As our outgoing PM put it this morning, “no one is remotely indispensible”.
Well, the same could be said of major fmcg brands, if Tesco’s price wars these past weeks are anything to go by.
And just like the MPs curently licking their lips at the thought of replacing Boris Johnson in the top spot, the sudden absence of Heinz and Mars petfood products from Tesco’s shelves will no doubt have lit a fire in the offices of their competitors.
Take Del Monte for instance, which this week unveiled plans to challenge Heinz with a four-strong range of ketchups and barbecue sauces.
Heinz and Tesco’s price war could not have come at a better time for a ketchup challenger to get buyers’ attention with an offering based on quality and value for money.
The range – the first move into table sauces from the canned fruit & veg mainstay – has been positioned as a more affordable competitor to the market leader: Del Monte has set its rsp at £1.75 for a 550g pack (or 530g in the case of its reduced salt and sugar SKU).
Del Monte is admittedly nowhere near as big a brand as Heinz. But it’s well known and trusted in the categories in which it already operates, which gives it some leverage. Plus it’s got heaps of consumer awareness. It’s understood that it has already pencilled in discussions with some major retailers.
So what are its chances? It’s got a massively competitive price point, but it will have to prove it can fight Heinz on taste. The brand claims to contain significantly more tomatoes than the market leader, but there are already brands like Stokes on the market offering a more premium, tomato-packed sauce.
Plus, its launch isn’t for some months. Tesco has pitched its own label as an alternative while the dispute with Heinz goes on, and it’s likely the dispute will be settled in some form by the autumn.
Still, it’s a great example of the kind of innovation that could come to play a bigger role in the supermarkets over coming months. Because the cost of living crisis could change everything for big brands. The conventional wisdom that shoppers will still trade up for everyday luxuries held fast over a decade of austerity, but that was a slow burn compared with the crisis the UK now faces.
After the throes of the pandemic, which saw shoppers turn to trusted and established names, it must have been tempting for those suppliers to feel just a little bit untouchable.
But none could have quite anticipated how hard the squeeze on shoppers’ wallets would hit in 2022. It is an altogether different kind of crisis to the pandemic, and totally unprecedented.
Plus, that Tesco has come out and publicly decried the price demands as “unjustifiable” has changed how the public view these pricing spats.
Rather than a battle over margin, Tesco has framed itself as the champion of the people, standing up against a giant American company. It may be the UK’s biggest retailer, but it’s David, rather than Goliath, in this battle.
It will be interesting to see whether Heinz’s sales suffer as a result. If Tesco’s play encourages switching to own label in sufficient numbers, other big names should take note.
Lest they find themselves more dispensible than they imagined.