting for some consumers, Mintel said brands had recognised that packaging can given an economical edge through offering a reassurance of value.
“This might be packaging that protects the product better so that the consumer can rest assured that they will be able to use the product before it goes off,” said Mr Punchard. “Similarly, portioned or dosing packs tell the consumer that they will definitely get the stated portions out of a pack – both a value proposition and a helpful measure for those on a budge needing to know exactly how far a product will stretch,” he said.
Reforms to the country of origin labelling system were agreed to at a meeting of the Australian Cons...
Despite operating in Australia for less than a decade, Costco is already making its presence known a...
Perhaps many urbane Australians eating avocado on toast for their breakfast will be surprised to lea...
Vegetarian diets are almost twice as effective at helping you lose weight a study has found.
Aldi has announced that from second quarter 2017 it will begin on-line retail operations in China.
Global wine production has sunk to its lowest level in 60 years according to the latest figures rele...
Tyson Foods, Inc. (NYSE: TSN) announced today the successful completion of the acquisition of the T...
A conveyancing firm has found the opening of a new Aldi supermarket in the UK can drive up nearby pr...