The escalating supermarket price war has helped drive down average prices of 41 of Britain’s 100 biggest grocery brands, according to analysis by The Grocer.
Deflation has contributed to one of the worst performances for branded grocery in recent years, with 53 of the top 100 in value decline [Nielsen 52 w/e 3 January 2015], as revealed in The Grocer’s Britain’s Biggest Brands 2015 report, out this week. A year ago, 34 were in value decline. In 2013, the figure was just 26.
The three bread brands in the top 100 - Warburtons, Kingsmill and Hovis - have been among the worst hit, with respective falls in average price per unit of 3.5%, 5.6% and 7.6%. Only Hovis has managed to grow volumes.
“Retailers have been fighting hard to establish and signal great value to consumers and using the most popular brands to do this,” said a spokesman for Hovis. “Hovis, as one of the largest grocery brands, has seen price activity in some retailers, as part of this competitive environment.”
The greatest price falls:
▼ 7.9% Cadbury
▼ 7.7% Bakers
▼ 7.6% Hovis
▼ 6.4% Kellogg’s Crunchy Nut
▼ 5.6% Kingsmill
Of the 41 brands that have lowered average price per unit, 14 have seen volumes fall, suggesting lower prices alone are not enough to maintain growth.
“Deflation is one of the issues we’re all battling as the grocers take on the discounters, and the challenge is to grow volume in this deflationary environment,” said United Biscuits MD Jon Eggleton. UB has done this partly by lowering average price per unit on McVitie’s and Jacob’s. Both have also benefited from big advertising campaigns over the past year.
“Our strategy is to have the right price point in the right channel,” added Eggleton. “The pound stores are a big opportunity because we undertrade there. We only have a 16% share there at the moment, but we have grown at 29% over the last year.”
NPD and promotions to encourage trial have contributed to price deflation. For example, growth of Special K Multigrain Porridge, with an average price less than half that of the brand’s cereal, has been a factor in Special K’s 3.4% price decline.
Special K has suffered the second-greatest fall down our ranking, from 59 to 72, after WeightWatchers, which has tumbled 19 places to 52. Value sales of WeightWatchers have fallen 21.6% to £158.6m on volumes down 23.1%.
“Consumer needs continue to change with sentiments moving away from traditional ‘diet’ foods to a healthier, more holistic approach,” said WeightWatchers head of licensing Matthew Davis.
News of price deflation among Britain’s 100 biggest brands comes as the Grocer Price Index recorded price drops across all food and drink categories for the first time (p21). Deflation in the big four hit a record high of 2.2% last month.