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How is the promotional landscape of the Confectionery category changing?

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Consumer group Which? has called upon the major supermarkets to promote more healthy products following its recent report that concluded less healthy products were being promoted more than healthier items. The report highlighted that 53 percent of the promotions in major supermarkets, between April and June 2016, were on less healthy food products.

The report called attention to the Confectionery category, where it claimed that 52 percent of related products were on promotion between April and June 2016 compared to 30 percent of the Fresh Fruit and 34 percent of Fresh Vegetable categories.

What the report failed to take into account is the move by supermarkets from seemingly complex promotions, such as multi-buys, to everyday lower prices (EDLP). Analysis by Brand View revealed that the average promoted price of Fresh Vegetables and Fresh Fruits fell 3.1 and 1.6 percent respectively between 1 July 2015 – 27 July 2016. In contrast, the average promoted price of Confectionery increased 1.8 percent, despite a 3.5 percent increase in the number of promotions.

Has the number of save amount promotions increased?

Brand View has carried out further analysis on the promotions in the Confectionery category (Chocolate and Sweets sub-categories only) in Asda, Morrisons, Ocado, Sainsbury’s, Tesco and Waitrose between 5 January 2015 and 21 August 2016.

A four week moving average has been used where each data point is the average number of promotions on that day and the four weeks previous.

The analysis showed that the average number of multi-buy promotions largely exceeded save amount promotions until 14 February 2016. Save amount promotions exceeded multi-buy promotions in the run up to Easter 2016, reversing the trend of Easter 2015, and continued to surpass multi-buy promotions until the end of the analysis period.

The chart shows the expected increase in confectionery promotions, both multi-buy and save amount, in the run up to Halloween and into the Christmas period. There was also a significant increase in save amount promotions this summer which were significantly less prominent during the same period in 2015. These promotions were likely associated with large sporting events such as UEFA Euro 2016 and the Olympics.

Which manufacturers are changing their promotional strategies?

Brand View has analysed the promotional mechanics utilised in the Confectionery category in the first seven months of 2015 and 2016 to see which manufacturers are driving this observed decrease in multi-buy promotions.

In the first seven months of 2015, 46 percent of chocolate promotions were multi-buys – this fell to 39.6 percent in the same period in 2016, highlighting the decline observed above.

The Chocolate category’s biggest players Mars, Mondelez and Nestlé all decreased their focus on multi-buy promotions in the first seven months of 2016 instead favouring save amount offers.

Lindt & Sprüngli had the greatest observed reduction in multi-buy promotions. Between January and the end of July in 2015 more than half of the manufacturer’s promotions (53.2 percent) were multi-buys. In the same period of 2016 this fell 12.3 percent to 40.9 percent.

Conversely, Ferrero has increased its focus on multi-buy promotions. Some 35.2 percent of its promotions in the first seven months of 2016 were multi-buys, up from 30.1 percent from the same period in 2015. This was due to Ferrero using multi-buy promotions on some of its Easter SKUs, such as Kinder Mini Eggs 85g and the Thorntons Harry Hopalot 60g, in 2016 as opposed to the save amount promotions it used in 2015.

Extending this analysis to the Sweets category showed a similar decrease in multi-buy promotions as they accounted for 64.7 percent of promotions in the first seven months of 2015 but fell to 56.7 percent in the same period in 2016.

Haribo Dunhills had the most significant decrease in multi-buy promotions. The percentage of its promotions that were multi-buys fell from 59.3 percent in the first seven months of 2015 to 33.7 percent in 2016.

The 100g bags of Haribo ‘Gold-Bears’, ‘Sour Happy Cola Bottles’ and ‘Phantasia’ products were all on multi-buy promotions in Sainsbury’s and Tesco during the first seven months of 2015 but switched to save amount promotions in the same time period in 2016.

Are shoppers getting a better deal?

Haribo Dunhills and Lindt & Sprüngli have both focused more on save amount promotions in the first seven months of 2016. The average depth of cut of these manufacturers’ save amount promotions fell in 2016 compared to 2015 while the average depth of cut of their multi-buy promotions rose.

The fall in average depth of cut of multi-buy promotions for Lindt & Sprüngli led to its total average depth of cut falling by 1.7 percent in 2016. However the manufacturer’s multi-buy and save amount promotions had a greater average duration than in the same period in 2015.

The average length of Haribo Dunhills multi-buy and save amount promotions fell between 2015 and 2016. The total average duration of its promotions fell by 13 days, this drop has been exaggerated by 14 products which were on promotion for the entire length of the 2015 time period and but not for the same period in 2016.

In this analysis we have attributed the Thornton’s brand to Ferrero throughout. Although Ferrero completed the acquisition of Thornton’s during the summer of 2015, this allowed us to create a fair comparison.

The decrease in average depth of cut of Ferrero products appears to be a result of this acquisition. In the first seven months of 2015, the average depth of cut of Thorntons SKUs was higher than for the same period in 2016. This shows the changes Ferrero has made in the brand’s promotional strategy. The average duration of Thorntons promotions did not change significantly between the two time periods.

Conclusion

Promotions of confectionery are likely to continue to move towards simpler, save amount promotions as retailers continue to favour EDLP. However, they should at first look at their Own Label ranges which had a significant proportion of multi-buy promotions in both the Chocolate and Sweets categories.

Sainsbury’s has led the charge by announcing that it had scrapped all of its multi-buy promotions during June 2016. This analysis has discovered that Sainsbury’s ceased its multi-buy promotions in the Chocolate and Sweets categories by the end of March 2016, three months earlier than its announcement.

Continued pressure from the media, such as the Which? report, could also lead to retailers changing their promotional activity to encourage healthier eating habits. This could accelerate the switch to save amount promotions in the Confectionery category as save amount offers encourage single product purchasing and therefore reduced consumption of sweet treats.

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