> March 2007 <
FMCG: Food For Thought
Experiential and point-of-sale marketing is now more essential for FMCG brands than mainstream advertising. With the introduction of supermarket's own "private label products", FMCG brands find themselves fighting for shelf space. They have always fought against their key competitors, and now they are also battling with their key distributors.
In 2006, 99% of Australian households consistently bought private label products as part of their shopping. 57% of all eggs sold in Australia are under private label along with 50% of milk, 31.5% of bread and 30% of cheese.
But now Supermarket "home brands" are climbing the product ladder. Coles was the first supermarket to introduce a three tiered private label structure, "Coles Finest", "You'll Love Coles" and "Coles $mart Buys". Woolworths followed in 2006 adding the mid price "Woolworths Select" to its already popular home brand private label.
Similarly Coles have been aggressive in deranging its stores and replacing product with "Coles Finest" and "You'll Love Coles" brands.
When was the last time you saw a Steggles or Bartter chicken in the Coles meat section?
More than half of Australian manufacturers have chosen to become private label suppliers, rather than lose out on sales all together. Steggles Corn Fed Chickens and Lilydale Free Range Chickens are the latest two casualties in the Coles bid to have 30% of all in-store product private label.
Most Australians are reaping the benefit of the transition. For them it means quality at cheaper prices and often the products are still Australian made. But what happens when at least one-third of all brands are private label? Once traditional brands have been moved off shelf, do we really believe the price will stay down? And what about choice?
So, what can be done by brands to ensure they get to stay on shelves?
The private label growth strategy of both Woolworths and Coles is to introduce product lines in 'low risk' areas where consumers can be easily enticed to brand switch. Staples, dairy, fresh goods, deli goods, pasta and rice, canned goods, fruit juices and basic cleaning products are categories that have been aggressively targeted over the past 2 years.
The consumer trigger is always price. A 750g block of Woolworths Select Australian Cheddar sells for around $5.00. Devondale is $6.49, Bega $6.89 …Bodalla is simply no longer on shelf.
The key to keeping brands on shelf is consumer demand. This does not necessarily mean market share, but reminding the supermarket that your brand is a key driver to their store traffic either through existing traffic, or creating new traffic for them.
The ongoing radio support throughout summer maintained those sales positions, and now both Coles and Woolworths are talking with Staminade about developing account specific in-store promotions with full point of sale support.
Palmolive chose to become part of the 2006 Pink Ribbon Campaign, supporting Woolworth's and other key retailers' corporate strategy of donating to the cause with every sale. To support this strategy, a small promotion to win 50 Woolworths Wish Gift Cards valued at $200 each was featured during Breast Cancer Week in all Woolworths Stores nationally.
Dove took this to another step, repacking its product lines pink for the duration of the campaign, and investing in outdoor and mobile advertising to drive sales into Woolworths.
Both companies leveraged their position as market leaders in the personal care product category to assist Woolworths in the promotion of their own corporate strategy. In doing this, they became partners in this program, rather than just suppliers.
Soft as Soap is the second highest seller in the liquid soap market, behind its stable mate Palmolive Soft Wash. Yet even in this position, it is finding itself under increasing pressure from its key accounts to maintain sales. Looking at its category brand map, Soft as Soap is about to re-define its product benefits through packaging, tapping into a more contemporary consumer who want personal products to be decorative as well as functional.
The new stylish Soft as Soap will be launched in April 2007 along with a Woolworths specific promotional event, designed to compliment its new positioning. Watch this space for the results!
In store sampling, direct marketing, emarketing and 'club' creations are other ways in which FMCG products can engage with their consumers.
I can't see Coles investing in this type of engagement for a dog food.
So, the race is on. While above the line advertising will continue to play an essential part in awareness, following this through with an experiential and POS engagement is even more important, as it maintains product presence in what we have previously thought of as traditional sales channels.
Woolworths and Coles are now FMCG brands in their own right. When you couple this with the fact that they hold 75% of all grocery sales, their buying power is too big to ignore as many smaller brands are finding out.
They are not dedicated to R&D or even to Australian made, and their power within the fresh produce industry is forcing niche Australian farmers out of business, with fruit and vegetable wholesalers losing sales.
But that's a whole different food fight.