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Quality, Indulgence and Premiumization Strategies in Food - Defending Against Margin Erosion

  • June 2014
  • 86 pages
  • GlobalData
Report ID: 2183545

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Summary

Consumers worldwide are trading down and discounting is becoming more prevalent, hurting the profit margins of many manufacturers. “Quality, Indulgence and Premiumization Strategies in Food – Defending Against Market Erosion” provides a comprehensive overview and strategic analysis of how brands can effectively defend their profits despite the emergence of value competitors. The report focuses on the strategy of premiumization, to encourage consumers to trade-up in terms of both price and quality. The growing popularity of private label alternatives is also addressed – and what brands can learn from them, and ultimately defend themselves against discounters by offering consumers the highest quality, and drive sales.

Key Findings
• The global financial crisis has affected consumer spending, and despite economic improvement across much of Europe and the US, consumers have not reverted to previous spending habits. Manufacturers must consider the austerity needs of these consumers by providing value, not solely in terms of low cost, but also to trade-up for quality.
• Taste and indulgence will continue to drive consumption across Food categories, and manufacturers should ensure that their products offer consumers the best overall experience. Consumers are unwilling to sacrifice taste for other concerns, such as health, re-enforcing the need to offer products that offer uncompromised moments of pleasure and indulgence, particularly, in Non-BRIC countries.
• Consumers, particularly in BRIC countries, are increasingly seeking products that offer assurances of quality, and manufacturers should respond by ensuring transparency in terms of sourcing, production, and ingredients to drive sales, as the desire for authentic and trustworthy products increases.
• Many consumers no longer view private labels as cheap, lower-quality imitations of branded products, instead perceiving them to be of an equal, and sometimes higher, quality. Branded manufacturers can defend against the growing popularity of private labels by accelerating innovation, or to corner a niche market which holds no attraction to private labels.In addition, the growing premiumization of private label offers means that making private label products could improve the profitability of some manufacturers.

Synopsis

Weak consumer confidence, rising production costs, and the rise of discounters and private labels are threatening the profit margins of food manufacturers worldwide. However, there are occasions when consumers will trade up to a more expensive than average product, but which offers a lot for the additional amount paid. This means that manufacturers need the correct premiumization and indulgence strategies now, in order to not just protect profit margins, but to also position themselves to make the most of future growth opportunities. “Quality, Indulgence and Premiumization Strategies in Food – Defending Against Market Erosion”provides manufacturers with the insight and knowledge to protect, and drive their sales.
In particular, this report includes:
• Identification of trading-up opportunities for manufacturers, where consumers whose stated desire for indulgence and quality is not being met.
• How manufacturers of branded products can appeal to price-conscious consumers by providing everyday low-prices, as opposed to offers and deals.
• The necessity of ensuring products focus on taste and ultimately experience, as consumers still seek the most indulgent products, despite their best intentions to eat more healthily.
• How authenticity is driving sales across many sectors, most notably meat and dairy, as consumers seek assurances over the ethicality and organic nature of their Food, and the intrinsic link to quality.
• How private labels are becoming a genuine threat to even the biggest brands, and how these brands can defend against market erosion from lower-priced competitors through premiumization.

Reasons To Buy

• This report provides the knowledge and insight to aid branded manufacturers to defend against margin erosion from the competition and consumers value-seeking behavior.
• This report identifies the future directions for manufacturers to target changing consumption habits, as ethicality, quality, and craftsmanship become increasingly influential.
• The growing popularity of private labels can be detrimental to brands; this report will identify the key areas in which to defend against incursion from private label products, and regain lost market share.

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