FMCG brands turn to promotions

13 June 2012

BRACKNELL: European FMCG companies are relying on promotions to maintain sales, with the region's consumers cutting costs due to adverse economic conditions.

According to a new multi-market study from market research firm SymphonyIRI, the proportion of grocery products sold on promotion has increased over the three years to 2012, with consumers less willing to spend following the region's credit crunch and sovereign debt crisis.

In all, 25.6% of products in the category are sold on promotion across the continent. This total rises to 56% in the UK, the highest proportion of the markets measured, but falls to 17.9% in France and 11.6% in Germany.

Across all markets, the FMCG sub-category most likely to use promotions is confectionery, where discount deals account for 29.2% of volume.

SymphonyIRI added that savvy shoppers are increasingly going online to seek out the best grocery deals, with, a British price comparison site, attracting 2 million users.

Other FMCG trends noted by the report include the increased popularity of smaller pack sizes, and rising use of off-shelf displays such as gondola ends and store foyers to catch the eye of shoppers.

Rod Street, executive vice president of consulting at SymphonyIRI, said: "The promotional arms race across Europe may be coming to a head. Now is the time for brands to be more strategic and less tactical in their use of pricing and promotions."

The report also identified inflation, caused by soaring commodity costs, as a major future threat to FMCG firms' revenues. Annual price rises are currently running at +3.2% for food products, and +2% for non-food FMCG goods.

Overall, FMCG inflation was found by SymphonyIRI to be highest of all in the UK (+5.1%), with the weak pound boosting prices for British shoppers.

Data sourced from SymphonyIRI; additional content by Warc staff