ROME: Leading FMCG manufacturers and restaurants, including Unilever and McDonald's, are developing products priced at one euro (€1) to attract recession-hit shoppers in Italy and Spain and the wider eurozone.
"One euro is a magic price point in Europe right now," Lloyd Burdett, head of global clients at consumer-insights firm Futures Co, told the Wall Street Journal.
"There is a feeling that the stuff will arrive at that price point anyway and their margins were going to get squeezed," he added.
Unilever's head of Europe pointed out that poverty was returning to the continent with 120m people on low incomes. "We need to get our brands to consumers who are having a hard time making ends meet," said Jan Zijderveld.
So manufacturers are reducing the size of existing products – something Unilever already has experience of in developing and emerging markets – to meet the €1 price point as well as creating products specifically for the chains of one-euro stores that are spreading across many countries. Brand owners also see this as a way of combating the growth of private-label products.
There are clear benefits to FMCG companies, as they spend less on packaging while the unit price is higher. "Consumers are more sensitive to the final price they pay than the size of the box," noted Tom Vierhile, of consulting firm Datamonitor.
The restaurant sector is also addressing the issue of affordability, with Starbucks selling various baked items at €1, while McDonald's, in Spain, Italy and Germany, offers a changing selection of products at the same price.
For a Spanish restaurant chain, 100 Montaditos, such deals have been phenomenally successful. For one day a week most menu items have been charged at €1, with sales tripling over three years and the number of outlets more than doubling.
The company now plans to expand into Portugal, Italy and the UK.
"One euro is a magic price point in Europe right now," Lloyd Burdett, head of global clients at consumer-insights firm Futures Co, told the Wall Street Journal.
"There is a feeling that the stuff will arrive at that price point anyway and their margins were going to get squeezed," he added.
Unilever's head of Europe pointed out that poverty was returning to the continent with 120m people on low incomes. "We need to get our brands to consumers who are having a hard time making ends meet," said Jan Zijderveld.
So manufacturers are reducing the size of existing products – something Unilever already has experience of in developing and emerging markets – to meet the €1 price point as well as creating products specifically for the chains of one-euro stores that are spreading across many countries. Brand owners also see this as a way of combating the growth of private-label products.
There are clear benefits to FMCG companies, as they spend less on packaging while the unit price is higher. "Consumers are more sensitive to the final price they pay than the size of the box," noted Tom Vierhile, of consulting firm Datamonitor.
The restaurant sector is also addressing the issue of affordability, with Starbucks selling various baked items at €1, while McDonald's, in Spain, Italy and Germany, offers a changing selection of products at the same price.
For a Spanish restaurant chain, 100 Montaditos, such deals have been phenomenally successful. For one day a week most menu items have been charged at €1, with sales tripling over three years and the number of outlets more than doubling.
The company now plans to expand into Portugal, Italy and the UK.
Data sourced from Wall Street Journal; additional content by Warc staff
