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| Big brands take austerity measures | Big brands take austerity measures |
| (4 months later) | |
| For months consumption has been flat-lining and there is little sign of any improvement in purchasing power. Comments, at the end of August, by Jan Zijderveld, head of Unilever's European operations, on "poverty" returning to Europe caused a stir in retail circles. He explained that Unilever had started marketing smaller packets of washing powder in Spain, only sufficient for five washes. Are we set to see a similar trend in France? | For months consumption has been flat-lining and there is little sign of any improvement in purchasing power. Comments, at the end of August, by Jan Zijderveld, head of Unilever's European operations, on "poverty" returning to Europe caused a stir in retail circles. He explained that Unilever had started marketing smaller packets of washing powder in Spain, only sufficient for five washes. Are we set to see a similar trend in France? |
| According to consumption specialists, the French market has not reached that point yet, but "national brands have been losing ground since July", according to Yves Marin, at Kurt Salmon consultants. "To avoid losing customers in these difficult times, brands are exploring both ends of the spectrum: on the one hand they are still producing large, keenly priced packs to sustain loyalty; and on the other hand they are working on products in smaller packages with aggressive prices per unit, in order to retain buyers tempted to stray or attract new ones." | According to consumption specialists, the French market has not reached that point yet, but "national brands have been losing ground since July", according to Yves Marin, at Kurt Salmon consultants. "To avoid losing customers in these difficult times, brands are exploring both ends of the spectrum: on the one hand they are still producing large, keenly priced packs to sustain loyalty; and on the other hand they are working on products in smaller packages with aggressive prices per unit, in order to retain buyers tempted to stray or attract new ones." |
| Brands need to adopt an offensive stance, agrees Delphine Mathez, a partner at Roland Berger strategy consultants. "In the past few years innovation in mass-market products has pushed prices upwards and now brands are realising there's a vacuum," she says. "There are generic products at very low prices and much more expensive brand products, with nothing in between. So the goal for brands is to win back middle-class buyers who can no longer afford their goods." | Brands need to adopt an offensive stance, agrees Delphine Mathez, a partner at Roland Berger strategy consultants. "In the past few years innovation in mass-market products has pushed prices upwards and now brands are realising there's a vacuum," she says. "There are generic products at very low prices and much more expensive brand products, with nothing in between. So the goal for brands is to win back middle-class buyers who can no longer afford their goods." |
| First half-year figures for sales of consumer-packaged goods compiled by SymphonyIRI show no sign of any substantial switch to smaller quantities, apart from spirits, pastis-type drinks and sodas, which have been heavily taxed since the start of 2012. "Consumers have gone back to more conventional sizes whereas they were buying two-litre bottles of cola, for example," says Jacques Dupré of SymphonyIRI. | First half-year figures for sales of consumer-packaged goods compiled by SymphonyIRI show no sign of any substantial switch to smaller quantities, apart from spirits, pastis-type drinks and sodas, which have been heavily taxed since the start of 2012. "Consumers have gone back to more conventional sizes whereas they were buying two-litre bottles of cola, for example," says Jacques Dupré of SymphonyIRI. |
| There is no comparison between marketing practice in France and emerging countries in Africa or Asia, where many products are sold singly, because consumers are less well off and purchasing habits are different. "In Morocco for instance packets are smaller and products are purchased one at a time, mainly because people shop everyday. If they have a child, they'll buy one yoghurt, every day," Mathez explains. | There is no comparison between marketing practice in France and emerging countries in Africa or Asia, where many products are sold singly, because consumers are less well off and purchasing habits are different. "In Morocco for instance packets are smaller and products are purchased one at a time, mainly because people shop everyday. If they have a child, they'll buy one yoghurt, every day," Mathez explains. |
| The situation is also different from what happened in 2008, according to Marin, when brands reduced quantity without changing the price. "In the present case there is no underhand attempt to pack less content for the same price. The idea is to create products that cater for budget-conscious buying strategies," he adds. Prices are set in line with psychological thresholds, witness the campaign by the Auchan retail chain to promote 50 organic products priced at under €1 ($1.30) a piece. There are also smaller, cheaper packages targeting consumers who will only spend so much on any particular trip to the shops, or towards the end of the month [when almost all French employees are paid]. | The situation is also different from what happened in 2008, according to Marin, when brands reduced quantity without changing the price. "In the present case there is no underhand attempt to pack less content for the same price. The idea is to create products that cater for budget-conscious buying strategies," he adds. Prices are set in line with psychological thresholds, witness the campaign by the Auchan retail chain to promote 50 organic products priced at under €1 ($1.30) a piece. There are also smaller, cheaper packages targeting consumers who will only spend so much on any particular trip to the shops, or towards the end of the month [when almost all French employees are paid]. |
| Several years ago Nestlé launched a reappraisal of the design of its products and the organisation of its offering in response to consumers' budgetary concerns. The economic downturn in 2008 speeded up the process, though the Swiss firm believes that opportunistic strategies are not a suitable response to the crisis. It now offers budget-conscious consumers in developed countries a range of "popularly positioned products" (PPPs) originally conceived for emerging countries. | Several years ago Nestlé launched a reappraisal of the design of its products and the organisation of its offering in response to consumers' budgetary concerns. The economic downturn in 2008 speeded up the process, though the Swiss firm believes that opportunistic strategies are not a suitable response to the crisis. It now offers budget-conscious consumers in developed countries a range of "popularly positioned products" (PPPs) originally conceived for emerging countries. |
| In France for example Nestlé launched, under the Maggi brand, a series of papilotte [cook-in-the-bag] meat dishes. The price, below the ¤1 threshold, partly explains the success of a line originally designed for eastern Europe. Nestlé has also brought out a range of more competitive instant coffees, under the Nes brand. Herta frankfurters and Buitoni pizzas fall into the same category. PPPs now account for 10% of Nestlé sales in France and are registering faster growth than the rest of the brand portfolio. | In France for example Nestlé launched, under the Maggi brand, a series of papilotte [cook-in-the-bag] meat dishes. The price, below the ¤1 threshold, partly explains the success of a line originally designed for eastern Europe. Nestlé has also brought out a range of more competitive instant coffees, under the Nes brand. Herta frankfurters and Buitoni pizzas fall into the same category. PPPs now account for 10% of Nestlé sales in France and are registering faster growth than the rest of the brand portfolio. |
| For the French market, Unilever is adjusting product sizes to try to reduce the face value of products. It has launched one-cup Knorr soups for €1 and dishwasher tablets in packs of 20. Danone claims to be taking a different route but says it is too soon to reveal its overall strategy for budget-conscious shoppers. For the time being, its subsidiaries are looking at ways of coping with fluctuating purchases. Spain is the top priority. Warning bells started ringing at Danone in June as consumer purchasing power dwindled. Buyers are moving away from yoghurts and dairy desserts, and switching to budget goods. Danone has yet to find an appropriate response. | For the French market, Unilever is adjusting product sizes to try to reduce the face value of products. It has launched one-cup Knorr soups for €1 and dishwasher tablets in packs of 20. Danone claims to be taking a different route but says it is too soon to reveal its overall strategy for budget-conscious shoppers. For the time being, its subsidiaries are looking at ways of coping with fluctuating purchases. Spain is the top priority. Warning bells started ringing at Danone in June as consumer purchasing power dwindled. Buyers are moving away from yoghurts and dairy desserts, and switching to budget goods. Danone has yet to find an appropriate response. |
| • This article appeared in Guardian Weekly, which incoporates material from Le Monde | • This article appeared in Guardian Weekly, which incoporates material from Le Monde |
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