Lower-priced brands, smaller packages and discounts are being promoted by British-Dutch Unilever, US-based Procter & Gamble (P&G) and other major consumer goods manufacturers to woo shoppers coping with the most severe global recession since the 1930s Great Depression.
Nestle
Nestle said earlier this month that it has recently launched single-use sachets of its instant noodles brand Maggi seasonings in Indonesia and smaller sachets and cooking sauces in the Philippines. Agnes Lalanne, head of culinary products at Nestle, said the world’s biggest packaged food company is focusing on “enhancing the rich flavor of its offerings” for when meat itself becomes a luxury.
It also promotes recipes in the Philippines that call for cheaper proteins, such as eggs and canned meat.
“We’ll give this (affordable products) more emphasis,” Nestle CEO Mark Schneider said recently, “because affordability, especially when it comes to the economic consequences of COVID, will become ever more important.”
Unilever
Unilever, which markets food and consumer goods in 190 countries, said it ensures that low unit-price packages and cheaper brands are available in each market.
Unilever’s Chief Financial Officer Graeme Pitkethly said that in its markets, the maker of Hellmann’s mayonnaise and Lipton tea has launched new versions of its Savital shampoo, priced below its Dove and Tresemme brands.
Consumer goods companies normally pass on price and “promotional allowances” to a retailer, who then uses them to offer limited-time sales such as 2 for $5 value promotions, or everyday prices.
In March and April, when coronavirus-related shutdowns drove shoppers to hoard everything from hand sanitizer and cleaners to toilet paper and flour, several businesses initially pulled back on price-focused promotions, such as ‘buy one, get one free.’
The demand rise challenged supply chains and all parties concentrated on keeping stores clean and shelves stocked.
The American multinational food, snack and beverage corporation, PepsiCo said it would invest more on brand advertising and marketing during the Christmas holiday season.
Unilever said recently that it had reactivated promotion plans with retailers after essentially suspending them during the first and second quarters.
In most categories in its core markets, Tide detergent maker P&G brought back promotions, except where demand remains high, such as for its toilet paper and disinfectants.
“Consumer spending levels are not going to recover until at least end-2022, so there is going to be a sustained pressure on consumer-packaged goods companies to offer promotions and incentives,” said Oliver Wright, Accenture’s global industry lead of consumer goods and services. Accenture is a global professional services company.
According to reports, by the end of September, about 26 percent of grocery products purchased had a price promotion, below the 31 percent average compared to February 29, 2020.
With millions out of jobs, the global economy has weakened.
According to the Commerce Department, personal income levels fell 2.7 percent in August in the United States, one of the largest markets for packaged goods. After rising 1.5 percent in July, consumer spending increased just 1 percent in August, and consumption remains 4 percent below pre-pandemic levels.
According to data analytics company Gfk, per capita buying power of individuals are projected to decrease by approximately 5.3 percent in 2020 from last year.
In June, 30 percent respondents reported purchasing more in-house, store-brand items compared to March and 28 percent said that they were searching for less-expensive brands overall, according to a survey by market analysis company Reach3.
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