The dairy co-op has cut the recommended price of popular 250g and 750g SKUs and rolled out a smaller 400g pack, in changes that are expected to take effect in major retailers from this week.
It has reduced the rsp of its 250g and 750g spreadable packs by 20% – though Arla stressed it did not confirm the shelf price, as retailers set their own prices.
The rsp of its new 400g spreadable pack – which is replacing its larger 500g tubs – is 20% cheaper than the previous, larger size, Arla said.
Some retailers have already begun selling the 400g pack at £2.75 on gondola ends, and promotions are expected across the major grocers.
The cut to the butter barnd’s spreadable pack sizes came on the back of a poll of more than 2,500 consumers that aimed to “understand the best pack size and pricing options” for cash-strapped shoppers, Arla suggested.
It follows similar cuts to pack sizes across Arla brands in April. The 250g blocks for Lurpak and sister brand Anchor were cut to 200g, while the Lurpak butter box was cut from 225g to 185g in a bid to keep the price of the butters “accessible” for shoppers, Arla said at the time.
“What we want consumers to see loud and clear is that Lurpak is doing its bit to help at a very, very difficult time,” Arla UK MD Ash Amirahmadi told The Grocer.
“This will be welcome for consumers because budgets are tight and this is a premium product,” he added.
Lurpak prices have risen by an average of 23.4% over the past year [NIQ 52 w/e 25 March 2023] on the back of record high UK farmgate prices – which peaked at more than 51p per litre last December.
At the same time, volumes have plummeted by 21% – making Lurpak the fastest-falling brand by absolute change in the butters and spreads top 10. Amirahmadi said the slump had been expected following price increases, but it was now at the “point of inflection”.
“2023 is absolutely a game of two halves,” he added. “In the first half of 2023 our brands continued to be in decline, the signs are in the second half of 2023 our brands are going to go in growth and doing things like this will obviously help that.”
Ahiramadi said the new pack changes had been welcomed by the dairy co-op’s farmer owners who were in a “very difficult” situation and currently being paid less than the cost of production due to global market conditions.
Arla will now be making similar changes across cheaper sister brand Anchor, Amirahmadi confirmed. While the brands target different consumers, the usage of both products was similar, he said.
The company had considered making the same changes to its branded milk offerings but had decided not to go down this route following consumer feedback, Amirahmadi revealed.