Price and Promotion in Western Economies...Volume sales growth by country – All countries Volume...

Tim Eales

Strategic Insight Director

November 2016

Price and Promotion in Western Economies A pause in promotion escalation

IRI Special Report

Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary. 2

Key findings

• The percentage of volume bought on promotion across Europe was 28.1% in the latest year and is down versus the

previous year by 0.7 point. This reduction has been driven by the United Kingdom (UK), -2.6 points, and Germany, -0.2 point. In

most other European countries the level of trade promotion is stable or close to it, yet it is up in the Netherlands (+1.1 points). The

United States of America (USA) is stable when in Australia it has grown by 1.0 point but New Zealand it has a reduced level, by 2.8

points.

• The UK has the highest proportion of volume sales bought on promotion in Europe at 51.5% but this is not as high as New

Zealand at 55.8%. Australia and the USA are also heavily trade promoted with 40.6% and 34.9% respectively, their levels are

higher than any European country except the UK. France and Spain have the lowest levels of promotional volume at less than 20%.

• Non-food is promoted more than food in Europe whereas it is the reverse in the USA, Australia and New Zealand. The

food sector is slightly more dependent upon promotions than non-food in Europe but it has reduced its reliance by 0.8 point in the

latest year. The small reduction in non-food promotion levels came from household and personal care, whereas pet products has

registered an increase.

• Alcoholic drinks have the highest proportion of volume sales on promotion across Europe as a whole (over the latest year)

at 35.9%. Confectionery ranks in second place at 33.2%. Interestingly the food categories have all decreased the proportion of

volume sold on promotion in this time period.

• Ambient food, chilled food and frozen food all have similar levels of trade promotion support across Europe at approximately

25%. These categories have all reduced in the last year, driven heavily by changes in the UK. However, chilled food, where

promotion activity is declining less than ambient and frozen, has recorded a slight volume sales increase across Europe over the last

year, whereas ambient and frozen food volumes are down.


Key findings

• For non-food personal care is the front runner with 32.7% of volume sold on promotion, rising across Europe in the

latest year. It was driven by all countries except Italy, Germany and the UK. The household category is being supported in Australia

and in most European countries with pet products displaying a positive trend in the proportion of volume sales on promotion, with

the exception of France, the Netherlands, New Zealand, Australia and the USA.

• In the latest year, fast moving consumer goods (FMCG) value sales in Australia, New Zealand, the USA and Europe have

been fairly buoyant apart from reductions in the UK and Greece which impacted the total European performance (+0.5%). Food

sales have been mainly responsible for this rise as non-food sales have only grown in Germany, Spain, the USA and New

Zealand.

• New Zealand has experienced impressive value sales growth (+2.9%) in the latest year, ahead of Australia, Europe and the

USA. New Zealand and Australia are also the leading countries for volume growth. In contrast to their European counterparts who,

apart from Spain and Germany, have struggled to attain volume growth. Of the European countries analysed Greece has struggled

the most with a significant dip in food and non-food volume sales evolution.

• Food volume sales growth shows a real variance across the countries analysed. Food volume grew by approximately 2% in

Australia and New Zealand and by just over 1% in Germany. Spain, France and the USA also experienced growth. In contrast, the

UK suffered volume decline in the face of discounter growth and Italy dropped nearly 1%, due mostly to an unfavourable summer

season. Greece was affected by the fastest overall decline of 9.9%. Alcohol volume sales rose in all countries analysed except

Greece.

• It is encouraging to see that non-food volume sales grew for total Europe over the latest year by 0.5% providing a small

boost to the total Europe volume sales outlook. The reduction in Greece was offset by increases in Germany and Spain.


Key findings

• In all countries, manufacturers who are supporting most of the cost of promotions, are looking at ways to lower the pressure. They

will need to develop new strategies to change the relentless focus on price onto other features of the market such as new product

development or local brands that can be less easily compared in terms of price by smart shoppers.

• Leaflets and coupons/e-coupons remain the most used promotion mechanics. Savvy shoppers are also increasingly more

interested by ‘money off’ on a single pack rather than multi-buys.

• Every day low price (EDLP) has been adopted in all countries and it seems to have become the way to overcome the trend for

ongoing promotions. At the same time shoppers are searching for quality as premium ranges, fresh products, local products and

small brands are performing better than standard private label and national brands.

• There is a pause in promotion escalation as all parties (shoppers, retailers and manufacturers) are now more focused on deal

depth rather than mass promotion which has lost in effectiveness.

Western Economies Summary


3,1

1,9 2,3

1,0

3,4

0,6

-0,4

3,2

0,5 0,9

-3

-2

-1

0

1

2

3

4

5

Germany France Netherlands Italy Spain UK Greece USA Australia New Zealand

GDP Q2 2016 % change versus Q2 2015

The euro area (EA18) includes Belgium, Germany, Estonia, Ireland, Greece, Spain, France, Italy, Cyprus, Latvia,

Luxembourg, Malta, the Netherlands, Austria, Portugal, Slovenia, Slovakia and Finland.

Euro area (18 countries) GDP +2.2% across second quarter of 2016

Growth rates of real GDP volume

PROVISIONAL PROVISIONAL

PROVISIONAL

Source: Eurostat Q2 2016 – Updated 19th October 2016

FR IT SP UK GE GR US AU NZ WE NE


4,3

10,1

6,1

11,6

19,9

4,8

23,2

4,9 5,8 4,7

Germany France Netherlands Italy Spain UK Greece USA Australia New Zealand

Unemployment levels in Europe

Euro area (18 countries) unemployment down from 11.0% in June 2015 to 10.1% in June 2016.

% unemployment rate in June 2016 compared with June 2015

Source: Eurostat June 2016: Table name - Harmonised unemployment rate monthly data

JUNE 2015



International FMCG H1 2016, % change versus previous year

1,1 0,1

1,1 0,5

-1,9

-8,7

1,8 1,0

3,2

Germany France Netherlands Italy UK Greece USA Australia New Zeland

1,3

-0,8 -0,5

0,5

-1,4

-12.5*

0.4* 1.3*

3,0

Value Trend

Volume Trend

Average Europe

-0.2%

Average Europe

-0.4%

* Unit trend for Australia, Greece and the USA Source: IRI - January-June 2016 vs. January-June 2015



0,6 0,9

1,9

0,5

2,0

-2,0

1,8

-5,2

1,7

0,8

3,0

0,1

-0,9 -0,5 -0,6

2,4

-2,6

2,7

-5,5

1,6

-0,1

2,1

Europe France Netherlands Italy Spain UK Germany Greece USA Australia New Zealand

Food Non-Food

Value sales growth by country – All countries

European value sales of FMCG have been fairly buoyant apart from reductions in the UK and Greece. Food sales, driven by price increases, have been mainly responsible for this increase, with non-food only growing in Spain and Germany. The growth rate in New Zealand is ahead of the USA, Australia and Europe. Volume decline in Greece is a response to increased prices, after a period of deflation. Germany and Spain have seen a clear increase in GDP as well as in FMCG sales.

Value sales evolution in Europe, by country, year-on-year, % change

0,5 0,6 1,6 0,3 2,1 -2,1 2,0 -5,2 1,7 0,6 2,9

Total Market


Source: Eurostat Q2 2016 – Updated 19th October 2016


0,5 0,3

1,1

2,0

1,2

0,2 0,2

-0,3

0,9

Ambient Food Chilled Food Frozen Food Confectionery Alcoholicdrinks

Non-alcoholicdrinks

Household Personal Care Pet Food andPet Care

Value sales trends by category – Total Europe

It is personal care that is declining in the non-food sector whilst all food groups are up across Europe as a whole, with the fastest growth coming from confectionery. Confectionery and frozen food value growth has been largely as a result of price increase whereas for alcohol, volume sales are up in all countries except Greece.

Value sales evolution in Europe, by category, year-on-year, % change

Food Average %

Non-Food Average %

0.6

0.1

FR IT SP UK AU NZ WE NE GE GR US


Value sales growth by country, for food – All countries

Germany, Spain and the Netherlands are driving food sales growth across Europe and much of this is coming from confectionery and frozen food. All food groups lost sales in Greece and all food groups grew in New Zealand. Alcohol increased in the USA, whilst the fastest growing food group in New Zealand was confectionery.


Ambient Food Chilled Food

Frozen Food Confectionery

Alcoholic drinks Non-alcoholic drinks

Value sales evolution in Europe, by food sectors, year-on-year, % change

0,6 0,9 1,9 0,5 2,0 -2,0 1,8 -5,2 1,7 0,8 3,0

Total Food



Value sales growth by country, for non-food – All countries

Personal care sales fell in five of the seven European countries measured but grew in the USA and New Zealand. Pet products sales were up in most countries but considerably down in Greece. Household grew the fastest in Germany but again was well down in Greece.


Household

Personal Care

Pet Food and Pet Care

Value sales evolution in Europe, by non-food sectors, year-on-year, % change

0,1 -0,9 -0,5 -0,6 2,4 -2,6 2,7 -5,5 1,6 -0,1 2,1

Total Non-Food



Volume sales growth by country – All countries

Volume growth has been hard to find in Europe, with over 1% in Spain and then Germany up by 1.5%, as non-food sales were up by 3.1%. Volume in Greece was well down for both food and non-food as prices have increased after a period of deflation. The USA was fairly flat but volume was up in Australia and New Zealand. The improving GDP and reduced unemployment in Spain and Germany may be filtering through into the FMCG market, as they show the highest levels of growth.

0,0 0,2

-0,2 -1,0

1,0

-1,1

1,2

-9,9

0,2

1,9 2,0 0,5

-0,9 -0,5 -0,3

2,3

-1,2

3,1

-7,0

-0,0

0,3

3,8


Food Non-Food

0,1 -0,0 -0,2 -0,9 1,2 -1,2 1,5 -9,3 0,2 1,5 2,3

Total Market

Volume sales evolution in Europe, by country, year-on-year, % change

FR IT SP UK GE GR US WE NE AU NZ






Volume sales growth by country, for food – All countries

All food sectors showed volume decline in Greece, whereas most grew in Spain and Germany, Australia and New Zealand. Italy and the UK had the fastest overall volume declines for food apart from Greece. Australia and New Zealand each grew food volume by approximately 2% and Germany was up by 1.2%.

Total Food

Volume sales evolution by food sectors, all countries, year-on-year, change in %

0,0 0,2 -0,2 -1,0 1,0 -1,1 1,2 -9,9 0,2 1,9 2,0



Volume sales growth by country, for non-food – All countries

Non-food volume sales grew across total Europe, despite a big reduction in Greece as it was more than offset by a big increase in Germany. Spain grew too, with pet products contributing to this growth. New Zealand saw a healthy volume increase in non-food volume as well.

Total Non-Food

Volume sales evolution by non-food sectors, all countries, year-on-year, % change


Household

Personal Care


0,5 -0,9 -0,5 -0,3 2,3 -1,2 3,1 -7,0 -0,0 0,3 3,8



Average price changes by country – All countries

Average volume price was up in most countries for food and down in most countries for non-food, leaving Europe at +0.4% overall, with the USA and New Zealand taking price rises and Australia with lower prices on both food and non-food. Greece had the fastest price rises by far in the food sector. Volume price changes are a combination of actual shelf price change and consumers either trading up or down. In the UK, consumers have been trading down to lower priced options, whereas in Italy and France the opposite has been happening.

Total Market

Price evolution by country, all countries, year-on-year, % change in average volume price

0,6 0,8

2,1 1,6

1,0

-0,8

0,7

4,7

1,5

-1,1

1,0

-0,5 -0,1 -0,1

-0,4

0,1

-1,4

-0,4

1,4 1,6

-0,4

-1,7


Food Non-Food

0,4 0,6 1,8 1,2 0,8 -0,9 0,5 4,0 1,5 -0,9 0,5



1,0

0,1

1,5

2,4

-0,3

0,5

-0,2

-1,0

0,8

Ambient Food Chilled Food Frozen Food Confectionery Alcoholic

drinks

Non-alcoholic

drinks

Household Personal Care Pet Food and

Pet Care

Average price change by category – Total Europe

Food price rises were seen in all food groups with confectionery the fastest but also ambient and frozen food up by 1% or more. Prices in non-food were down overall and fastest in personal care. Frozen food has seen the largest drop in promotional sales which will have fed into higher prices. Many confectionery products have been repackaged into smaller sizes which often brings a higher price per kilo. Personal care is often one of the most heavily discounted categories when on promotion and this will have contributed to the overall price decline.

Price evolution by category in Europe, year-on-year, % change in average volume price

Food Average %

Non-Food Average %

0.6

-0.5



27,7

19,3

25,0 27,9

19,6

49,8

21,7 18,9

37,4

41,0

56,1

30,0

21,2

29,6 28,0

18,6

58,6

20,0

32,3

25,0

39,1

54,5

Europe France Netherlands Italy Spain UK Germany Greece USA AustraliaNew Zealand

Food

Non-Food

Volume sales on promotion by country – All countries

The UK has the highest levels of trade promotion but this is beginning to reduce. Spain has the lowest level of trade promotion with France and Germany just above. In Europe non-food is promoted more than food but in the USA, Australia and New Zealand it is the other way around. Against the UK experience of massively high promotion levels that have trained consumers to buy as often as possible at promotion prices, retailers and manufacturers in other European countries may be trying to avoid a similar situation occurring there.

Volume sales on promotion by country, for food and non-food, % volume sold on promotion

Special note for Greece: Volume sales on promotion is mainly referring to Temporary Price Reduction. Feature, display and special pack are applicable only to specific categories.

28,1 19,7 25,5 27,9 19,4 51,5 21,4 21,8 34,9 40,6 55,8

Total Market

FR IT SP UK GE GR US NZ WE NE AU


-0,8

-0,2

1,2

0,3 0,1

-3,4

-0,1

0,1 0,2

1,0

-2,9

-0,1

0,6 0,7

-0,7

-0,0

0,9

-0,4

-1,1

-0,0

1,0

-2,4


Food Non-Food

Change in volume sales on promotion by country – All countries

In Europe the food sector depends marginally more on promotions than non-food but has reduced reliance by 0.8 point in the latest year. Overall, levels have dropped in the UK and New Zealand whilst increasing on both food and non-food in the Netherlands and Australia. Generally, there has been little change in these levels apart from the UK where promotion costs have become overwhelming for some brands, as well as a reduction in multi-buys across the key accounts but particularly by Sainsbury’s.

Volume sales on promotion, evolution by country, for food and non-food, year-on-year, share point change


Total Market

-0,7 -0,0 1,1 0,1 0,1 -2,6 -0,2 -0,2 0,1 1,0 -2,8



Volume sales on promotion by category – Total Europe

Alcoholic drinks have the highest proportion of volume sales on promotion across Europe as a whole. Chilled food and pet products are the least involved. The variances between categories may be due to the degree of impulsiveness of the products, with confectionery and non-alcoholic drinks being very much driven by impulse purchase. Alcohol promotions are often used as a way to attract footfall, particularly at Christmas and Easter, whilst pets can get very attached to their food, making it harder to get their owners to switch brands.

Volume sales on promotion by category in Europe, % volume sold on promotion

24,9 24,0 25,3

33,2

35,9

32,8

30,2 32,7

21,2

Ambient Food Chilled Food Frozen Food Confectionery Alcoholic drinks Non-alcoholic

drinks


Pet Care



-1,0 -0,7

-1,8

-1,0

-0,2

-0,9

-0,2 -0,3

1,0


drinks

Non-alcoholic

drinks


Pet Care

Change in volume sales on promotion, evolution by category – Total Europe

The food sectors have all decreased the proportion of volume sold on promotion whereas non-food has tended to increase with pet products showing the largest gain. It is the reduction in UK food promotion levels that is driving much of what we see at the total Europe level, given how much higher promotion levels are in the UK than elsewhere.

Volume sales on promotion, evolution by category in Europe, year-on-year, share point change







Change in volume sales on promotion by country, for food – All countries

The drop in the proportion of European food volume bought on promotion has occurred across all sectors, driven by the reduction in the UK. Most food sectors are now promoted more in Australia and less in New Zealand. The Netherlands has increased in all food categories apart from confectionery.

Volume sales on promotion, evolution by food sectors, year-on-year, share point change


-0,8 -0,2 1,2 0,3 0,1 -3,4 -0,1 0,1 0,2 1,0 -2,9

Total Food




Household

Personal Care


Change in volume sales on promotion by country, for non-food – All countries

Similarly, non-food sectors are lower than last year in New Zealand but in most cases non-food sectors have increased apart from household which has reduced in Italy, Germany, Spain and Greece. UK non-food is up whereas food is well down.

Total Non-Food

Volume sales on promotion, evolution by non-food sectors, year-on-year, share point change


-0,1 0,6 0,7 -0,7 -0,0 0,9 -0,4 -1,1 -0,0 1,0 -2,4



Change in volume sales on promotion, evolution by category – All countries

Promotion support for frozen food has reduced in most countries but particularly in the UK. Ambient food has also had less support, only increasing in the Netherlands, Italy, Greece and the USA. Chilled food has received greater support in the Netherlands, Italy, Spain and Greece, as well as in Australia.

Volume sales on promotion, evolution by country, year-on-year, share point change

-1,0 -0,7

0,9 0,5

-0,1

-2,9

-0,1

1,8

0,5

-0,8

-3,0

-0,7

0,1

2,2

0,9 1,3

-4,9

-0,6

0,9

-0,4

2,1

-1,6 -1,8

-0,5 -0,4 -0,7 -1,0

-6,5

0,6

-1,6

0,4

2,0

-2,9


Ambient Food

Chilled Food

Frozen Food



-1,0

0,3

-1,4

0,0

-1,4 -2,0

-0,9

-3,7

-0,3

1,5 1,5

-0,2

0,8

2,0

0,7

-1,0 -1,5

0,5

-4,4

-0,2

0,0

-4,3

-0,9 -0,6

1,3

0,4

-0,2

-4,6

0,2

-0,3

0,5

3,1

-5,6


Confectionery

Alcoholic drinks

Non-alcoholic drinks


Promotion support for confectionery is in decline in Greece but in Australia and New Zealand it is increasing. Alcohol is receiving more support in the Netherlands, Germany, Italy and France but is often down significantly elsewhere. Non-alcoholic drinks are getting a lot less support in the UK and in New Zealand.





Promotion support for pet products is up in most countries but not in New Zealand, the USA, France and the Netherlands. Personal care support has decreased across Europe as a whole, driven by the UK, Germany and Italy. Household category has followed the same trend as personal care, except in Spain, the UK, Greece and Australia.


-0,2

0,9

0,3

-1,0 -0,9

1,8

-0,5

-2,2

0,2

-0,3

-2,7

-0,3

0,7

2,2

-0,2

0,5

-0,1

-0,7

0,4 0,2

1,3

-2,6

1,0

-0,1 -0,4

0,8

1,7

2,4

1,6

3,1

-1,2

3,0

-1,3


Household

Personal Care




Deal depth by country, food versus non-food – All countries

Deal depth is noticeably lower in the USA than it is in the European countries shown, particularly for non-food. Deal depth has been getting deeper in these European countries as manufacturers and retailers try harder to compete with each other and bring the best deals to shoppers.

% price reduction on promotion by country, last year

25,8 27,0

17,3

24,4

16,2

33,4

27,1

17,5

30,9

10,1

Netherlands Italy Spain UK USA

Food

Non-Food

0,4 -0,3 0,5 0,6 -0,5

1,0 -0,0 1,2 0,3 0,2

Food point change

Non-Food point change


Copyright © 2016 Information Resources, Inc. (IRI). Confidential and Proprietary.

France Overview

FR IT SP UK GE GR US AU WE NE

Value sales trends by category

Total % change: 0.6 Food: 0.9 Non-Food: - 0.9

Volume sales trends by category

Average price change by

category



NZ



Highest three categories in terms of volume sales on promotion (%)

Volume sales on promotion with off shelf display (%)

Categories Volume Evolution

Alcoholic drinks 23.3

Household 23.2

Personal care 22.5

Volume Evolution

Food 11.2

Non-food 11.8

Lowest three categories in terms of volume sales on promotion (%)


Pet food and pet care 11.2

Ambient food 15.9

Chilled food 19.2

N

F


1,0 1,1

-0,8

1,7 2,2

-0,3 -0,1

-2,5

1,7


drinks

Non-alcoholic

drinks


Pet Care

Value sales trends by category – France

Value sales increased by 0.6% in France during the latest year. The food sector rose in value whereas non-food went down. Alcohol saw the fastest growth and personal care experienced the fastest decline. In food, frozen food dropped by 0.8%.

Value sales and evolution in France, by category, year-on-year, % change

Total € bn

€ 17,4 € 22,5 € 3,7 € 2,9 € 8,5 € 8,8 € 6,2 € 6,8 € 2,1

Total % change

Food

Non-Food

0.6

0.9-0.9



0,3 0,3

-3,2

0,6

1,7

-0,5 -0,3

-2,2

1,8


drinks

Non-alcoholic

drinks


Pet Care

Volume sales trends by category – France

Volume sales were flat in France during the latest year, with non-food accounting for the bulk of that reduction. Frozen food was down the most due to poor weather conditions. But for frozen food it is also a lasting trend as shoppers prefer fresh products. Alcohol is up, due to the strong performance of beers. Personal care volume sales show the fastest drop, by -2-2%, despite high promotion activity. This category is facing competition from the growing monobrand and specialist channels as well as the internet and Lidl (Cien range).

Volume sales evolution in France, by category, year-on-year % change

Total % change

Food

Non-Food

-0.0

0.2

-0.9



Average price change by category - France

Shelf prices have slightly increased in France and consumers have been trading up and buying higher priced items, thereby increasing volume price. Non-food volume prices have not changed substantially, despite a strong deflation in this sector.

Price evolution in France, by category, year-on-year, % change in average volume price

Total % change

Food

Non-Food

0.6

0.8

-0.1

0,7 0,8

2,4

1,1

0,5 0,2 0,2

-0,3 -0,1


Non-alcoholicdrinks




15,9

19,2 19,6 21,4

23,3 21,7

23,2 22,5

11,2


drinks

Non-alcoholic

drinks


Pet Care

Volume sales on promotion by category – France

Promotion levels in France are highest in the alcohol and household categories with pet products the least promoted by far at only 11.2%. Household has benefited from strong promotional activity in laundry care. Personal care has been boosted by beauty promotional actions in the spring and autumn. Alcohol performance is driven by year end promotions.

Volume sales on promotion in France, by category, last year,% volume sold on promotion



-0,7

0,1

-0,5

0,3

0,8

-0,6

0,9

0,7

-0,1


drinks

Non-alcoholic

drinks


Pet Care

Volume sales on promotion, evolution by category - France

The overall level of trade promoted volume in France remained stable this year at 19.7%. The largest sector, ambient food, was down but this was offset by increases from confectionery, alcohol, household and personal care. Non-food categories are more and more promotion dependent due to specific actions in spring and autumn for beauty care and on an ongoing basis in laundry care: shoppers take these opportunities to stock and wait for the next promotion wave.

Volume sales on promotion, evolution by category in France, year-on-year, share point change



9,7 10,1 9,6

12,5

15,4

13,0 13,7

11,8

6,0


drinks

Non-alcoholic

drinks


Pet Care

Volume sales on promotion with off-shelf display by category – France

Off-shelf displays account for just over 11% of volume sales in France. This mechanic is most popular for alcohol and not used a great deal for pet products. The big food sectors average close to 10% of volume bought when off-shelf display is available.

% volume sales on promotion with off-shelf display by category in France, last year

FR IT SP UK GE GR US AU NZ WE NE WE GE GR AU NZ


10,8 10,7 11,2 11,3 11,2 11,8

Total Food Non-Food

Year ago

Latest year

Volume sales on promotion with off shelf display - France

There has been little change in the proportion of volume sales bought where off-shelf displays are available. A small increase has been seen for both food and non-food sectors.

% volume sales on promotion with off shelf display, in France, year-on-year

FR IT SP UK GE GR US AU NZ WE NE WE NE IT SP GE GR AU NZ


Insights for France

• The overall level of trade promoted volume has remained stable this year at 19.7%. The percentage of volume sold on promotion is

highest for the alcohol and household categories, closely followed by non-alcoholic drinks and confectionery.

• Ambient food is the category with the lowest proportion of volume sold on promotion, yet reduced by 0.7 point. Of the food

categories, alcohol showed the highest increase at 0.8 point and in non-food, household gained by 0.9 point with personal care also

up by 0.7 point.

• The recent performance of the personal care category highlights France’s current challenging retail conditions with increasing

competition from the monobrand and specialist channels and from the internet and Lidl, for the cosmetic and beauty care sectors.

Personal care has experienced the fastest decline in value sales trends by category in 2016, with a 2.5% decline, with volume sales

also down by 2.2%, yet promotions levels are high at 22.5% (volume sales sold on promotion).

• Total value sales increased by 0.6% in France during the last year. The food sector grew in value by 0.6% whereas non-food fell by

0.9%. Total volume sales was flat at the same time period, with non-food accounting a sales decline when food was positive.

• Alcohol was the fastest growing category for both value and volume sales.

• Leaflet is the most used promotion mechanic with promotion pressure that has increased by 8.5% versus 5.7% in 2015, and virtual

promotion (especially -x% on the second product). Immediate reductions and games (even if they are ever marginal) are growing in

terms of popularity.

• The promotion level (the revenue generated by promotions/the share of the sales on promotions in the total revenue) is increasing

faster in supermarkets than in the big hypermarkets. But the overall trend is a stabilisation of the promotion activity with different

approaches according to banners: some have decided to slow it down such as Système U, Géant and Auchan while others have

increased it, for example, Carrefour Market, Casino and Monoprix.


Insights for France

• The price war in France is ongoing with the same level of deflation maintained over the last two years for the FMCG market (-1.1%).

Although shelf prices have fallen, consumers have been trading up and buying higher priced items, thereby increasing volume price.

This can be attributed to shoppers treating themselves to the occasional premium product while carefully budgeting their regular

shopping expenditure. The frozen food category has seen the biggest year-on-year increase in average volume price at 2.4%.

• This price war is sustained by national brands whose promotion revenue was at 16.0% in 2015 (up by 0.4 point) while private label

was at 5.8%, down by 0.2 point in 2015.

• In terms of price, the deflation rate is higher for products from large companies and for the leader products (-2.5%) when national

brand deflation is 1.7% and FMCG deflation is 1.1%. The average unit price for leader products is decreasing by 0.3% when for

small brands it has increased by 0.3% and for private labels by +0.8%.

• Regarding the retail landscape, two channels are winning: convenience stores and click and collect. But their growth is linked to their

numeric increase. For instance, Dia stores (hard discount banner) have disappeared and have been replaced by Carrefour

convenience stores (Carrefour City, Carrefour Contact, Carrefour Express). The click and collect channel’s growth rate has started to

decline and it is now lower than +10%. Lidl is still winning market share, due to massive media campaigns and to the renewal of its

stores. Prices are generally the same in the click and collect channel as in bricks and mortar stores. The click and collect channel has

made progress in promotion, to be aligned with store programmes.


The Netherlands Overview





category

Total % change: - 0.2 Food: - 0.2 Non-Food: - 0.5


FR IT SP UK GE GR US AU WE NE NZ



Deal depth, price reduction on promotion (%)



Personal care 34.2

Household 32.4

Volume Evolution

Food 25.8

Non-food 33.4




Ambient food 17.7

Frozen food 19.2

N

F

FR IT SP UK GE GR US AU NZ WE NE WE


Value sales trends by category – Netherlands

Value sales increased by 1.6% in the Netherlands, with growth for the food sector and decline for non-food. Confectionery and alcohol had the largest percentage gains and personal care experienced the fastest decline. The largest sector, ambient food, grew by 1.6%. The growth is mainly driven by price increases as volumes are quite stable. The strong decline in personal care is heavily influenced by channel switching towards online channels and low end retail.

Value sales and evolution in the Netherlands, by category, year-on-year, % change

Total € bn

Total % change

Food

Non-Food

1,6 1,4

0,1

4,3 4,0

0,9 0,3

-2,8

0,8


drinks

Non-alcoholic

drinks


Pet Care

1.6

1.9-0.5

€ 5,4 € 1,9 € 0,9 € 0,8 € 2,4 € 2,5 € 1,0 € 0,6 € 0,3



Volume sales trends by category – Netherlands

Volume sales were marginally down. The rapid growth in the alcohol sector, driven by the popularity of specialty beers and radler-varieties was offset by declines in frozen food and non-alcoholic drinks, as well as personal care and pet products. With ambient food volume slightly down, value growth has come from price increases. Supermarkets in the Netherlands tend to focus more and more on fresh and chilled foods, as this is where they can make the difference versus other channels, resulting in a growth for chilled foods.

Volume sales evolution in the Netherlands, by category, year-on-year, % change

Total % change

Food

Non-Food

-0,2

0,6

-1,8

0,4

1,2

-1,6

0,1

-1,0

-1,6


drinks

Non-alcoholic

drinks


Pet Care

-0.2

-0.2-0.5



Average price change by category - Netherlands

Prices in the Netherlands have mostly been increasing, averaging 2.1% up for food but down for non-food. Confectionery has seen the fastest increase in price. The price increase of confectionery will, in part, be due to less promotion but it is also driven by increased sugar prices, which steers the price increase of non-alcoholic drinks as well. For alcoholic drinks the price increase is also driven by premiumisation, especially within beers.

Price evolution in the Netherlands, by category, year-on-year, % change in average volume price

Total % change

Food

Non-Food

1,8

0,7

2,0

3,9

2,9 2,5

0,2

-1,8

2,4


drinks

Non-alcoholic

drinks


Pet Care

1.8

2.1-0.1



Volume sales on promotion by category – Netherlands

The largest sector, ambient food, has just under 18% of volume bought under trade promoted conditions. Alcohol has the highest promotional pressure (driven by regular pilsners) as these promotions are used as traffic builders by retailers. Pet products are promoted the least. Overall non-food is promoted more than food as products are non-perishable and in strong competition with high promotional levels at drugstores.

Volume sales on promotion in the Netherlands, by category, last year, % volume sold on promotion

17,7

24,5 21,8 22,9

39,3

28,8

32,4 34,2

11,3


drinks

Non-alcoholic

drinks


Pet Care



Volume sales on promotion, evolution by category - Netherlands

The overall level of volume on promotion increased by 1.1 points in the Netherlands in the latest year, driven by chilled food, alcohol and personal care as well as ambient food and non-alcoholic drinks.

Volume sales on promotion, evolution by category in the Netherlands, year-on-year, share point change

0,9

2,2

-0,4

-1,4

2,0

1,3

0,3

2,2

-0,4


drinks

Non-alcoholic

drinks


Pet Care



Deal depth by category – Netherlands

Deal depth in the Netherlands averages just under 27%. The deepest deals are to be found in personal care and household and they are aggressively promoted in other channels as well. Confectionery offers are a lot less generous at just 20.7% as these are more impulse driven products, where often the visibility of the promotion is more important than the discount.

% price reduction on promotion in the Netherlands, by category, last year

23,6 26,6

28,4

20,7

28,0 26,0

33,5 34,8

24,7


Non-alcoholicdrinks


FR IT SP UK GE GR US AU NZ WE NE WE FR GE GR AU NZ


Deal depth trends - Netherlands

The deepest deals are coming through in non-food, on average, almost 8 points more than in food. Both are tending towards deeper deals over time.

% price reduction on promotion in the Netherlands, trend over last two years

26,0 24,8

33,0

26,9 25,8

33,4

Total Food Non-Food

Year ago

Latest year

FR IT SP UK GE GR US AU NZ WE NE NZ AU GR GE FR WE


Insights for the Netherlands

• The overall level of volume on promotion increased by 1.1 points to 25.5% in the latest year, influenced by the increases in chilled

food, alcohol, non-alcoholic drinks and personal care.

• The retail landscape evolution, growth of discounters, drugstores and low end retailers, contributed to increase the promotion

pressure. To compete against these channels, traditional retailers are increasing their promotion activity. Jumbo, an every day low

price (EDLP) retailer started with all year-long promotions , leading to a big fuss in the market.

• Online channels mostly have the same promotions as the regular channels but some promotions are done online only.

• Sun care products, chilled and fresh pasta and deodorants are three of the most heavily promoted categories in the Netherlands.

Sun care products are impacted by seasonal promotions and also channel competition between supermarkets and drugstores.

Chilled and fresh pasta is a segment that has been built up by a key retailer, Albert Heijn, and other retailers are now also promoting

it. There is strong competition driving the deodorants segment amongst retailers and again channel competition between

supermarkets and drugstores.

• Promotional pressure on national brands is much stronger than the pressure on private labels (24% for national brands versus 13%

for private labels). This has led to only a small market share gain for national brands.

• Ambient food – the largest category in the country – only has just under 18% of volume bought on promotion and this is the lowest

level for food categories. In contrast alcohol has 39.3% of volume sold on promotion. This category is well above other food

categories with non-alcoholic drinks second highest at 28.8%.

• The food sector has experienced a value sales increase of 1.6% in the latest year while non-food has declined in the same time

period. Confectionery and alcohol have seen the largest percentage gains at 4.3% and 4.0% respectively. In the ambient category

value growth has come from price increases. Personal care has been impacted by the greatest decline in value sales.


Insights for the Netherlands

• In the Netherlands prices have been mostly increasing in the latest year, due to the cost increase of raw materials. Confectionery

has seen the fastest increase in volume price at 3.9% and there has been an average price increase of 2.1% for food but a price

decrease for non-food.


Italy Overview





category

Total % change:- 0.9 Food: - 1.0 Non-Food: - 0.3


FR IT SP UK GE GR US AU WE NE NZ






Household 31.9

Frozen food 31.5

Volume Evolution

Food 27.0 =

Non-food 27.1




Confectionery 23.0 =

Non-alcoholic drinks 28.5

N

F



Value sales trends by category – Italy

Value sales only increased by 0.3% in Italy during the latest year. This has been driven by food sales which saw growth of 0.5% year-on-year. Food has been driving the growth in Italy for a couple of years. Non-food sales fell as both household and personal care sectors declined. Personal care and home care categories are struggling in hypermarkets and supermarkets. Their performance is better in drugstores which offer to clients a better service and specific assortment. Confectionery saw the fastest level of growth.

Value sales and evolution in Italy, by category, year-on-year, % change

Total € bn

Total % change

Food

Non-Food

0,4

1,4

-2,1

2,9

1,8

-0,9 -0,6

-1,4

2,3


drinks

Non-alcoholic

drinks


Pet Care

€ 16,9 € 10,3 € 3,1 € 2,5 € 4,6 € 5,8 € 5,2 € 4,6 € 1,3

0.30.5

-0.6



Volume sales trends by category – Italy

Volume sales in Italy were down for food and non-food. In 2015 the FMCG market recovered slowly and the very hot summer season boosted all seasonal categories which was not the case this year. Pet products grew by 1.1% and confectionery was up by 1.4% but all other sectors were down apart from a stable level of volume sales for alcohol. Pet products are the only ones that grew continuously in Italy, even in the worse crisis period (2010-2014). This is caused by a increasing number of pets in Italian households.

Volume sales evolution in Italy, by category, year-on-year, % change

Total % change

Food

Non-Food

-1,5 -1,1

-2,1

1,4

0,0

-0,5 -0,2

-0,7

1,1


drinks

Non-alcoholic

drinks


Pet Care

-0.9

-1.0

-0.3



Average price change by category - Italy

Average food prices increased in Italy during the analysed period, with all food sectors apart from frozen food up in price. Despite the general deflation phase from March 2016 some food categories show a price increase due to the price rise experienced from August 2015 until January 2016. It was also caused by some raw material price increases, such as sugar and coffee. Household and personal care prices are down.

Price evolution in Italy, by category, year-on-year, % change in average volume price

Total % change

Food

Non-Food

1,9

2,5

0,0

1,5 1,8

-0,4 -0,5 -0,7

1,2


drinks

Non-alcoholic

drinks


Pet Care

1.21.6

-0.4



Volume sales on promotion by category – Italy

The proportion of volume sales on promotion was high for most sectors in Italy and virtually the same for food as for non-food. Pet products is the lowest and it is relatively weak for confectionery.

Volume sales on promotion in Italy, by category, last year, % volume sold on promotion

30,1 29,7 31,5

23,0

32,6

28,5

31,9 30,4

19,0


drinks

Non-alcoholic

drinks


Pet Care



Volume sales on promotion, evolution by category - Italy

Overall the level of volume on promotion in Italy hasn’t changed during the last year as some sectors increased and some reduced. Chilled food saw almost one point increase whereas household promotion levels fell by one point.

Volume sales on promotion in Italy, evolution by category, year-on-year, share point change

0,5

0,9

-0,7

0,0

0,7

0,4

-1,0

-0,2

0,8


drinks

Non-alcoholic

drinks


Pet Care



Deal depth by category – Italy

At an average of 27%, deal depth in Italy is the same as it is in the Netherlands. The sectors with the least volume on promotion are also the ones with the lowest deal depth.

% price reduction on promotion by category in Italy, last year

26,7 27,2 28,4

24,2 26,9 27,5 28,4

26,4

23,0


drinks

Non-alcoholic

drinks


Pet Care



Deal depth trends - Italy

There has been almost no change in the average level of deal depth in Italy across food and non-food sectors. New mechanics are being tested and implemented not only by retailers but also by manufacturers (for example e-couponing, cashback) to avoid increases to the discount depth and a loss of effectiveness in promotion activities.

% price reduction on promotion in Italy, trend over last two years

27,1 27,0 27,4 27,0 27,0 27,1

Total Food Non-Food

Year agoLatest year

FR SP UK GE GR US AU NZ WE NZ AU GR GE FR WE IT NE


Insights for Italy

• Italy is experiencing tough market conditions: there has been a long phase of deflation in 2016 and this deflation and a flat volume

trend are affecting retailers’ and manufacturers’ revenues.

• National brands seem to be using promotions more than private labels and overall promotions are very frequent in Italy. At just

under 28% of volume sold on promotion this is one of the highest levels in Europe. In Italy, around 32 euros for every 100 euros

spent are under promotion activity. Over the past year, many retailers have adopted an EDLP policy as a way to overcome the trend

for ongoing promotions. Auchan, for example, enlarged its private label value tier offering one year ago and communicated with the

following claim: da Auchan risparmi senza aspettare le promozioni (At Auchan’s you save money without waiting for promotions).

Conad, Coop Italia and discounter MD-LD have also introduced a similar approach a while ago.

• 47.2% of the food and beverages sales under promotion in supermarkets and hypermarkets are driven by flyers, while 15% of these

sales are combined with a display in the point of sale, and this is a growing trend as it enables retailers and manufacturers to

increase performance. The communication of the promotion itself can generate over 500% of incremental volume sales. Italian

families buy after having collected online information on products therefore the communication of promotional events is important to

influence the shopper when s/he prepares her/his shopping list.

• New mechanics are being tested and implemented not only by retailers but also by manufacturers like e-couponing and cashback for

non FMCG goods (fuel, phone cards, flights). Amond Galbani, Barilla, Monini, Zuegg, Ferrero and P&G are using these types of

promotional tactic.

• The proportion of volume sales on promotion was high for most categories and almost the same for both food and non-food. The

level of volume sales on promotion hasn’t changed significantly in the last year as some categories have increased and some have

decreased. The most noteworthy is chilled food that has seen a 0.9 point increase. Chilled food is one of the macro categories that is

driving growth in Italy so manufacturers and retailers are focused on promotion to ensure they sustain volumes.


Insights for Italy

• The top 25 manufacturers who are increasing their promotional activities are losing market share while the other manufacturers and

private labels are gaining share of the market. The trading up in the shopping basket is often focused upon medium manufacturers

and on the premium tier of private label.

• Value sales increased by 0.3% throughout the latest year. This has been driven by food sales with a 0.5% year-on-year growth.

Non-food sales dropped as the personal care and household categories have both experienced a decline in the last year. Volume

sales have fallen for food and non-food in the same time period. Interestingly, all food categories have declined except confectionery

(up by 1.4%) and alcohol (stable at 0%).

• Average food prices increased in the last year for all food categories if we consider only hypermarket and supermarket channels,

having higher volume prices apart from frozen food.

• As in all countries retailers need to adapt to the changing landscape although online shopping for grocery remains marginal in Italy.

But Amazon is already in the market for fresh food. Unes started to co-operate with Amazon from this summer.


Spain Overview


Total % change: 2.1 Food: 2.0 Non-Food: 2.4



category



FR IT SP UK GE GR US AU WE NE NZ WE





Confectionery 29.2



Volume Evolution

Food 17.3

Non-food 17.5



Frozen food 15.0


Household 18.0

N

F



Value sales trends by category – Spain

Value sales trends are looking buoyant in Spain with all sectors growing and most supported by more than 2% volume growth and increasing prices. The GDP rise and lower levels of unemployment have reflected well on sales.

Value sales and evolution in Spain, by category, year-on-year, % change

Total € bn

Total % change

Food

Non-Food

2,3

0,9

4,7 4,9

2,9

0,8

2,2 2,2

5,0


drinks

Non-alcoholic

drinks


Pet Care

2.1

2.02.4

€ 15,0 € 10,9 € 2,5 € 1,2 € 4,3 € 4,9 € 4,0 € 4,2 € 0,7



Volume sales trends by category – Spain

Food volume growth is 1.0% with the largest sector, ambient food, up by 0.7%. Similarly frozen food, confectionery and alcohol are performing well. All non-food sectors have seen volume increases as well.

Volume sales evolution in Spain, by category, year-on-year, % change

Total % change

Food

Non-Food

0,7 0,6

2,7

2,3

2,7

0,2

1,8

2,6

3,1


drinks

Non-alcoholic

drinks


Pet Care

1.2

1.0

2.3

FR IT SP UK GE GR US NE AU NZ WE


Average price change by category - Spain

Average prices in Spain have mostly increased due to private label where there has been a rise in prices. On the other hand manufacturers have increased their promotion activity, mainly with price reduction promotions. On average food prices are up by 1.0% and non-food prices are essentially flat with personal care prices going down.

Price evolution in Spain, by category, year-on-year, % change in average volume price

Total % change

Food

Non-Food

1,6

0,2

1,9

2,5

0,2

0,7 0,4

-0,4

1,9


drinks

Non-alcoholic

drinks


Pet Care

0.81.00.1



Volume sales on promotion by category - Spain

The highest level of volume bought under trade promotion conditions in Spain is for confectionery, at 29.2%, whereas non-food sectors and frozen food are much lower. Among promotions, price reduction promotion is becoming more and more popular in Spanish FMCG markets, with increases in most of the categories.

Volume sales on promotion in Spain, by category, last year, % volume sold on promotion

18,2 18,5

15,0

29,2

24,5 22,3

18,0 19,5

16,6


drinks

Non-alcoholic

drinks


Pet Care



Volume sales on promotion, evolution by category - Spain

Overall, the level of trade promoted volume in Spain has not changed in the last year, remaining at 19.4%. Within these volume sales chilled food is being promoted more and other food sectors, less. More pet products have been sold on promotion but less household items.

Volume sales on promotion in Spain, evolution by category, year-on-year, share point change

-0,1

1,3

-1,0

-1,4

-1,0

-0,2

-0,9

0,5

1,7


drinks

Non-alcoholic

drinks


Pet Care



Deal depth by category – Spain

On average deal depth in Spain is 17.3% and is one point up from the year before. The deepest deals are found in the confectionery sector.

% price reduction on promotion in Spain, by category, last year

15,0

18,0 16,4

25,6

20,7

16,0 18,2

17,1 15,2


drinks

Non-alcoholic

drinks


Pet Care



Deal depth trends - Spain

Deal depth is increasing in Spain, across both food and non-food sectors. Most of the categories have had a percentage price reduction promotion take place to attract consumers.

% price reduction on promotion in Spain, trend over last two years

16,3 16,1 17,0 17,3 17,3 17,5

Total Food Non-Food

Year ago

Latest year



Insights for Spain

• The level of trade promoted volume has not changed in the last year, remaining at 19.4%. Chilled food is being promoted more

whilst other food sectors are receiving less promotion support. Confectionery is the food category with the highest volume sold on

promotion at 29.2%. Frozen food and the non-food categories are significantly lower.

• Manufacturers have become quite reliant upon promotions due to the tough economic environment, high unemployment levels and

the popularity of private label. As economic conditions improve a little this approach may change yet shoppers will continue to shop

smartly.

• Spanish retailers position themselves as good value. Half of the retailers are discounters or equivalent, with short assortment and

price focus. Therefore retailers set their price level according to the private level reference, Mercadona. Innovation is also used as a

way to capture market share and focus on areas other than private label.

• The top 20 private label categories in Spain account for 50.9% of total sales of private label and of these categories 13 have

increased their promotional sales more than their total sales. Long life milk and beer are two examples of this. There has been clear

promotional activity and a slight drop in price. Private label in Spain tends to be sold on an every day low price basis.

• Leaflets continue to be popular with most retailers with the significant exception of Mercadona who doesn’t adopt these mechanics.

When manufacturers don’t want to run three for two promotions it is an opportunity for private labels who can fill these gaps.

• Spain has experienced good value sales trends over the last year with all sectors growing and most categories have more than 2%

value sales growth.

• Volume sales of food are slightly down for the last year by 0.1%, as ambient food has fallen by 1.4%. Other food categories have

performed well however and there has been a good performance for the non-food categories. Non-food volume sales have increased

by 2.3%.

• Average prices in Spain have mostly increased. On average food prices are up by almost 2% while non-food prices are flat.


The United Kingdom Overview





category








Personal care 63.9


Confectionery 61.9

Volume Evolution

Food 24.4

Non-food 30.9



Frozen food 38.9


Chilled food 45.1

N

F


Volume Evolution

Food 14.6

Non-food 14.0 N

F



Volume sales on promotion with multiy-buy (%)

Volume Evolution

Food 11.9

Non-food 11.8 N

F



Value sales trends by category – UK

Value sales declined by 2.1% in the UK during the latest year. This is a combination of volume decline and price reduction. Ambient food has been badly hit, as has household. Sales are transferring from the supermarket sector to the discount sector (Aldi, Lidl and the bargain stores).

Value sales and evolution in the UK, by category, year-on-year,% change

Total € bn

Total % change

Food

Non-Food

-3,8

-2,1

-0,6

0,1

-0,1

-1,9

-3,0 -2,5

-1,9


drinks

Non-alcoholic

drinks


Pet Care

€ 22,0 € 13,5 € 5,2 € 3,5 € 15,2 € 8,5 € 5,7 € 7,9 € 2,2

-2.1

-2.0

-2.6



Volume sales trends by category – UK

Volume sales declined by 1.2% in the UK during the latest year. Both food and non-food sales fell. Ambient food has been badly hit, as has household. Sales are transferring from the supermarket sector to the discount sector (Aldi, Lidl and the bargain stores).

Volume sales evolution in the UK, by category, year-on-year, % change

Total % change

Food

Non-Food

-1,9 -1,6

-2,0

-0,8

0,6

-1,2

-1,8

-0,4

-2,3 Ambient Food Chilled Food Frozen Food Confectionery Alcoholic

drinksNon-alcoholic

drinksHousehold Personal Care Pet Food and

Pet Care

-1.2

-1.1-1.2



Average price change by category - UK

Average prices decreased for all sectors, except for frozen food, confectionery and pet products. Ambient food and personal care were particularly impacted with a -2.0% and -2.1% year-on-year change in average volume price. The discount sector is gaining sales from the supermarket sector.

Price evolution in the UK, by category, year-on-year, % change in average volume price

Total % change

Food

Non-Food

-2,0

-0,4

1,4

0,9

-0,7 -0,6

-1,2

-2,1

0,4


drinks

Non-alcoholic

drinks


Pet Care

-0.9

-0.8

-1.4



Volume sales on promotion by category – UK

The UK has the highest proportion of volume sold on promotion. Personal care, non-alcoholic drinks and confectionery are the highest at over 60%. The lowest sector in the UK, frozen food, is as strong as the highest sector elsewhere in Europe (alcohol in the Netherlands).

Volume sales on promotion by category in the UK, last year, % volume sold on promotion

45,5 45,1 38,9

61,9

54,0

62,9 56,8

63,9

44,0


drinks

Non-alcoholic

drinks


Pet Care



Volume sales on promotion, evolution by category - UK

The level of volume bought on promotion in the UK is starting to fall after years of continuous increase. Overall it is down by 2.6 points in the last year. Household and pet products continue to increase but all other sectors are down, especially frozen food. Many manufacturers have found that the ever increasing cost of trade promotion in the UK is difficult to afford and draining their marketing budgets to the extent that other things, such as new product development, suffer. This, along with the reduction in multi-buys, has produced this trend.

Volume sales on promotion in the UK, evolution by category, year-on-year, share point change

-2,9

-4,9

-6,5

-2,0 -1,5

-4,6

1,8

-0,1

2,4


drinks

Non-alcoholic

drinks


Pet Care



Deal depth by category – UK

At an average of just under 26%, deal depth in the UK is high and has been increasing as the percentage volume on promotion has been reducing, leaving the overall contribution by promotions to average prices relatively unchanged. Personal care has the highest level. As the level of trade promotion activity has fallen and multi-buys have reduced, single pack ‘money off’ promotions have become more popular and with deeper depth deals, in an attempt to make each promotion work harder and produce a greater uplift in sales.

% price reduction on promotion in the UK, by category, last year

27,6

22,9 25,7

27,6

20,4

24,3

31,9 32,6

19,0


drinks

Non-alcoholic

drinks


Pet Care



Deal depth trends - UK

Despite the level of volume on promotion falling, deal depth in the UK has been increasing. It is much higher for non-food than for food. Both have been going up as multi-buys reduce and manufacturers increase the single pack ‘money off’ promotions with deep discounts in order to increase promotion uplifts and make each promotion work harder.

% price reduction on promotion in the UK, trend over last two years

25,3 24,1

30,3

25,8 24,4

30,9

Total Food Non-Food

Year agoLatest year



Volume sales on promotion with off-shelf display by category – UK

Off-shelf display is a popular mechanic in the UK, averaging 14.5% of volume sales occurring in stores where it has been used. This level is slightly up year-on-year. It is very high amongst confectionery categories which builds upon the impulse nature of this sector but not used very much for pet food which is much more of a planned purchase.

% volume sales on promotion with off-shelf display in the UK, by category, last year

13,7

10,3 13,0

27,4

15,3

18,4 18,3

13,6

4,0


drinks

Non-alcoholic

drinks


Pet Care



Volume sales on promotion with off shelf display - UK

Volume bought where off-shelf displays are present accounted for 14.5% of sales in the latest year and was marginally higher for food than for non-food. It would not be expected to change substantially over time as the sites available for off shelf displays in stores are largely fixed.

% volume sales on promotion with off shelf display, in the UK, year-on-year

14,1 14,2 13,7

14,5 14,6 14,0

Total Food Non-Food

Year agoLatest year



Volume sales on promotion with multi-buy, by category – UK

Multi-buy promotions such as BOGOF and ‘3 for 2’ are especially popular as mechanics in non-alcoholic drinks, with nearly one quarter of volume sales occurring under these conditions. Chilled food and personal care are high too but alcohol is not often sold this way.

% volume sales on promotion with multi-buy in the UK, by category, last year

10,1

15,8

7,6

11,2

5,7

24,8

6,0

16,5

10,2


drinks

Non-alcoholic

drinks


Pet Care

FR UK US WE NE IT SP GE GR AU NZ


Volume sales on promotion with multi-buy - UK

Sainsbury’s made the decision to cease all multi-buy promotions in their stores from April 2016 and other retailers have dropped their levels as well. This has resulted in the overall level of volume sold from multi-buy promotions dropping from 15.2% to 11.9%.

% volume sales on promotion with multi-buy promotion, in the UK, year-on-year

15,2 15,4

14,0

11,9 11,9 11,8

Total Food Non-Food

Year agoLatest year

FR UK US WE NE IT SP GE GR AU NZ


Insights for the UK

• Last year was very unusual as the percentage of volume sales on promotion fell in the UK by 2.6 points. Of all countries in Europe

the UK is the highest promoted with more than 50% of FMCG volume sold under trade promotion conditions at an average deal

depth of 27% despite new promotion regulation, suggesting that no product should be on promotion for longer than it is off

promotion.

• The proportion offered as price reduction on deal, deal depth, has been rising, so the overall amount that has been saved by

consumers buying on promotion is relatively unchanged.

• UK retailers’ strategy has been to keep base prices high and to promote down to a more realistic level.

• UK consumers were being ‘trained’ to look for deals in store and to concentrate their purchasing into promoted periods and on

promoted goods. On some products, such as highly promoted shower gels, we can see that almost nothing is sold in store when

there is no promotion running.

• Whilst products and stores fight to grow or maintain their slice of a shrinking cake it’s not just hard discounters (Aldi and Lidl) which

pose a threat. Bargain stores such as B&Q, Poundland and 99p stores are growing quickly too but mainly reach into non-food at the

moment. Round pound promotions are very popular (£1, £2, £3) as they are simple and easy for customers to understand, enabling

a total of what’s been spent to be calculated more easily as the shopping trip takes place.

• Non-alcoholic drinks, confectionery and personal care are the highest categories for volume sales on promotion. They are all at over

60%. Yet all food categories experienced a decline in the proportion of volume sales on promotion in the last year.

• A significant change to UK trade promotions took place in September 2015 when a key retailer, Sainsbury’s, decided to cease all

multi-buy offers in its stores, which it achieved as of April 2016. Other major store groups have also reduced their levels of multi-

buys yet they still retain them. Many consumers prefer money off a single purchase, rather than 3 for 2 for example, as it lowers the

overall expenditure necessary to benefit from the offer.


Insights for the UK

• The private label sector is less promotionally driven than branded products are. National brands have 60.0% of volume sales bought

on trade promotion whereas private label has only 28.4%. On average, brands have more than four times the proportion of value

given away in promotional discount than private label does. Private label has been cutting back on proportion support and last year

the percentage volume on promotion for private label fell to 28.4% from 34.1% the year before.

• The top categories on promotion are deodorant/bodyspray with 81.1% of volume bought on promotion, rinse conditioner with 79.8%

and hair conditioner with 78.9%. The top promoted food category is cola with 78.0% of volume bought on promotion.

• FMCG value sales declined by 2.1% in the UK during the latest year and this is a result of volume decline and price reduction. Both

food and non-food volume sales declined.

• FMCG prices are falling. In the first half of 2016 shopping basket prices were approximately 2% lower than in H1 2015. This is due to

the Consumer Price Index (CPI) dropping to zero for most of 2015 and also the major supermarkets have reduced prices to compete

with the ever strengthening discount sector. Ambient food and personal care were particularly impacted with a -2.0% and -2.1%

year-on-year change in average volume price. The discount sector is gaining sales from the supermarket sector.


Germany Overview





category







Confectionery 30.5






Ambient food 15.6

Chilled food 17.9



Value sales trends by category – Germany

Value sales growth has come from both food and non-food with most sectors contributing a sales increase of 2% or more. Alcohol grew by 0.9% and chilled food, with sales higher than ambient food, grew by just 0.3%. Overall the main driver for the value sales increase is the rising consumer consumption level in Germany, which has an impact on food and non-food categories.

Value sales and evolution in Germany, by category, year-on-year, % change

Total € bn

Total % change

Food

Non-Food

3,3

0,3

3,7

2,3

0,9

2,0

3,1 2,8

1,4


drinks

Non-alcoholic

drinks


Pet Care

€ 25,6 € 27,3 € 7,3 € 8,5 € 13,9 € 15,5 € 7,9 € 9,8 € 2,2

2.0

1.82.7



Volume sales trends by category – Germany

Volume sales have grown in Germany: food by 1.2% and non-food by 3.1%. Household and personal care have both registered very high levels of volume growth. The second largest sector, ambient food, has experienced slight growth only, by just 0.7%.

Volume sales evolution in Germany, by category, year-on-year, % change

Total % change

Food

Non-Food

0,7

1,6

2,2

-1,0

2,5

0,8

3,0

3,8

0,4


drinks

Non-alcoholic

drinks


Pet Care

1.5

1.2

3.1



Average price change by category - Germany

Average volume price in Germany is up by 0.5% as food prices have risen by 0.7% and non-food volume price has reduced by 0.4%. Alcohol prices have fallen the fastest as well as chilled food and personal care. Ambient food was up in price by 2.6%. The price evolution is mainly driven by the better product quality offered and to a certain extent the premiumisation of the assortment.

Price evolution by category in Germany, year-on-year, % change in average volume price

Total % change

Food

Non-Food

2,6

-1,3

1,6

3,3

-1,6

1,1

0,1

-1,0

1,0


Non-alcoholicdrinks


0.5

0.7

-0.4



Volume sales on promotion by category – Germany

Germany has one of the lowest levels of volume sold on trade promotion in Europe but it varies hugely across sector from confectionery at 30.5% to pet products at 12.1%. Historically seen, the high penetration of hard and soft discounters in the German market is pushing low shelf prices on the one hand and thus limiting the promotion share on the other hand. The level of promotion share seems to have stabilised in 2016.

Volume sales on promotion in Germany, by category, last year, % volume sold on promotion

15,6 17,9

19,8

30,5 28,1 28,7

20,8 21,2

12,1


drinks

Non-alcoholic

drinks


Pet Care



Volume sales on promotion, evolution by category - Germany

Volume sales on promotion decreased by 0.2 point in Germany versus the previous year, with much of this due to chilled food and confectionery. There was a 0.9 point reduction for confectionery and a 0.6 point reduction for chilled food, with personal care supported less too. Frozen food and pet food have been increasing the most due to the expansion of the assortment at discounters as well as an increasing competition between the main players in the market.

Volume sales on promotion, evolution by category in Germany, year-on-year, share point change

-0,1

-0,6

0,6

-0,9

0,5

0,2

-0,5 -0,7

1,6


drinks

Non-alcoholic

drinks


Pet Care



Insights for Germany

• The German market is historically a low price market for FMCG – driven by a very high density of stores, and strong retail

competition with a big market share of discounters and private labels. The loyalty towards retailer brands is rather low, shoppers can

make their selection from a broad variety of interesting offers. This is the homeland of hard discounters and when Aldi changes

prices all of the other retailers immediately do the same. The German market, like most European countries, is driven by price.

• Nevertheless, backed by a prospering economy, most categories show rising price levels. This development is strongly driven by

shoppers increasingly upgrading their purchases, mainly to higher priced manufacturer brands, partly to higher priced private labels.

• Partly due to the comparably low shelf price base Germany has one of the lowest levels of volume sold on trade promotion in Europe

at 21.4%. There is great variance across the food categories with confectionery, being one of the biggest drivers for impulse

shopping, recording 30.5% of volume sales on promotion in the last year compared to ambient food at 15.6%. For non-food,

personal care and household have approximately 21% of volume sales on promotion compared to just 12.1% for pet products.

• Volume sales on promotion decreased by 0.2 point versus the previous year despite a considerable increase for pet products and

personal care, although the effectiveness of promotion for this last category has decreased, probably due to the fact that shelf prices

have been so competitive.

• Price-off with features remains the prevailing promotion mechanic.

• Prices across personal care categories have been falling over the past few years as a result of competition between retailers. This

was exacerbated last year when dm drugstore launched its online store. In response manufacturers of brands like Elvital, Guhl, Head

& Shoulders and Pantene in the hair care category have increased pack sizes in order to implement price rises and also to sustain

higher price points. This approach has also been adopted in the home care sector for hand dishwashing and fabric finishers.

• Value sales growth has come from both the food and non-food sectors with +2.0% on a year-on-year basis versus the last year.

Volume sales have also risen year-on-year by 1.2% for food and 3.1% for non-food. This is mainly due to shoppers purchasing more

and is driven by hypermarkets and supermarkets.


Insights for Germany

• Personal care and household have experienced the highest levels of volume growth as a result of their pack size strategy with a two

pronged approach to bigger pack sizes for higher value for money on the one hand and smaller sizes to address growing numbers of

smaller households on the other hand.

• Within the food sector non-alcoholic drinks are the best performing. The premiumisation of non-alcoholic drinks assortment has

supported the volume growth of this category. Examples are increasing product launches in smoothies, higher quality fruit juices and

ambient fruit juice-lemonades for adults. More specifically, categories that are most promoted are: coffee, chocolate, beer, shower

care, detergents, carbonated soft drinks and sparkling wine.

• In Germany average volume price is up slightly, by 0.5%, in the latest year as food prices have risen by 0.7% and non-food volume

price has fallen by just 0.4%. This is mainly due to the development of more premium products on the German market with a greater

quality focus.

• For future forecasting the development of the hard discounters, especially Aldi and Lidl, will be interesting to follow. Both hard

discounters are investing a lot to change their image from low price banner to that of convenience and top quality for an equivalent

price, versus other retailers.

• While the listing of more and more branded goods helped Aldi to grow in some of those categories where the brands were listed, it

did not stop the slight overall loss of market share for Aldi. Recently Aldi has launched an extensive media campaign "Simple is

more“ to replay its competitive strengths. At the same time Lidl is counteracting this by advertising branded products with its white

label alternative as a way to address shoppers’ choices.

• The retail competition is likely to grow with other retailers like Rewe Group and Globus also developing strategies and banners to

strengthen their presence in the convenience format and all banners are closely looking at Amazon’s first market moves to enter the

new battlefield of e-commerce.


Greece Overview





category







Household 35.1

Personal care 30.7


24.1




Confectionery 13.0

Chilled food 15.8



Value sales trends by category – Greece

Value sales have fallen by 5.2% in Greece year-on-year. Non-food sales have declined slightly faster (-5.5%) than food sales (-5.2%). No sector registered value growth with the fastest decline coming from pet products. Personal care was only 2.7% down. These value sales declines are more intense mainly due to the collapse of Marinopoulos, former number one retailer in Greece, in value sales and in the number of stores.

Value sales and evolution in Greece, by category, year-on-year, % change

Total € bn

Total % change

Food

Non-Food

-6,6

-4,7 -4,4 -5,9 -5,8

-4,4

-6,9

-2,7


drinks

Non-alcoholic

drinks


Pet Care

€ 0,57 € 1,22 € 0,08 € 0,18 € 0,20 € 0,55 € 0,47 € 0,27 € 0,04

-5.2

-5.2-5.5

FR IT SP UK GR AU NZ WE NE GE US


Units (packs) sales trends by category – Greece

Volume sales have decreased by 9.3% in Greece. Pet products has shown the fastest decline of 18.1% but personal care was only down by 1.8%. Confectionery has grown in volume in five of seven European countries but was 15.7% down in Greece mainly due to Marinopoulos’s collapse.

Units (packs) sales evolution in Greece, by category, year-on-year, % change

Total % change

Food

Non-Food

-12,8

-9,2 -10,7

-15,7

-6,9 -7,5 -8,7

-1,8


drinks

Non-alcoholic

drinks


Pet Care

-9.3-9.9-7.0



Average price change by category - Greece

Average volume price in Greece has increased quickly, by 4.0% on average and higher for food than for non-food. Confectionery has experienced a particularly high level of price increase whereas personal care has gone down in price. These kind of increases are mainly due to VAT increase, product mix change and a slowdown of the private label contribution.

Price evolution in Greece, by category, year-on-year, % change in average pack price

Total % change

Food

Non-Food

6,2

4,5

6,3

9,8

1,2

3,1

1,8

-0,8

10,4


drinks

Non-alcoholic

drinks


Pet Care

4.0

4.7

1.4



Volume sales on promotion by category – Greece

At 21.8%, the level of volume sales on trade promotion in Greece is one of the lowest in Europe and food has the lowest level at less than 19%. Household, however, is relatively high at 35.1% but pet products is much lower at only 11.1%.

Volume sales on promotion in Greece, by category, last year, % volume sold on promotion

20,6

15,8

21,2

13,0

23,1 24,1

35,1

30,7

11,1


drinks

Non-alcoholic

drinks


Pet Care



Volume sales on promotion, evolution by category - Greece

Dropping very slightly overall, the level of volume sales on promotion in Greece was well down for alcohol and confectionery, whilst it increased on ambient and chilled food as well as for pet products. Both retailers and manufacturers are trying to rationalise promotional spend hence the drop in promotional volumes.

Volume sales on promotion in Greece, evolution by category, year-on-year, share point change

1,8 0,9

-1,6

-3,7 -4,4

-0,3

-2,2

0,4

3,1


drinks

Non-alcoholic

drinks


Pet Care



Insights for Greece

• The level of volume sales on trade promotion is low for Greece, one of the lowest levels for the European countries analysed, at

21.8%. Food has the lowest level of volume sales on promotion in Europe at less than 19%, yet the household category is fairly high

at 35.1% with personal care just behind at 30.7%.

• Overall, the proportion of volume of sales on promotion has not changed much in the latest year, it is just down by 0.2 point.

However, food has increased by 0.1 point and non-food has dropped by 1.1 points. Alcoholic drinks and confectionery have reduced

the most, by 4.4 points and 3.7 points respectively, whilst ambient food, chilled food and pet products have experienced an increase

in trade promotion support. The top three categories for extensive promotions in Greece recently are: low suds fabric washing, foam

bath and beer.

• Manufacturers favour promotional activity to price decreases such as the every day low price mechanic.

• The price gap between private label and national brands is reducing due to heavy price promotions by national brands. But retailers

and Lidl, who is very active, are also developing promotional activities for private label products, focusing mainly on price offs and

extra quantity.

• FMCG value sales have fallen by 5.2% year-on-year for the latest year. Non-food sales have decreased at a slightly faster rate than

food sales (-5.5% compared to -5.2%). In the last year no category registered value growth and the fastest decline has come from

ambient and pet products.

• Volume sales (measured by packs) have dropped by more than 9% during the last year, which by sector is a 9.9% fall for food and a

7.0% decline for non-food. The categories that have experienced the greatest year-on-year volume declines are confectionery

(-15.7%), ambient food (-12.8%) and pet products (-18.1%).


Insights for Greece

• The average volume price has risen quickly with a 4.7% year-on-year increase in average pack price for food and a 1.4% increase

for non-food. The confectionery category has had a particularly high level of price increase and frozen food and ambient food have

also experienced strong levels, of 9.8%, 6.3% and 6.2% respectively. In contrast personal care average pack prices have declined

by 0.8% for the same time period.

• There is a concentration in the retail channel leading to an intense price war to gain market share. Four retailers account for 73.4%

of the market (January-July 2016). Furthermore, the collapse of former number one retailer, Marinopoulos, contributed an increase

of approximately 3.5% of sales to channels such as discounters (Lidl) and cash & carry outlets.

• In this highly competitive environment and despite the gloomy economic context major retailers have invested heavily in

advertising, overtaking in advertising spend the banking and automotive industry.


The United States Overview





category









Confectionery 41.0

Frozen food 35.8

Volume Evolution

Food 16.2

Non-food 10.1




Personal care 25.4

Household 27.3

N

F


N

F

Volume Evolution

Food 24.9

Non-food 15.5



Value sales trends by category – USA

Value sales were up in the USA by 1.7% overall and similar for both food and non-food. The fastest growing sector was alcohol, up by almost 5% and chilled food was slightly down. Frozen food was similarly stagnant whereas the largest sector, ambient food, was up by 1.4%.

Value sales and evolution in the USA, by category, year-on-year, % change

Total € bn

Total % change

Food

Non-Food

1,4

-0,3

0,1

1,5

4,8

3,4

1,9 1,3

1,7


drinks

#¡REF! Household Personal Care Pet Food and

Pet Care

€ 148,3 € 79,6 € 48,1 € 20,6 € 43,5 € 84,8 € 47,1 € 45,9 € 17,5

1.7

1.7

1.6



Volume sales trends by category – USA

Volume sales in the USA were virtually flat in the latest year. There was a very small increase for food but none for non-food. The best performing sector was alcohol at +2.5%, whereas confectionery sales fell by 1.0%. Non-alcoholic drinks performed well. Both alcoholic and non-alcoholic drinks have benefited from home based behaviours (for example, consumers staying in rather than going out for drinks).

Volume sales evolution in the USA, by category, year-on-year, % change

Total % change

Food

Non-Food

-0,6 -0,3

-0,7 -1,0

2,5

1,7

0,2 0,2


drinks

Non-alcoholic

drinks


Pet Care

0.20.2

-0.0



Average price change by category - USA

Volume price increased in the USA by just 1.5% overall and by a similar level in food and non-food. Pet products have increased in price the most whereas chilled food effectively did not increase in price at all. These increases are due to some declines in promotional activity and product premiumisation.

Price evolution by category in USA, year-on-year, % change in average volume price

Total % change

Food

Non-Food

2,0

0,1

0,8

2,5 2,3

1,6 1,7

1,1

3,0

Ambient Food Chilled Food Frozen Food Confectionery Alcoholic drinks Non-alcoholicdrinks


1.51.5

1.6



Volume sales on promotion by category – USA

The level of volume sold on promotion in the USA was 34.9% in the latest year, with the highest sector being non-alcoholic drinks at almost 44%. Pet products has much less volume sold on trade promotion, just 17.6%. The largest sector, ambient food, was 38.3%. Reliance on promotion has been escalating in general in the USA for several years as marketers look to drive volume. Yet lift from merchandising has been on the decline and brand equity is undermined by an over reliance on promotion.

Volume sales on promotion in the USA, by category, last year, % volume sold on promotion

38,3

32,7 35,8

41,0

31,0

43,7

27,3 25,4

17,6


drinks

Non-alcoholic

drinks


Pet Care



Volume sales on promotion, evolution by category - USA

The level of volume sales on promotion in the USA increased very slightly overall, by 0.2 point. There was a small reduction for pet products and ambient food went up by 0.5 point to 38.3%. Chilled food, however, reduced by 0.4 point.

Volume sales on promotion in the USA, evolution by category, year-on-year, share point change

0,5

-0,4

0,4

-0,3 -0,2

0,5

0,2 0,2


drinks

Non-alcoholic

drinks


Pet Care



Deal depth by category – USA

Deal depth is quite low in the USA at 15.3%, with non-food at just 10.1%. The deepest deal depths are seen for the big food categories, where it is closer to 20%. But alcohol has less than 5% deal depth for the 31.0% of volume sales on trade promotion.

% price reduction on promotion in the USA, by category, last year

17,7

21,2 20,5

12,3

4,8

13,8

8,2

12,2 10,3


drinks

Non-alcoholic

drinks


Pet Care

FR IT SP UK GE GR AU NZ WE NE WE FR GE GR AU NZ US


Deal depth trends - USA

Deal depth in the USA has not changed in the last year overall but it has reduced a little on non-food and risen very slightly on food. Lift has been declining and in some categories there is work being done to move away from a reliance on promotion.

% price reduction on promotion in the USA, trend over last two years

15,2 16,0

10,6

15,3 16,2

10,1

Total Food Non-Food

Year agoLatest year



Volume sales on promotion with feature and/or off-shelf display by category – USA

Promotions that are featured in store leaflets or on off-shelf displays in store, accounted for 23.0% of volume sales in the USA in the latest year. It was highest for non-alcoholic drinks at just over 30% and lowest for pet products.

% volume sales on promotion with off-shelf displayi in the USA, by category, last year

27,1

17,7 20,4

26,7

23,4

30,6

18,2

14,7

10,1


drinks

Non-alcoholic

drinks


Pet Care

IT SP UK US NE WE FR GE GR AU NZ


22,8 24,8

14,8

23,0 24,9

15,5

Total Food Non-Food

Year ago

Latest year

Volume sales on promotion with feature and/or off-shelf display by category – USA

Promotions that are featured in store leaflets or on off-shelf displays in store, accounted for 23.0% of volume sales in the USA in the latest year. This was marginally higher than in the previous year. It is much more popular as a mechanic for food than for non-food.

% volume sales on promotion with feature and/or display, in the USA, year-on-year



Insights for the USA

• The grocery industry has been struggling to find growth for several years now. Volume sales have remained largely flat since before

the end of the Great Recession and dollar sales have largely been the result of falling promotional activity and inflationary pricing

trends. Retail growth is coming largely from store population expansion efforts.

• The USA is in a deflationary period and this could have a powerful impact on revenues and margins.

• In the latest year the level of volume sold on promotion was 34.9% in the USA. Non-alcoholic drinks (43.7%), confectionery

(41.0%) and ambient food (38.3%) were the leaders for the food sector and household was the leading category for non-food at

27.3%. The level of volume sales on promotion in the USA increased by 0.2 point.

• Even though lift from merchandising is declining, manufacturers continue to funnel more money into promotion and they are locked

in a vicious cycle of undermining brand equity by over-promoting.

• Volume price increased year-on-year by 1.5% for food and 1.6% for non-food. The chilled food category only experienced a 0.1%

change in average volume price for the latest year, while confectionery increased faster at 2.5%. Pet products was the highest

performing category in the non-food sector.

• Value sales in the USA for the latest year were up 1.7% overall and were similar for food and non-food at 1.7% and 1.6%

respectively. Alcohol was the fastest growing category, up by 4.8% year-on-year. Non-alcoholic drinks also performed well.

• Private label is stronger in the frozen foods and chilled categories where it will drive price down. It has lost some ground in

household and personal care, where it will drive prices up.

• IRI research shows that quick shopping trips account for two thirds of shopping visits and just over one third of grocery expenditure

in the USA. This style of ‘just in time’ shopping has become the norm and shoppers are increasingly spreading their spend across

more channels and across more store formats.


Insights for the USA

• Cross-channel shopping has escalated as consumers seek the best deals. In addition, digital evolution is putting vast amounts of

pricing information at the customer’s fingertips, which is real challenge in keeping shoppers loyal.


Australia Overview





category







Confectionery 67.7


Personal care

45.4



Chilled food 29.7

Household 33.1

Ambient food 38.7



Value sales trends by category – Australia

Value sales have grown overall in Australia by 0.6%, increasing for food and remaining stable for non-food. The fastest growing sector was confectionery at 2.2% with non-alcoholic drinks declining by 1%. Personal care showed a small increase whereas pet products was down.

Value sales and evolution in Australia, by category, year-on-year, % change

Total € bn

Total % change

Food

Non-Food

0,8 1,1

1,6

2,2

0,0

-1,0

-0,2

0,3

-0,6


drinks

Non-alcoholic

drinks


Pet Care

Not

available

€ 10,3 € 6,3 € 2,4 € 1,7 € 0,0 € 3,8 € 2,6 € 2,7 € 1,1

0.60.8

-0.1



Volume sales trends by category – Australia

Volume sales have increased in Australia by 1.5% overall and by 1.9% for food. Non-food showed a small volume increase of just 0.3%. Frozen and chilled foods did especially well with over 3% volume growth. Increasing amounts of promotion and a stronger private label offer in the main food categories have driven volume growth.

Volume sales evolution by category in Australia, year-on-year % change

Total % change

Food

Non-Food

1.5

1.90.3

0,7

3,1 3,4

2,8

0,0

1,4

-0,1

0,8


drinks

Non-alcoholic

drinks


Pet Care

Not

available



Average price change by category - Australia

Volume prices fell in Australia. Non-alcoholic drinks declined the most, by 2.4%. Only ambient food did not go down in price. Non-food prices fell less than food prices.

Price evolution by category in Australia, year-on-year, % change in average volume price

Total % change

Food

Non-Food

-0.9

-1.1

-0.4

0,1

-2,1 -1,8

-0,6

0,0

-2,4

-0,2 -0,6 -0,5


drinks

Non-alcoholic

drinks


Pet Care

Not

available



Volume sales on promotion by category – Australia

The level of volume sold on promotion is high in Australia, on average 40% and for confectionery almost 70%. Chilled food has the lowest level at 29.7% of volume sales bought from stores where trade promotions were present. Higher levels of promotion are now evident as both retailers and manufacturers seek to compete on a price and value message.

Volume sales on promotion in Australia, by category, last year, % volume sold on promotion

38,7

29,7

44,3

67,7

0,0

51,8

33,1

45,4

37,8


drinks

Non-alcoholic

drinks


Pet Care

Not

available



Volume sales on promotion, evolution by category - Australia

The level of volume sales on promotion in Australia increased by one point in the latest year. This increase has been seen across most sectors, only household and ambient food went down.

Volume sales on promotion in Australia, evolution by category, year-on-year, share point change

-0,8

2,1 2,0

1,5

0,0

3,1

-0,3

1,3

3,0


drinks

Non-alcoholic

drinks


Pet Care

Not

available



Insights for Australia

• In Australia, the proportion of volume sales sold on promotion is very high. In the latest year the average was 40.6% overall and for

confectionery, the most impacted sector, it was 67.7%. Other food categories also rank highly: non-alcoholic drinks is at 51.8% and

frozen food is at 44.3%. The level of volume sales on promotion increased by one share point in the latest year and was seen across

all categories with the exception of ambient food (-0.8 point) and household (-0.3 point).

• Australia has one of the highest amounts of promotion yet it has still suffered from low value sales growth. Manufacturers have to

promote heavily to drive volume sales but it is a challenging environment as shoppers are very price aware. The growth of Aldi is a

key factor. The main supermarkets have focused on price led positioning to combat the threat from Aldi.

• Of the major categories the most heavily promoted (>60% volume sold on deal) are confectionery, soft drinks and snacking chips.

All of these are impulse categories and have strong branded presence competing for low or declining growth. Perceived health

concerns for these categories have helped stifle consumer demand and brands are having to promote to high levels to drive sales

and shopper interest.

• Private label has an underdeveloped market yet it is growing very strongly in the Coles stores. In fact, private label is beginning to

act like a brand in the Coles stores and the loyalty and repeat purchase analysis from recent data for ice cream shows a private label

product with a profile more akin to a key national brand.

• Price deflation in the market and the growth of private label has forced manufacturers to rethink their price positioning. We have

seen examples of brands not pushing through a price increase for several years, especially if they are participating in a retailer’s

EDLP strategy.

• All retailers have a price and value focus in their proposition and the ability to differentiate on price is becoming less evident as

shoppers now expect to be able to get great value in whichever main supermarket they shop in (76% of shoppers state that item

price drives their purchase choice).


Insights for Australia

• Overall value sales have grown year-on-year in Australia by 0.6% for the latest year. They have increased for food (0.8%) and

stayed stable for non-food (-0.1%). Confectionery was the fastest growing sector for the period with a 2.2% year-on-year increase.

Personal care displayed a small level of growth (0.3%) and performed the best amongst the non-food categories. Confectionery is

the most highly promoted of the mentioned categories and increasing price investment in this category has driven volume growth

which has in turn driven value growth, albeit at a lower level, reflecting the price deflation in this category.

• Volume sales were more positive, with an overall increase of 1.5% for the latest year. The food sector has experienced a 1.9%

increase in volume sales and non-food was up by 0.3%. The frozen food and chilled food categories did particularly well with volume

growth of 3.4% and 3.1% respectively.

• New product development (NPD) in both frozen and chilled categories and an increased promotional focus on offers such as meal

deals has driven growth in these categories

• In this time period volume prices declined year-on-year in Australia. Food fell by 1.1% and non-food by 0.4%. Food prices fell more

significantly than non-food prices and ambient food was the only food category to not experience a dip in price. For non-food, all

categories experienced a volume price decline.


New Zealand Overview





category








Confectionery 62.8


61.2



Chilled food 48.4

Household 50.6

Ambient food 51.2



Value sales trends by category – New Zealand

Value sales grew in New Zealand by almost 3% overall and by 3% for food. Non-food value sales were also up, by 2.1%. Confectionery saw the fastest growth, of almost 5%. All sectors showed growth, the slowest increase came from chilled food at 1.5%.

Value sales and evolution in New Zealand, by category, year-on-year, % change

Total € bn

Total % change

Food

Non-Food

3,5

1,5

3,6

4,8

3,3 2,8

1,9 2,0 2,7


drinks

Non-alcoholic

drinks


Pet Care

2.9

3.0

2.1

€ 2,3 € 1,2 € 0,5 € 0,3 € 0,9 € 0,7 € 0,5 € 0,5 € 0,3

FR IT SP UK GE AU NZ WE NE GR US


Volume sales trends by category – New Zealand

Volume sales in New Zealand were also up year-on-year, by 2.3% overall, by 2.0% for food and by almost 4% for non-food. Personal care showed the fastest increase in volume at 4.9% with the largest sector, ambient food, up by 0.9%.

Volume sales evolution in New Zealand, by category, year-on-year, % change

Total % change

Food

Non-Food

0,9

3,3 3,5

4,4

1,2

2,3

3,9

4,9

1,4


drinks

Non-alcoholic

drinks


Pet Care

2.3

2.0

3.8



Average price change by category - New Zealand

Volume price in New Zealand barely changed overall but went up for food and down for non-food. Personal care saw volume prices fall by almost 3%, household price was down too whereas volume price for ambient food went up quite quickly, by 2.6%.

Price evolution in New Zealand, by category, year-on-year % change in average volume price

Total % change

Food

Non-Food

2,6

-1,9

0,1 0,4

2,0

0,5

-2,0

-2,9

1,3


drinks

Non-alcoholic

drinks


Pet Care

0.5

1.0-1.7



Volume sales on promotion by category – New Zealand

Trade promotion levels in New Zealand are extremely high, greater even than in the UK or in Australia. Alcohol has the highest level at over 70%. Even the sector with lowest proportion of volume sales sold on promotion, chilled food, is almost 50%.

Volume sales on promotion in New Zealand, by category, last year, % volume sold on promotion

51,2 48,4

59,7 62,8

71,6

61,2

50,6

57,6 56,3


drinks

Non-alcoholic

drinks


Pet Care



Volume sales on promotion, evolution by category - New Zealand

The high level of trade promoted volume in New Zealand has fallen by 2.8 points in the last year. All sectors apart from confectionery showed a decline, the fastest coming from non-alcoholic drinks. These declines are largely due to retailers’ focus on every day low pricing (EDLP).

Volume sales on promotion in New Zealand, evolution by category, year-on-year, share point change

-3,0

-1,6

-2,9

1,5

-4,3 -5,6

-2,7 -2,6

-1,3


drinks

Non-alcoholic

drinks


Pet Care



Insights for New Zealand

• In New Zealand trade promotion levels are the highest from every country in this report. The food sector has experienced levels of

71.6% of volume sales on promotion for alcoholic drinks, 62.8% for confectionery and 61.2% for non-alcoholic drinks. Even the

lowest category for volume sales sold on promotion, chilled food, still has a level of 48.4%. The non-food levels are also high with

the key categories all recording figures of over 50%.

• Yet the high level of trade promotion support has declined by 2.8 points in the latest year. All categories have experienced a decline

with one exception, confectionery. The fastest decline is for non-alcoholic drinks at 5.6 points.

• In a duopoly market, manufacturers have little power and follow the focus of retailers which is upon price reduction and EDLP

offerings. Countdown, a key retailer, provides a ‘Price Drop’ feature as an EDLP strategy to attract shoppers.

• In such a highly promoted market, manufacturers have little choice but to maintain their promotion pressure. The only alternative is

unique new product development.

• The top categories on promotion are wine and beer. Wine has had up to 90% of volume sales on promotion at times.

• It is interesting to see that EDLP positioning is bringing branded goods closer to private labels in terms of price.

• The New Zealand market has seen value sales grow by 2.9% for the latest year. Food has fared better than non-food with increases

of 3.0% and 2.1% respectively. Confectionery has seen the highest growth at 4.8% with other food categories also performing well.

Chilled food value sales increased but at a slower rate of 1.5%.

• Volume sales are positive for the latest year with an overall increase of 2.3% (2.0% for food and 3.8% for non-food). Personal care

has showed an encouraging increase at 4.9% and household has also performed well with a 3.9% increase.

• Volume price hasn’t changed significantly over the latest year with 0.5% total change year-on-year. The fastest increases were seen

for the ambient food and alcoholic drinks categories whereas non-food has struggled with volume prices falling by 2.9% for the

personal care category.

Path to Growth


Path to Growth

Summary

• Price is having less influence on brand choice than it has had in previous years. Most retailers offer a value focus in their propositions

and differentiating on price is becoming less critical as shoppers expect greater value from all of the supermarkets they visit.

• IRI shopper studies highlight that consumers are increasingly seeking healthy, quality products that preserve the environment.

Consumers are keen to embrace innovation and they also have a tendency to make impulse buys and purchase for pleasure.

• The challenge for retailers is keeping abreast of these consumer and market driven changes and responding to these trends in an

effective and relevant way.

• The challenge for manufacturers is to optimise their costly promotional activities and manage volume loss to private labels in an

environment where the shopper is becoming more and more demanding.


Path to Growth

Recommendations for future growth opportunities include:

• Manufacturers and retailers need to move to a collaborative relationship that big data technology can enable, either via

comprehensive solutions such as IRI Holistic Retail Solution, or via ad hoc solutions that IRI can offer upon specific business needs.

• Manufacturers and retailers need to tap into new shopper behaviour trends and understand the influencing factors behind

them in order to grow.

• Retailers should focus upon categories growth when running promotion, using analytics solutions such as such as IRI

Price and Promotion models to identify where and how this can be done.

• Manufacturers should plan promotions based upon ROI and uplift per promotion, leveraging prescriptive analytics solution

such as the IRI Promotion model combined with IRI Promo Event Planner. In addition, manufacturers must set clear goals for their

promotions and find the best mechanic to achieve these goals.

• The communication of a promotion is critical. IRI studies reveal that one third of promotions on food and beverage products in

Italy are not properly communicated. This is an area for improvement for retailers and manufacturers alike. Promotional strategies

also need to factor in online shopping and the significance of digital channels, particularly with younger shoppers.

• Manufacturers need to reduce their trade promotion budgets and invest in new product development in order to grow

but it is close to impossible to do so without impacting sales. Round pound promotions have been very popular in the UK recently as

they are easy for consumers to understand. There may be an increase in this style of simple promotion in the months ahead.

• Promotional stand out is crucial. Retailers and manufacturers must ensure that their promotion is seen. There is also a need to

promote smartly. In a market where growth is minimal ensuring that you have the right mechanic on the right products at the right

time will help to drive growth.


Path to Growth

Recommendations for future growth opportunities include:

• Innovate in order to stand out from competitors. Unique new product development and range extensions that create

excitement are two approaches to consider. IRI Assortment Optimization can help you find the best new products to launch and the

best product mix to carry!

How to win


How to win

If you have enjoyed this report, you may be interested in the following IRI products and services, which provide customisable insights:

IRI InfoScan Census® is a syndicated retail tracking service that enables manufacturers and retailers to acquire industry insights used

to make better business decisions. InfoScan Census utilises the data that IRI collects from grocery, drug and mass merchandise

retailers to provide the most comprehensive and accurate syndicated data offering in the fast moving consumer goods (FMCG)

sector. With access to accurate, granular detail by category, geography, measure and time period, clients have the tools needed to

develop marketing and sales strategies based on product performance, distribution and promotion responsiveness.

IRI Analytics Suite provides global solutions for all strategic marketing needs. It enables retailers and manufacturers to get fast and

in-depth category insights and dynamic analysis for identifying growth opportunities, and to measure business impact in term of return

on investment, sales and profit. The Analytics Advantage Suite goes from in-store interviews to advanced modelling solutions for

marketing mix, media, price and promotion optimisation.

IRI Price and Promotion model solution is a unique revenue management solution that delivers the most accurate ROI and

efficiency measures. Based on the IRI Liquid Modeling™ platform, it is the only solution that gives a full category view that allows users

to anticipate and simulate their own and competitive actions. IRI Price and Promotion models provide manufacturers and retailers with

actionable results to plan, monitor, analyse and optimise their price positioning and their promotional budgets.

IRI Price and Promotion for Retailers provides models including the Price and Promotion Strategic Planner application, delivering

on-the-fly simulations for a large number of categories and products. It is based on a modular approach covering diagnostics and

market benchmarking, along with the strategic module for directional view, and tactical modules covering different strategic and

operational needs for retailers.

FOR MORE INFORMATION,

please contact your IRI Consultant or send an email to [email protected]

mailto:[email protected]


Resources

• This report contains data gathered from XX countries from Western economies: Australia, France, Germany, Greece, Italy, New

Zealand, the Netherlands, the UK and the USA. The data has been sourced from IRI Infoscan® retail and MarketEdge databases; 52

weeks ending August 2015 versus August 2016 for all countries except for Greece which is 52 weeks ending July 2015 versus July

2016.

• Macro-categories analysed: chilled food (excluding eggs), ambient food, frozen food, non-alcoholic drinks (including tea and coffee),

household, personal care (excluding cosmetics), confectionery, pet food/pet care and alcoholic drinks.

• The market channels used for each country in this report are as follows:

Country Channels used

UK IRI Infoscan: hypermarkets and supermarkets

Greece IRI Infoscan: hypermarkets and supermarkets

Germany IRI Infoscan: hypermarkets, supermarkets, discounters and drugstores

Netherlands IRI Infoscan: hypermarkets and supermarkets

Italy IRI Infoscan: hypermarkets, supermarkets, discounters and drugstores

France IRI Infoscan: hypermarkets and supermarkets

Spain IRI Infoscan: hypermarkets and supermarkets, including Canary Islands

US IRI Infoscan: total U.S. Multi-Outlet w/ C-Store” tracking covers Supermarkets, Drugstores, Mass Market Retailers, Gas/C-Stores, Military Commissaries and Select Club & Dollar Retail Chains.

Australia IRI MarketEdge: hypermarkets and supermarkets

New Zealand IRI MarketEdge: supermarkets, including online


Contact

FOR MORE INFORMATION

Contact you local IRI Consultant or send an email to

[email protected]

ABOUT IRI

About IRI. IRI is a leading provider of big data, predictive analytics and forward-looking insights that help CPG, OTC health care, retailers and media companies to grow. With the largest repository of purchase, media, social, causal and loyalty data, all integrated on an on-demand cloud-based technology platform, IRI guides over 5,000 clients globally in their quests to remain relentlessly relevant, capture market share, connect with consumers and deliver growth. www.IRIworldwide.com

International Headquarters

1 Arlington Square,

Bracknell, Berkshire RG12 1WA,

United Kingdom

+44 1344 746 000

Copyright © 2016 Information Resources, Inc. (IRI). All rights reserved. IRI, the IRI logo and the names of IRI products and services referenced herein are either trademarks or registered trademarks of IRI. All other trademarks are the property of their respective owners.

mailto:[email protected]

http://www.iriworldwide.com/

Date post:	28-Jul-2020
Category:	Documents
Upload:	others
View:	0 times
Download:	0 times

Price and Promotion in Western Economies...Volume sales growth by country – All countries Volume...

Documents