Leading CTN operator Rippleglen has accused big confectionery companies of damaging traditional newsagents’ businesses by developing exclusive ranges for discounters.
MD Mike Colley said major confectionery manufacturers were not just causing a loss of trade to his business and the CTN sector they were also devaluing their own brands. “There has been significant market shift, which has moved the brand proposition in many customers’ eyes with possible irreparable damage to brand equity.”
Colley said he heard customers in one of his stores declare a box of Maltesers priced at £1.60 must have been incorrectly priced as it should only cost £1.
Rippleglen sales director Laraine Jones said the situation was particularly upsetting as the CTN channel has been an important route to market for the confectionery giants for so long. “We put these units in on the basis that we would be supported with promotions. But now they are giving better deals to the discounters and we can’t compete,” she said. “For years we were warned that if we bought grey market or clearance stock we would lose these offers.”
Jones said she has approached the confectionery giants to ask for the same stock as the discounters, but was told that Rippleglen did not sell enough volume. She said that in many cases brand owners had developed smaller pack sizes to meet the demands of single-price discounters who wanted to maintain a certain price point while absorbing food price inflation. “Customers often just see the different prices and don’t realise that they are actually different sizes as well.”
This week 99p Stores commercial director Hussein Lelani cited an exclusive agreement with Kraft for a smaller bar of Toblerone as a key way the single-priced discounters could cope with the increase of VAT.
“We needed a viable product we can sell at 99p and the only way they could do that was by reducing the chocolate bar by 30g,” he said.