Range rationalisation tipped to continue as brands are “interchangeable”

28 November, 2017

Retailers are expected to continue cutting their ranges in 2018 in a bid to save money and make life easier for their customers, according to market research firm IRI.

It said that wine is still a far more complex category than most, while beer and cider brands do not generate a great deal of loyalty, so rationalisation will persist.

Toby Magill, IRI’s head of BWS, said: “The focus recently has been on rationalisation, with all eyes on retailers who have removed household names from their shelves to see the effects.

“Despite initial concerns, it seems that large numbers of brands, especially in the beers and ciders category, are interchangeable and consumers don’t mind as much as we thought.

“This is particularly true for the mainstream and premium sectors in these markets, where products and pricing are actually pretty similar and the definitions are more an exercise in marketing rather than product quality.

“In a bid to save money and simplify their ranges, we will see more retailers cutting items, with a focus on less is more, especially in wines, where there continues to be a far more complex choice for consumers than in other sectors.”

The BWS category has grown 2.5% in the past year to reach the £16 billion mark, according to the latest IRI data. The convenience channel is outgrowing the market, with sales up 3.3%, and that trend is expected to continue.

“We are still seeing lots of opportunities for the BWS sector to grow next year as consumers shop more frequently across different formats and trade up when shopping for booze,” said Magill. “This idea of trading up fits nicely with convenience top-up shopping, and as a result, we will see the influence of the convenience channel continue to grow next year.”

He expects the discounters to remain ahead of the curve when it comes to the BWS category in 2018. “While the major multiples are simplifying their ranges, they still have a long way to go to match the discounters,” he said. “Up to now, the supermarkets have always had an advantage because they stock major brands, but we are seeing sales of own label alcohol increasing [up 5.4% this year]. We will see the discounters become more of a threat as consumers buy alcohol in discount stores along with their regular grocery shop.”

The wine category has had a good year, driven by strong sales of sparkling wine, white wine and low/no alcohol wines, while Magill said the UK’s love of Prosecco shows no sign of abating any time soon.

He added: “Younger shoppers in particular are becoming more sophisticated in their alcohol choices and demanding more in the way of authenticity from brands, happy to spend more when they buy. Beer and cider companies will need to emphasise their products’ crafty credentials, provenance and quality to lure shoppers in. However as manufacturers rush to cash in on this trend, 2018 may also be the year we finally see if ‘craft’ is truly driven by quality or provenance, or it is simply a marketing exercise.

“When it comes to loyalty, brands need to consider how loyal their shoppers really are. Looking at the range changes in beer, for example, have shown that shoppers are fine with not finding major brands as long as they can get something similar that is in their repertoire. This being the case, a lot of marketing departments need to take a reality check on how special their brands are and understand that they could be replaced. Brands need to be strong on articulating what they bring to the category and the retailer.”




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