Economy product launches overtake premium in UK

The uncertain economic climate is impacting new product launches in the UK, with the number of economy food and drink products launched in 2012 outstripping the number of premium launches for the first time.

According to market research firm Mintel, new product launches in 2012 featuring economy claims accounted for 9% of total new food and drink launches in the UK, compared to 7% of launches featuring premium claims. The UK leads the way with 21% of global food and drink economy introductions in 2012, even exceeding the US at 20%.

“The UK economy has struggled to see market recovery and consumer disposable income has remained under pressure,” said David Jago, Director of Innovation and Insight at Mintel.

“This has given buoyancy to the trend for food and drink brands and grocers to push their value credentials to the foreground. Investment in NPD (new product development) across economy lines has reflected this, increasing steadily since 2010, outstripping the number of new product launches featuring premium claims. Much of the activity in the economy segment in 2012 was fuelled by UK supermarkets improving their value-for-money ranges in response to consumer challenges dictated by the ongoing economic turmoil.”

Private label products made up the bulk of products with economy claims, Jago said, while bulk value is also taking off: branded manufacturers are increasing pack sizes to deliver lower average pricing per unit or kilogram, but higher overall package costs.

“However, this value pack strategy ignores some basic economics of poorer consumers, suggesting that alternative strategies may be successful,” Jago said. “As budgets grow ever tighter, consumers are recalibrating their lifestyles and making new product choices, but they carry their middle- and upper-class tastes and experiences with them. Economy product innovation, packaging and marketing needs to remain mindful that  ‘down-sliding’ consumers don’t want to be made to feel poorer.

In continental Europe, a significant proportion of consumers have switched from branded to cheaper private labels: 34% in Spain and Italy, 21% in France and 25% in Germany. Many also report cutting down on the number of premium products they purchase: 21% in France, 19% in Italy, 18% in Germany and 17% in Spain.

“Alongside clear economy statements on packs, which can be off-putting for some, brands have recognised that packaging can give an economical edge through offering a reassurance of value,” said Benjamin Punchard, Senior Global Packaging Analyst at Mintel.

“This might be packaging that protects the product better so that the consumer can rest assured that they will be able to use the product before it goes off. Similarly portioned or dosing packs tell the consumer that they will definitely get the stated portions out of a pack - both a value proposition and a helpful measure for those on a budget needing to know exactly how far a product will stretch.”