I hope you had a great jubilee weekend and are ready for what June has to bring!
Here is your round-up of the key stories from across the FMCG industry...
Inflation continues
After Ofgem announced they will raise the cap on energy prices again in October, we can expect the average household's bills to increase by more than £800 per year. Grocery inflation remains at an all time high of 7%, the highest level since May 2009. This is expected to result in the average household paying an extra £271 per year on groceries. As people try to save money, it's likely that they will adapt:
Where they shop - Aldi & Lidl both hit record market share this month.
How they shop - as retailers push EDLP and price matching, value becomes a delicate balance of promotions and absolute price.
What they buy - as retailers focus on their own label, many people will be open to switching from big brand names.
Jubilee weekend was predicted to be a big-spending weekend with activity from lots of FMCG brands, so it will be interesting to see the impact in the next data release.
Some HFSS restrictions are delayed 🍫🍬
After years of discussion and preparation, the government has delayed some HFSS (High Fat, Salt & Sugar) restrictions in light of the increasing cost of living.
What's delayed?
✅ Clampdown on junk food advertising (delayed to January 2024).
✅ Ban on in-store promotions for high fat, salt & sugar items (delayed to October 2023).
Still going ahead in October 2022:
⛔️ HFSS promotions in prominent in-store locations (gondola ends, front of store etc).
The basics:
Location restrictions will apply to store entrances, aisle ends (e.g. gondola ends, FSDUs) and any area within 2 metres of a till point or self checkout area. There are 13 pre-packaged food and drink categories in scope for the restrictions, but the biggest impact will be on sweet and savoury snacks because they are most likely to be bought impulsively. IRI have predicted the promotional ban could affect sales by £3bn. Shoppers offer mixed reviews. While some agree the restrictions will help reduce temptation, only 18% agree that feature space should be limited to products that are low in fat, sugar and salt.
What are retailers doing?
The big supermarkets have been trialing various solutions to combat these changes, including:
In-aisle bays for HFSS promotions.
Alternative gondola ends featuring compliant products.
Wellness bays highlighting healthy options.
Supermarket trials have shown that 95% of the sales decline is from missed impulse purchases, and only 5% is from the ban on multi-buys.
Tesco revealed they are sticking with their plan to remove multi-buys from HFSS products in October.
Sainsbury's also plan to follow the original guidelines, having already removed multi-buy offers in 2016.
Tesco also launched their "Better Baskets" campaign last month.
This was brought to life in their seasonal aisle, featuring 'healthier and more sustainable' options.
What are brands doing?
Most of the big snacking and soft drinks brands are playing their portfolio to shift sales into HFSS compliant products.
Coca-Cola have launched 100 new low or no sugar soft drinks since 2010. They have also reduced the sugar content in 47 existing products.
One popular tactic for big brands is to add 'healthier' versions of their products to the range. This keeps their brand present on gondola end without changing the recipe on their classic lines.
Mars have launched "Triple Threat" range of Mars, Snickers, Bounty and Galaxy bars. The "Triple Threat" Mars bar is 20% smaller than the classic counterpart, with 25% fewer calories and a higher RRP.
Various smaller brands have challenged the decision to delay, expressing concerns that their efforts to develop compliant products may not be rewarded as expected.
With the double-whammy of inflation and HFSS, it will be a challenging time for many food and drink brands.
If there is anything we can do to help you or your business - get in touch!
Stay safe, well and positive.
Ella.
Check out the newsletter archives and sign up here to get the latest insight in your inbox.
Comments