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UK: Economy drinks forge ahead

In 2012 new product launches featuring economy claims accounted for 9% of total UK new food and drink launches, compared to 2% in 2008.

David Jago, Director of Innovation and Insight at Mintel, said:

“The UK economy has struggled to see market recovery and consumer disposable income has remained under pressure. This has given buoyancy to the trend for food and drink brands and grocers to push their value credentials to the foreground. 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.

“The largest share of products with economy claims is driven primarily by significant private label investment in essential economy product ranges. Meanwhile, branded manufacturers in the US and Europe have used bulk value positioning, increasing pack sizes to deliver lower average pricing per unit, but higher overall package costs. However, this value pack strategy ignores some basic economics of poorer consumers, suggesting that alternative strategies may be 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. Economy product innovation, packaging and marketing needs to remain mindful that downsliding consumers don’t want to be made to feel poorer.”

Economic challenges are continuing to reshape consumer lifestyles and expectations within and outside the UK. And it seems bargain hunting has become ingrained amongst Britain’s savvy shoppers,with 72% of consumers saying they like the ‘thrill’ of getting a bargain (77% female vs 66% men)and it is also strong amongst the highest earners.

Today, promotional activity has become essential to more than half (55%) of British consumers, who only buy certain products or brands when on promotion with four in ten saying that promotions allow them to buy foods that they would not be able to afford otherwise.

In the US, 62% look at sale items first when shopping in grocery stores and supermarkets, while about half use coupons and 28% look for the cheapest products. Meanwhile, in continental Europe, a significant portion of European consumers report switching from branded to cheaper private labels as well as cutting down the number of premium products they buy.

Benjamin Punchard, Senior Global Packaging Analyst at Mintel, said:

“We’ve recently seen many retailers improving the quality of the packaging for budget ranges, as they recognise that this has been a barrier to purchase for the nouveau poor, ie those middle class consumer who increasingly find themselves on an ever tighter budget.

So where to for the SA consumer and manufacturer? Are we already there or is this trend around the corner for our market?

Source: Mintel