Sweet success: confectionery growth during pandemic
Market analyst IRI has unveiled some key strategies and tactics used by the Australian food and grocery sector to survive and thrive during and post COVID-19.
The four key strategies are:
- Use pricing to maintain and strengthen brands.
- Invest in marketing and advertising to bolster ‘mental availability’.
- Adopt a shopper-led total store view to holistically understand customers.
- Streamline, rationalise and innovate your product range.
According to IRI Chief Commercial Officer for Asia Pacific Alistair Leathwood, during a recession many suppliers delay new product development (NPD) but he believes new products have a vital role during these times. “Because new product activity typically slows in recessions, well-executed NPDs have a higher chance of gaining visibility — and ultimately paying off — as competitors streamline the NPD funnel,” he said.
“Our research has demonstrated that more buoyant consumer segments, as well as those that are more time and cash rich due to COVID-19, will appreciate the novelty and experiential qualities of affordable luxuries. In fact, many Australians will want to alleviate the monotony of buying the same things throughout their extended period at home.”
To showcase this, IRI has created a case study drawing on the IRI Shopper Panel comprising of over 13,000 households to provide insight into the sales and shopper behaviour that changed as a result of the continued focus on innovation during challenging times. The data that was examined in this study compared shopper purchasing information from 21/07/2019 to 19/07/2020.
“The chocolate category in Australia within the grocery channel is worth $830 million and has been identified as a recessionary category that has responded well to attract additional spend from shoppers seeking smaller indulgences to enjoy as they live in lockdown but also seek to save money as we move into a recession,” Leathwood explained.
Within this category Cadbury and Darrell Lea have taken the opportunity to dial up their innovations and bring shoppers a breadth of new flavour-extensions or flavour-rotations despite the pandemic and recession. During this time Cadbury has released its Marble and Caramilk range, and Darrell Lea has introduced 10 unique new chocolate block flavours. The innovation through the introduction of new flavours has not only attracted new shoppers to the category to try but increased the total spent on chocolate compared to 2019.
According to IRI, some of the key findings of the study include:
- 32% increase in the spend on chocolate as a direct result of NPD, compared to non-NPD shoppers spending only 14% more.
- Darrell Lea did not change their price, but new NPD has increased spend on the category by 24%.
- Cadbury Marble attracted 760,000 new shoppers to the category and 420,000 from Cadbury Caramilk.
- Of the Cadbury Marble new shoppers, 13,560 were new to chocolate confectionery altogether. In addition, of the 420,000 new shoppers of Cadbury Caramilk, 14% were new to purchasing Cadbury.
- Pre and young families have been responsible for 17% of the total monetary spend on blocks compared to just 1% last year.
“From these findings we have been able to determine that shopper behaviour has not only changed as a result of NPD in that shoppers are purchasing chocolate when they previously didn’t, NPD also encouraged trial amongst shoppers. Innovation has not cannibalised the category, rather it has added additional spending to the category through existing and new shoppers,” Leathwood concluded.
To learn more about the impact of COVID with IRI’s report “FMCG In The ‘COVID-Quarter’ & Preparing For Recession” visit: https://www.iriworldwide.com/IRI/media/IRI-Clients/IRI-Australia_Coronavirus-Impact_Industry-Update-Part-2.pdf.
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