Discounters, pricing promotions and technology disrupting traditional shopper behaviour.
Bracknell, UK – 29 November 2016 – The latest study released today by IRI, the provider of big data and predictive analytics for FMCG manufacturers and retailers, into the use of promotions by FMCG manufacturers and retailers across Europe, highlights a drop in the proportion of FMCG products sold on promotion.
The IRI Price and Promotion in Western Economies report claims that the proportion of FMCG volume sold on promotion in supermarkets across Europe declined by -0.7 points, compared to the previous year which registered 28.1% of sales purchased where trade promotions were available. IRI believes that this indicates the first serious pause in promotional escalation seen by the region since 2012 and is a sign that manufacturers are evaluating whether the high cost of promotions gives them sufficient returns in the form of increased sales and profit.
More than a quarter of food product purchasing is now bought on promotion (27.7%) but this is a decline of 0.8 percentage points in the latest year. The proportion of non-food volume (personal care, household and petcare products) in Europe bought on promotion remained stagnant at 30.0%, a 0.1 point decrease. The steepest decline in the use of promotional tactics was by food products in the UK (by -3.4% points to 49.8%) and non-food products in Greece (by 1.1% points to 32%).
While manufacturers are using promotions less, when they do engage with shoppers in a battle over price they are often providing better (deeper) offers meaning the overall amount that has been saved by consumers from promotions is relatively unchanged. The IRI report highlighted noticeable increases to the depth of deal in Netherlands, Spain and the UK.
Off shelf display promotions, popular in the UK and France, have also increased in the last year. They now account for 14.5% of all volume sales in the UK and 11.3% in France. At the same time, use of multi-buys such as BOGOF (Buy One Get One Free) have declined in the last year in the UK, dropping from 15.2% to 11.9% of all products sold. This has been driven by retailers such as Sainsbury’s making the decision to cease all multi-buy promotions in their stores this year.
Tim Eales, Strategic Insight Director at IRI UK and author of the report, said: “Retailers rely on manufacturer promotions to increase store footfall but manufacturers cannot afford to play the promotion game any more. We expect that more brands will follow by redirecting their marketing spend from consumer promotion to activities that communicate brand benefits such as advertising, as well as new product development. Marketers are more alert to the detrimental impact that continuous promotions can have on their brand equity.
“Further, using advanced predictive analytics, IRI Analytics Advantage, has shown that promotions do not usually drive category value sales growth but merely switch volume between brands at reduced prices. Consumers are trained to look for deals in store and concentrate their purchasing on promotional events. They do not necessarily generate new sales. This year’s Price and Promotion in Western Economies report highlights a tipping point in the use of promotions by manufacturers.”
Other highlights include:
IRI measured sales of FMCG products in its IRI Infoscan databases covering sales of all products across nine food and non-food super categories for the 52 weeks ending August 2016 and the previous year in seven European countries (France, Netherlands, Italy, Spain, UK, Germany and Greece), in grocery stores.
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IRI Price and Promotion in Western Economies report reveals a pause in promotion escalation as manufacturers re-assess their value.
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Sydney, Australia – 7th July 2016 – Private label is continuing to come under increasing pressure across Europe, according to a new report – ‘Private Label in Western Economies’ – launched by IRI, the big data and market intelligence expert. The report analyses private label sales trends and price and promotions across six countries in Europe (France, Germany, Italy, Spain, the Netherlands and the United Kingdom), as well as in the US and Australia.
Private label’s value market share in Europe fell by 0.6 points to 38.3% in 2015, compared to the previous year as a share of the total FMCG market. This highlights both a downward trend and the fact that retailers and manufacturers are struggling to cope with challenging market conditions, including pressure from a growing discounter channel, as well as national brands pumping large amounts of money into promotions. Private label market share measured by pack sales also dropped by 0.5 points to 47.4% last year.
While there are encouraging signs of economic growth in Europe, with GDP up 1.7% for 2015 and signs of unemployment slowing or stabilising, the story for private label tends to differ from country to country, suggesting that shoppers’ decisions about whether to buy private label over national brands vary according to national choices and preferences.
France, for example, saw the highest private label share decrease of all the eight countries in 2015, but still with a robust private label value share at 34.1%, compared to Italy’s 17.2% value share and Australia’s 13.9% value share.
The UK remains the country with the strongest penetration of private label with a value share of 51.8% in 2015, increasing by 0.4 points versus previous year, as measured by Kantar Worldpanel UK, which includes the discounter channel and other big private label food retailers, such as M&S*.
The IRI report also points to the fact that supermarkets are losing private label sales to the discounters, primarily from the economy end of their private label ranges. France saw a strong decrease in the private label economy tier (-5.6% in value sales and -6.8% in unit sales) as well as from the standard (-3.5% in value sales and -3.8% in unit sales) tier, which diluted healthy growth coming from the premium ranges (+2.8% in value sales and +3.0% in unit sales).
“The report presents an interesting picture, despite a decrease in private label value and unit market share overall,” comments report author, Tim Eales, Director of Strategic Insight at IRI. “Economy ranges are facing big challenges – not least from the discounters, but also in the minds of shoppers who tend to equate ‘economy’ with ‘low quality’ – but it seems that premium private label is actually growing. This is where retailers should be focusing their attention in order to win shoppers hearts’ and minds when it comes to private label.”
The IRI report also highlights that private label assortment is shrinking across Europe, a trend that is also impacting national brands, as FMCG retailers and manufacturers focus on cutting their range and assortment for higher performing categories, brands and point of sales.
Tim Eales adds: “We’ve seen this over-abundance of products on the shelves across many of the countries – there is simply too much choice for the average consumer today and private label is often the victim of cuts to products that appear on store shelves. Retailers and manufacturers need to put in place the right strategies to help them focus on what shoppers want, but also to understand the impact of their decisions when it comes to reducing assortment and range.”
Find out more in the IRI Special Report ‘Private Label in Western Economies’, click here to download.
*Sources: IRI Infoscan hypermarkets and supermarkets for Spain and Italy; Kantar Worldpanel total market 52 w/e 3rd January 2016 for the UK; IRI Infoscan total market including hard discounters for Germany, the Netherlands and France (including Drive); IRI Infoscan total food for the US; IRI MarketEdge total food for Australia: UK Supermarkets data from IRI Infoscan.
Notes for editors:
Category trends across Europe
All categories are declining or are stable in value share with the biggest drops shown for chilled & fresh food (-1.3 points), non-alcoholic drinks (-1.0 points) and frozen food (-0.8 points).
Frozen food, chilled & fresh food and household are leading categories when private label’s value share by category in Europe is reviewed. Frozen food commanded a 43.0% value market share in 2015, with chilled & fresh food at 39.0% but both are decreasing.
Household (31.2%) and pet food (26.5%) remain the best performing non-food categories.
Confectionery, personal care and alcoholic drinks struggle to compete in this sector with value market shares of less than 15% in 2015, due to strong national brand affinity with shoppers.
Non-alcoholic drinks and chilled & fresh food are facing high promotional activity from brands. Frozen food saw the biggest reduction in promotional activity for private label in all categories.
For French retailers and manufacturers operating in the private label space, 2015 was a difficult year. All categories struggled from 2010 to 2015, whilst national brands grew by 12.8% in value, private label only saw a value increase of 1.5%. Private label growth needs to be encouraged across the country to compete with the promotion pressure coming from brands.
The outlook for private label is more positive in Italy with growth in 2015 despite it being a tough year. There has been investment in premium price private label assortment (by product and by category) to provide shoppers with options to trade up.
In Spain, national brands were more successful in 2015 than private label. Many Spanish shoppers perceive national brands to be higher quality products and purchase branded items even if it means that they spend more.
In UK supermarkets growth from the discounters is depressing sales especially across the private label economy range.
In 2015 total private label sales were stable in the Netherlands yet total private label share is now under pressure. Retailers introduced lower value private label products to halt the growth of hard discounters but this hasn’t been that successful as the quality wasn’t comparable to that of the hard discounters.
In Germany private label is decreasing (-0.8 point in value share) although it remains high with a value market share and a unit market share at 38.4% and 50.9% respectively. Shoppers tend to accept higher prices for higher quality goods, from national brands and premium private label products, in an extremely price sensitive market where discount formats dominate. As a result there has been slightly more support for branded goods where assortment has grown by 5.0% compared to 3.2% growth for private label goods since 2013.
Private label share in Australia is lower than in many European countries and retailers are keen to improve private label presence and share.
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Price wars, national brand promotions and shopper behavior all challenging the role of private label on the shelf
Key findings in the ALSA-IRI State of the Industry Report for 2015 confirm Australia’s retail liquor market continues to face many challenges. The report has found that Spirits and Cider are growing in a challenging retail liquor market, a continuing trend towards premiumisation and a shifting attitude in Australians towards alcohol and health.
SYDNEY – March 23, 2016 – Australia’s vibrant, diverse and competitive retail liquor sector generated sales $16.2 billion in 2015. The industry has seen many changes with the market performance dynamics which has reflected a continuing trend towards premiumisation whereby more discerning, health conscious and moderate Australian drinkers are ‘trading up’ to upscale and specialty options.
The shifting attitude towards alcohol and health, and trends in population growth are contributing towards the changes in the relationship Australians have with alcohol. Chief Executive Officer of the ALSA, Terry Mott said “More broadly, the findings show retail liquor is a $16 billion industry which is of vital importance to the Australian economy generating $5.2 billion through excise, wine equalisation tax, licence fees, payroll taxes and GST taxes, before personal income tax and company tax. The sector also underpins the employment of 165,500 people.”
The latest ALSA-IRI State of the Industry report details the economic and social contribution of the liquor sector in Australia, plus the composition and performance of the Australian Retail Liquor Industry. The report also offers insight into the consumption trends and challenges for liquor retailers with an increasing burden of regulatory issues.
IRI Australia’s Channel Development Manager, Hugh Edwards-Neil said: “The turnaround in glass spirits, both light spirits and dark spirits, is noteworthy – in 2014, this liquor category was in decline, but in 2015, spirits accounted for 50 per cent of all retail liquor growth by value.”
The report identifies many challenges and opportunities for ALSA’s retailer members to build on the continuing change in drinking habits away from volume. Terry Mott also said “Consumers are drinking less quantity in search of better quality, brand and product differentiation, with unique taste profiles, natural flavours and provenance in wine, cider, spirits and beer. Australians are far more health conscious than their parents and grandparents.”
The report reinforces the many voluntary, industry-led initiatives the retail liquor industry has in place to promote responsible consumption of alcohol, including:
“ID-25” – Any person who looks under 25 will be asked for photo identification;
“Don’t Buy It For Them” – Encourages adults to reconsider before purchasing alcohol on behalf of a minor; and
ALSA Product Ranging Guidelines – A check-list of issues for retailers to consider when making product ranging choices.
ALSA will be holding a free networking event where the report will be presented, and a panel discussion will be facilitated by Giuseppe Minissale, (ALSA President & GM of Porters Liquor Group) and will also include David Reberger, (LSA NSW President & GM of Kemenys), plus key beer, wine and spirits suppliers and Hugh Edwards-Neil (IRI).
The event takes place at the IRI offices in Sydney on April 5, from 9.30am to 12pm and is free, but those wishing to attend should register first. ALSA members and industry stakeholders are encouraged to attend and you can register via the ALSA or LSA NSW websites.
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IRI fundamentally believes that delivering differentiated growth for clients requires deep, highly integrated partnering with a variety of best-of-breed companies. As such, IRI works closely with a broad range of industry leaders to create innovative solutions, services and access to capabilities to help its clients more effectively compete in their various markets and exceed their growth objectives. IRI is committed to its partnership philosophy and continues to actively enhance its ecosystem of partners through alliances, joint ventures, acquisitions and affiliations.
IRI is a leader in delivering market, consumer, and shopper information, predictive analytics and the foresight that leads to action. We go beyond the data to enable informed decisions and create growth for clients in the FMCG, Retail, Liquor and Pharmaceutical industries by pinpointing what matters and illuminating how it can impact their businesses.
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# # #
IRI Contacts: ALSA Contacts:
Hugh Edwards-Neil Terry Mott
Channel Development Manager CEO, Australian Liquor Stores Association Inc.
E-mail: Hugh.Edwards-Neil@IRIworldwide.com.au Email: Terry.Mott@alsa.com.au
Phone: (02) 8789 4000 Phone: 0418 557 290
Key findings in the ALSA-IRI State of the Industry Report for 2015 confirm Australia’s retail liquor market continues to face many challenges.
Caspar Netscher – who also has a background in FMCG and telecoms – leads a focus on new business revenue and client retention
Bracknell, U.K – 11 February, 2016 – The big data leader IRI has expanded its retail offer in Europe to provide advanced analytics of combined retail data sources in a single unified platform. The IRI Retail Holistic Solution (IRI HRS) is underpinned by IRI’s Liquid Data technology, which makes it possible to aggregate and find associations for trillions of data points in a matter of seconds.
Bracknell, U.K. – 9 February, 2016 – The price of olive oil purchased by shoppers in supermarkets across Western Europe increased by an average of 19.8%in 2015 according to the latest analysis of consumer goods sales by retail analysts IRI.
The cause of the price hike is a bacterial disease in Italy that is still affecting more than one million olive trees at the same time as a poor harvest in Spain, Europe’s biggest olive producing country, that started in 2014 and continues to impact production.
Manufacturers, as well as retailers with their own label products, are pushing up the price of olive oil to cover their increased costs. Shoppers spent an additional 231 million Euros in 2015 on olive oil as a result, which drove sales value for the whole oil category by +9.5% to 2.7 billion Euros.
The price increases were most severe in Spain, Italy and Greece where olive oil is a key cooking ingredient and one of the most purchased food items. Promotions on olive oil products all but stopped in these countries as prices increased - in Spain by +27.2% in 2015 compared to the previous year, in Italy by +21.0% and in Greece +17.2%.
As the prices continued to rise in 2015, accelerating during the final months of the year, shoppers across the region started to buy less olive oil. IRI reported a decline in sales volumes during 2015 in every country except Italy, where sales volumes remained relatively flat (with an increase of just 1.0% in volume sales). The decline in sales volumes during 2015 was most evident in Greece (-18.0%) and Spain (-16.2%) compared to 2014.
A decrease for sales of other oils of -2.52% of total volume sales across the monitored countries is interesting and indicates that shoppers are not switching to other oil products, despite relatively stable price (-0.9%).
Olive oil Sales in Western Europe for 2015:
Private label prices increases more severe
In every country except the UK price rises of olive oil were higher or equal for private label than for the total oil category price increase, which is often the case when raw material costs increase. Shoppers then opt for the best price option.
Globally the price in increase of private label olive oil had little impact on consumption (-0.5 point versus last year) but there are strong contrasts between countries.
In Spain for example, where there is already a strong private label culture, the price increase is as high for private label as it is for national brands (28.6% and 26.6% respectively) yet private labels grew in terms of volume market share (+3.1 points compared to the previous year) as well as showing an increase in total sales value of 13.3% to 529 million euros.
The UK follows the same trend as Spain in terms of volume market share evolution for private label with an increase of +5.3 points versus last year (the highest among the seven countries). This was due to the strong price increase of national brands (+6.1%) while private label’s price decreased by 1.8%.
In France the opposite occurred. With the price war impacting mainly national brands, the price increase for olive oil impacted just private label which had a direct impact on volume market share - down -7.2 points versus the previous year.
Private label olive oil sales in Western Europe for 2015:
Despite the high increase in the price of private label olive oil, consumers still prefer to buy own label products that remain less expensive than most national brands.
“Olive oil has always been very dependent on weather conditions, but the bacteria attack in Italy might change the game for a while, particularly for those countries where olives are a staple purchase. There have been reports of thefts from some olive groves in Spain as producers in Italy look to import olives from Spain and Greece.” commented Anne Lefranc, European Marketing Director at IRI. “Olive oil which is a staple product for Southern Europe countries seems to have become a ‘premium’ item at least for the heavy consumer countries.”
“Price rises are costing shoppers who are still trying to balance budgets. In those countries where olive oil is one of the main shopping essentials, price increases can have a major impact on the shoppers’ basket which can affect sales of other categories and distort the price of total FMCG sales for some countries like Spain. Retailers and manufacturers need to review their price, promotion, assortment strategy so that they are clear on what impact price rises will have on total category and basket sales.”
Bacterial disease blighting olive trees in Italy and a poor harvest in Spain has knock on effect on olive oil prices across Europe
Retailer own label olive oil prices increase faster than national brands but remain cheaper option for shoppers
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Despite strong evidence that European markets are starting to recover, it seems that neither prices nor sales are recovering in line with these trends. To some extent, we are witnessing the ongoing impact of the price wars in the region. While lower prices suggest a better deal for shoppers, this is not necessarily translating into sales growth.
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Global insight leader, IRI, has launched its Discounter solution, the most comprehensive and insightful data set in the market. In the first of its kind, IRI has entered into a joint agreement with Kantar Worldpanel to take the solution to manufacturers looking to increase their share of the discounter channel, set to grow to as much as 20% of the overall retail market within the next five years (Source: IGD, June 2015).
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