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Market Overview Brand Performance in the Downturn

May 2012

Copyright © SymphonyIRI Group, 2012. Confidential and Proprietary.

Consumer Recession – Thoughts…

People will have been changed by the experience of this ‘consumer recession’.

It has been (and will continue to be for a while) a slow but relentless reduction of disposable income against a backdrop of higher prices in almost every area of consumer expenditure.

Under these conditions a lot of people have to change how they spend and save and even those that are technically immune (because they can afford the extra) are caught up in the reaction.

So, people are buying what they need when they need it, buying less each time they shop and buying more often. Just buying what they need, not wasting so much. Turning down the heating and turning off more lights.

Eating out and having their hair done a bit less, baking at home and preparing more meals from scratch.

Basically a long overdue return to a few basic principles that have been forgotten during a time of rapid expansion and waste.


3.3 3.43.8

4.54.2 4.2

4.6

5.55.3

£9,200

£9,400

£9,600

£9,800

£10,000

£10,200

£10,400

£10,600

Sep,

10

Oct,

10

Oct,

10

Nov,

10

Dec,

10

Jan,

11

Feb,

11

Mar,

11

Apr,

11

May,

11

Jun,

11

Jul,

11

Aug,

11

Sep,

11

Oct,

11

Oct,

11

Nov,

11

Dec,

11

Jan,

12

Feb,

12

Mar,

12

Apr,

12

0

1

2

3

4

5

6

7

8

TOTAL PRICE

FMCG Shopping Basket – GB – All items

% CHANGE vs. LAST YEAR


3.4 3.3 3.23.4

3.9

4.4

5.0

6.1 6.2

£2,500

£2,550

£2,600

£2,650

£2,700

£2,750

£2,800

£2,850

Sep,

10

Oct,

10

Oct,

10

Nov,

10

Dec,

10

Jan,

11

Feb,

11

Mar,

11

Apr,

11

May,

11

Jun,

11

Jul,

11

Aug,

11

Sep,

11

Oct,

11

Oct,

11

Nov,

11

Dec,

11

Jan,

12

Feb,

12

Mar,

12

Apr,

12

0

1

2

3

4

5

6

7

8

TOTAL PRICE

Own labels have increased in price more quickly than brands in the last 12 weeks.

Overall, their absolute price peaked in February but last year it fell by much

more than it has done this year.

FMCG Shopping Basket – GB – All items – Private Labels

% CHANGE vs. LAST YEAR


Severe price inflation is affecting a number of categories…

18.6

16.7

14.2

13.5

11.7

11.2

10.5

10.4

10.2

9.8

9.3

9.2

9.0

8.7

8.5

8.4

8.0

7.7

7.6

7.5

GROUND COFFEE

SPICES

OTHER HOUSEHOLD

INSTANT COFFEE

GRAVY

FROZEN MEAT

BABY MILK & DRINKS

STOCK CUBES

CANNED VEGETABLES

ZR BISCUITS

FISH

FROZEN VEGETABLES

HOT CHOCOLATE

CEREAL

CANNED MEAT

SR BISCUITS EXC CBARS

CHOCOLATE SPREAD

COOKING SAUCE

CREAM

BUTTER & MARGARINE

Based on sum of average unit prices paid

12w/e 14th April 2012

These annual % price inflation rates are all

above the CPI headline inflation rate in March

of +3.5%

Extracted from the shopping basket items, these are the annual %

changes over the past 12 weeks of unit prices paid, for the most popular items

in these categories.


3.9

6.4

1.8

3.1

3.0

3.2

2.4

-0.6

2.3

1.4

52 w/e 24 Dec, 11

% Change v Year Ago Value Sales Volume Sales Price Trend

SOURCE: IRI All Outlets; Sales Change vs Yr ago; 52 w/e 24th December 2011

FMCG Sectors status – Volume decline is shown for most sectors with the main food sector declining again. Beer etc is compared with the World Cup sales in 2010 . Prices are up in every sector.

-4.6

1.3

-0.1

-1.6

-3.0

-0.8

-0.6

-0.9

-0.6

-0.6

5.1

1.5

4.9

3.8

3.6

3.0

8.5

3.8

1.0

3.2

BEER / LAGER / CIDER

NON ALCOHOLIC COLD DRINKS

FOOD / MILK / HOT DRINKS

PET FOOD

CONFECTIONERY

HEALTH CARE

PERSONAL CARE

HOUSEHOLD

TOTAL inc. Alcohol

TOTAL exc. Alcohol

% change vs ‘10

2011 52 wks


4.8

3.7

2.2

3.9

3.9

4.6

2.9

1.4

3.8

3.1

12 w/e 17 Mar 12

% Change v Year Ago Value Sales Volume Sales Price Trend

SOURCE: IRI All Outlets; Sales Change vs Yr ago; 52 w/e 24th December 2011

FMCG Sectors status – Volume decline persists but with Easter coming earlier, confectionery sales are up . Prices are up faster overall, mainly coming from the food sector.

-0.9

0.3

2.0

0.0

-2.7

-0.6

-0.6

0.7

-0.8

-1.2

3.4

1.1

4.9

4.5

4.5

4.1

5.7

5.4

1.5

3.1

BEER / LAGER / CIDER

NON ALCOHOLIC COLD DRINKS

FOOD / MILK / HOT DRINKS

PET FOOD

CONFECTIONERY

HEALTH CARE

PERSONAL CARE

HOUSEHOLD

TOTAL inc. Alcohol

TOTAL exc. Alcohol

% change vs ‘11

2012 12 wks


2.3

1.5

4.6

5.4 5.3

4.5 4.74.2

3.6

5.7

2.8

5.8

5.0

4.3

-3

-2

-1

0

1

2

3

4

5

6

7

Apr, 11 May, 11 Jun, 11 Jul, 11 Aug, 11 Sep, 11 Oct, 11 Oct, 11 Nov, 11 Dec, 11 Jan, 12 Feb, 12 Mar, 12 Apr, 12

FOOD / MILK / HOT DRINKS Value Trend

FOOD / MILK / HOT DRINKS Volume Trend

FOOD / MILK / HOT DRINKS Price Trend

Food & Drink sales have been down for most of the last 6 months as prices rise faster. There is little to make us think this will change in the near future.

SOURCE: IRI, All Outlets, YoY Value & Volume price change

Source: IRI InfoScan Data to 14th April 2012

Trend of UK Food/Milk/Hot Drinks exc. Alcohol (Packaged groceries, Bagged Snacks, Hot Beverages, Baby Food, exc. Pet Food)


3.43.8

4.54.2 4.2

4.6

5.5 5.3

3.03.5

4.0

3.4

2.0

2.6

4.1 3.9

-3

-2

-1

0

1

2

3

4

5

6

Oct, 11

Oct, 11

Nov, 11

Dec, 11

Jan, 1

2

Feb, 1

2

Mar, 12

Apr, 12

% PRICE CHANGE W/O PRODUCT MIX% PRICE CHANGE WITH PRODUCT MIXTRADEDOWN

Prices to the consumer have risen by 5.3% yoy in March 2012 but they have chosen to buy products

that only increased their spend by 3.9%.

FMCG Shopping Basket – GB – All items % CHANGE vs. LAST YEAR


3.43.8

4.54.2 4.2

4.6

5.5 5.3

3.03.5

4.0

3.4

2.0

2.6

4.1 3.9

-0.3 -0.4 -0.5 -0.8

-2.3 -2.0

-1.4 -1.4

-3

-2

-1

0

1

2

3

4

5

6

Oct, 11

Oct, 11

Nov, 11

Dec, 11

Jan, 1

2

Feb, 1

2

Mar, 12

Apr, 12

% PRICE CHANGE W/O PRODUCT MIX% PRICE CHANGE WITH PRODUCT MIXTRADEDOWN

Prices to the consumer have risen by 5.3% yoy in March 2012 but they have chosen to buy products

that only increased their spend by 3.9%.

FMCG Shopping Basket – GB – All items % CHANGE vs. LAST YEAR

Total Grocery – Own Label share in last 10 years OL share increasing up to 2007 just before the recession started..

39

40

41

42

43

44

45

46

47

48

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Ow

n La

bel V

alue

Sha

re %

All Outlets

Source: Kantar Worldpanel – Total Groceries – quarterly share 18 Mar 2012

42.5%

46.4%

44.7%

45.6% 46.7% 46.2%

Grocery includes: Alcohol, Ambient Groceries, Fresh+Chilled, Frozen, Healthcare, Household, Toiletries

Crunch Recession Bounce Austerity ?


Tesco

• Value • Tesco • Finest • Tesco Organic • Light Choices • Free From


Tesco Venture Brands

• Parioli • Chokablok • Yoo • Lathams • Halo • Naturally Powered • Nutricat


Private Label Value Shares – Hypermarkets/Supermarkets Growth has been seen across Europe

15.8

26.6

29.2

37.0

37.3

39.6

29.5

36.6

37.8

40.7

19.6

16.5

23.1

27.2

Italy

Greece

Netherlands

UK

France

Germany

Spain

20112010

France is up in Q1 ‘12

Inc. Hard Discount

All Outlets. Exc Hard Discount


Retailer Own Brand value share is slightly up overall coming mainly from Food & Drink and OTC & Health - All Outlets

35.0

26.620.8

13.1

6.3

29.235.5

26.621.1

12.66.2

29.6

FOOD & DRINK HOUSEHOLD OTC & HEALTH PERSONAL CARE CONFECTIONERY TOTAL

52 w/e 16 Apr, 11 52 w/e 14 Apr, 12

SOURCE: SymphonyIRI, All Outlets, % Value Sales

VALUE share

Value sales +5.3%

(exc. Alcohol)

Food, Confectionery and OTC & Health are showing a growth in

Retailer Own Brand share.

(exc. Alcohol)


0

5

10

15

20

25

30

35

40

45

Sep,10

Oct,10

Oct,10

Nov,10

Dec,10

Jan,11

Feb,11

Mar,11

Apr,11

May,11

Jun,11

Jul,11

Aug,11

Sep,11

Oct,11

Oct,11

Nov,11

Dec,11

Jan,12

Feb,12

Mar,12

Apr,12

FOOD &DRINK

HOUSEHOLD

OTC &HEALTH

PERSONALCARE

CONFECTIONERY

TOTAL

The brands are now growing in the OTC & Health season. It’s the trend in Food & Drink and partly in Personal Care providing any growth recently.

SOURCE: SymphonyIRI, All Outlets, % Value Sales – 4 weekly

VALUE share


Retailer Own Brand unit share is up slightly more however – All Outlets

38.2 36.5 37.4

21.8

7.7

33.439.0 36.3 37.5

20.6

7.8

33.9

FOOD & DRINK HOUSEHOLD OTC & HEALTH PERSONAL CARE CONFECTIONERY TOTAL

52 w/e 16 Apr, 11 52 w/e 14 Apr, 12

SOURCE: SymphonyIRI, All Outlets, % Value Sales (exc. Alcohol)

UNIT share

There is a small growth in Unit share in several sectors

These sectors have very similar unit share for Retailer Own Brand but vary hugely in Value share, caused by the

difference in relative pricing levels. Unit sales

+0.9%

(exc. Alcohol)


Trade Promotion Levels – National Brands are promoted more than Retailer Own Brands, Own Brand has reduced a little.

5460

42

5562

41

TOTAL NATIONAL BRAND RETAILER OWN BRAND

52 w/e 16 Apr, 11 52 w/e 14 Apr, 12

SOURCE: SymphonyIRI, Major Mults, % VOLUME ON DEAL (exc. Alcohol)

National Brand promotions have overshadowed Retailer Own Brand promotions and

held ROB shares down


15

25

35

45

55

65

75

Sep,

10

Oct,

10

Oct,

10

Nov,

10

Dec,

10

Jan,

11

Feb,

11

Mar,

11

Apr,

11

May,

11

Jun,

11

Jul,

11

Aug,

11

Sep,

11

Oct,

11

Oct,

11

Nov,

11

Dec,

11

Jan,

12

Feb,

12

Mar,

12

Apr,

12

NATIONALBRAND

RETAILEROWNBRAND

Deal levels have continued to increase for National Brands whilst Retailer Own Brands are being promoted a little less.

SOURCE: SymphonyIRI, Major Mults, % Volume on Deal – 4 weekly

ALL CATEGORIES

WW

W

SPLIT SCALE


Does price drive own label choice?


-80

-60

-40

-20

0

20

40

0 10 20 30 40 50 60 70 80 90 100

ROB Unit Share

Pric

e D

iffer

entia

lFood/Milk/Hot Drinks – Unit Share vs. Price Differential


-80

-60

-40

-20

0

20

40

-25 -15 -5 5 15 25 35 45

ROB Unit Trend

Pric

e D

iffer

entia

lFood/Milk/Hot Drinks – Unit Trend vs. Price Differential


-15

-13

-11

-9

-7

-5

-3

-1

1

3

5

0 10 20 30 40 50 60 70 80 90 100

ROB Unit Share

Act

ual P

rice

Diff

eren

ceROB Unit Share vs. Actual Price Difference


-20

-15

-10

-5

0

5

10

15

20

-10 -8 -6 -4 -2 0 2 4 6 8 10

ROB Unit Share Change

Pric

e D

iffer

entia

l Cha

nge

ROB Unit Share Change vs. Price Differential Change


What did we choose? SIG team


89.8

89.8

85.7

83.7

81.6

81.6

79.6

79.6

75.5

73.5

71.4

65.3

63.3

61.2

59.2

59.2

51.0

42.9

42.9

40.8

32.7

26.5

22.4

22.4

4.1

Heinz Tomato Ketchup

Sure Deo Stick

Colgate Toothpaste

CDM

Heinz Soup

SureMen Deo

Weetabix

Walkers Crisps

HP Sauce

Nescafe Instant

Pedigree Dog Food

Radox Shower

Felix Cat Food

BE Fish Fingers

Flash

BE Burgers

Harpic Toilet Cleaner

Schweppes Lemonade

Domestos Bleach

Hartleys Jam

Plenty Kitchen Roll

John West Tuna

Mc D Flour

S. Strong Cheddar

Cravendale Milk

% choosing

Brand

15.9

25.0

14.3

24.4

22.5

27.5

28.2

33.3

18.9

11.1

34.3

34.4

22.6

43.3

55.2

48.3

48.0

38.1

57.1

40.0

62.5

53.8

18.2

36.4

50.0

% would switch

20

13

15

22

20

19

23

24

19

18

22

19

24

22

18

20

15

19

18

16

23

20

30

15

30

Average 59%

Average 31%

<<< % that price gap would need to widen by to induce switch

Average 20%

SIG team


95.9

77.6

77.6

73.5

67.3

59.2

57.1

57.1

49.0

40.8

40.8

38.8

36.7

34.7

28.6

26.5

24.5

20.4

20.4

18.4

18.4

16.3

14.3

10.2

10.2

% choosing

ROB

JS Milk

JS Flour

JS Cheddar

JS Tuna

JS Kitchen Roll

JS Jam

JS Lemonade

JS Bleach

JS Toilet Cleaner

JS Kitchen Spray

JS Burgers

JS Fish Fingers

JS Cat Food

JS Shower

JS Dog Food

JS Instant Coffee

JS Brown Sauce

JS Wheat Biscs

JS Crisps

JS Soup

JS Male Deo

JS Chocolate

JS Toothpaste

JS Tomato Ketchup

JS Deo Stick

14.9

23.7

44.7

36.1

33.3

65.5

67.9

64.3

37.5

50.0

70.0

68.4

61.1

76.5

28.6

23.1

58.3

20.0

70.0

66.7

66.7

37.5

85.7

80.0

100.0

64

69

72

67

75

72

70

69

64

73

68

71

61

73

75

75

68

75

71

67

67

58

71

75

70

% would switch

Average 41%

Average 47%

Average 70%

<<< % that price gap would need to reduce by to induce switch SIG

team


Those choosing own brand clearly felt committed to their choice. Only 30% would switch and it would take a further widening of the price gap by c.20% for them to consider it.

Key Findings Having chosen own brand over national brand, with price being the key motivation, the price level that the national brand has to attain to reverse that decision has to get very close to own brand price indeed. Almost 50% would consider the switch but the price gap has to close by 70% to induce that.


‘Snapshot’ highlights

• One third of the packaged goods sector is represented by own label

• Own label is showing signs of growth after a decline in recent

years • Own label has on average, a 30% price advantage vs. national

brands. However, price is not the main driver, it is much more of an emotional choice.

• Brands have been fighting back with bigger and better promotions • The top five products that we buy as own label are: milk, ready

meals, fruit juice, canned vegetables, and yoghurts and desserts


Emotional leaps … some switches harder than others?

PREMIUM

REGULAR

ECONOMY

NATIONAL BRAND OWN BRAND

Market Overview Brand Performance in the Downturn

May 2012

Market Overview - law.ox.ac.uk · Just buying what they need, not wasting so much. Turning down the...

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